ENRON: A Not So Happy Ending to a Good Recruiting Plan

Enron Corporation was launched in 1985, with the merger of Houston Natural Gas and InterNorth, a Nebraska company. In 1990, Enron—which was just a natural gas transportation company at the time—started a new division to trade natural gas. The company went from being a “stodgy” gas pipeline company to being a “world-class” company overnight. Enron soon became a $55 billion empire, trading gas, electricity, minerals, water, paper, and broadband capacity.

A critical part of Enron’s success was the company’s employee value proposition (EVP). The EVP focused on Enron as a dealmaker and was designed to attract the top talent the company needed to continue to move it forward. The EVP pro-vided employees with the opportunity to do something “big” and to change how business was done in other industries. Jobs were restructured to give employees a lot of elbow room and headroom. Traditional gas pipeline employees were not the employees needed for this new, never-before-tried venture.

Internal job movements at Enron were an important part of the EVP. Managers were strongly encouraged to allow employees to move within the company. The goal was to not hold anyone back. When the Global Broadband unit was launched, 100 top performers from around the company were brought together in Houston. By the end of the day, 50 had been recruited for the new project. Overall, the recruiting strategy focusing on internal recruitment paid off. The business continued to grow and attract entrepreneurial employees.

The company that thought it had no way to go but up came crashing down in 2001 when it was charged with illegal activities. By 2004, Enron’s corporate officers faced numerous charges of wrongdoing, and the company was a shell of its former self. Managers were charged with manufacturing profits, hiding debt, and bullying Wall Street to buy into its questionable accounting and investment practices. An extensive amount of downsizing had occurred, and many employees had lost all of their retirement savings after Enron’s stock collapsed. Faced with bankruptcy and a sullied reputation, the company struggled to continue but finally made the decision to cease to exist once all litigation concludes.

At one time, Enron’s recruiting efforts were described as a model for other employers. Enron portrayed itself as an exciting company with lots of growth opportunity—a firm in which employees experienced a great deal of autonomy and responsibility.

Questions

Enron did a lot of things right from a recruiting standpoint. Discuss its recruiting strategy and why it worked.

Do you think that Enron’s overall recruitment EVP and strategy played any role in the problems that resulted at Enron? If so, what and how?

Discuss why it’s important to create a recruiting message that’s attractive but that doesn’t “oversell” the company.

Assume that in a few years Enron decides to reconstitute itself in some form. Develop a recruiting strategy that the company could use to attract employees.