Happy Friday!

I just wanted to let each of you know that we have cancelled the PRC training on Monday since the majority of the information that we were going to present is outlined below.  However, if any of you need any additional assistance or have any questions, especially if this is your first PRC, please do not hesitate to contact me at 
extension 5-7809.  

Additionally, please remember to complete your self evaluation and list your 5 accomplishments in PEP, and update your profile in eHRonline, as all of this information will be reviewed during the PRC meeting.  In order to access eHRonline, you will need your personnel number and password.  If you do not have this info, please call the SAP hotline
 at 5-4727.

Thanks,
Anne Labbe'
HR Representative
 -----Original Message-----
From: 	Enron Announcements/Corp/Enron@ENRON [mailto:IMCEANOTES-Enron+20Announcements_Corp_Enron+40ENRON@ENRON.com]  On Behalf Of Jeff Skilling- President and CEO@ENRON
Sent:	Wednesday, May 09, 2001 1:55 PM
To:	All Enron Worldwide@ENRON
Subject:	Changes to PRC Process


MEMORANDUM

TO:		All Employees

FROM:	Jeff Skilling

DATE:	 	May 9, 2001

SUBJECT:	Changes to PRC Process

Enron's midyear Performance Review process is now underway.  The PRC system is the backbone of Enron's meritocracy and is a critical part of the process of managing, rewarding, and moving talent.  The system allows us to provide 360-degree feedback on employee performance; to evaluate skill levels across Enron on a relative basis; to align individual performance with compensation decisions; and to inform our staffing decisions.

The PRC process begins when you access the Performance Evaluation Process (PEP) system and suggest reviewers who can best speak about your performance.  Once all the feedback is received, your supervisor will use it to assist in determining your performance relative to your peers in the same job group in a Performance Review Committee meeting.  In the meeting, supervisors make a rating recommendation supported by a description of the individual's performance during the review period and an indication of the feedback received.  The decision of the committee on relative performance must be unanimous for all employees under review.

At the end of last year, we asked you to provide us with feedback on how we could improve the PRC process without compromising the philosophy behind the system.  Based on your comments and suggestions, the PRC Committee and the Enron Policy Committee have agreed upon several modifications that will streamline the process.  These changes include online access to the PEP system through our ClickAtHome portal, shorter forms, changes to the rating system, and the opportunity to provide feedback on your supervisor.  These changes are outlined in detail below.  

?	Eligibility - In an effort to ensure that new employees have amassed a sufficient track record and are evaluated appropriately, a minimum of six months tenure at Enron will be required before an employee is included and evaluated in a PRC meeting.  Consequently, employees hired after December 31, 2000, will not be included in the mid-year PRC ratings process.  These employees will nevertheless solicit and receive feedback via the PEP system and must receive a final evaluation from their managers.  Because of the opportunity for rapid development in the Analyst/Associate Program, all Analysts and Associates with a minimum of three months tenure (hired prior to March 1, 2001) will be included and rated in a PRC meeting.  
?	Non-exempt Employees - Non-exempt employees (administrative and clerical) will not be rated in a formal PRC meeting.  Individual Business Units or groups may choose to discuss their non-exempt employees, but this is not required.  The sole requirement for non-exempt employees is that they receive a rating of 1-3 (1 and 2 bonus eligible, and 3 not bonus eligible).   They will continue to solicit feedback via the PEP system, and as in the past, they must receive a written final evaluation from their supervisor.  
?	Rating Clusters - Last year we used the following descriptors to determine relative rating: "superior, excellent, strong, satisfactory, needs improvement and issues."  Many employees believed that these descriptors were not useful in light of the relative evaluation process.  So this year we will use numerical relative ratings of 1-5 (with 1 being the highest).  Those in categories 1-4 are bonus eligible; those in category 5 are not bonus eligible.  For those in category 5, the consequences (besides not receiving a bonus) include implementation of a Development Plan or, in the event of continuing performance issues, consideration of ongoing employment.
?	Preferred Distribution - Consistent with the relative rating approach, employees' performance will be grouped in accordance with the following distribution:  5% level 1, 30% level 2, 30% level 3, 20% level 4, 15% level 5.  This grouping requires PRC committee members to identify those who must improve in order to remain at Enron as well as to identify top talent for special recognition.  There is flexibility in the system, but every organization must exercise informed discretion to meet a distribution that reflects that organization's overall effectiveness and need for improvement.
?	Ensuring higher quality reviews - In the past, employees and their supervisors could select an unlimited number of reviewers.  This approach reduced the quality of the written feedback, with many forms filled out only with rating information.  To ensure higher quality written reviews, the PEP system will limit the number of reviewers an employee may select for feedback to a maximum of 7.  Additionally, the PEP forms have been revised to encourage more written feedback and reduce reliance on ratings.
?	Feedback Forms -The 360-degree feedback forms have been reduced to one page; however, the
	system will accommodate more detailed written feedback.
?	Unsolicited Feedback - In the event an individual is not selected as a reviewer but wants to provide feedback on an employee, he or she may do so via the Unsolicited Feedback feature in PEP.  Unsolicited Feedback is in addition to the maximum of seven reviews.
?	Self-evaluation Form - The self-evaluation form has been revised to provide employees with a forum to list their accomplishments during the review period.   The employee's list of accomplishments will be available for viewing by the PRC committee during the meeting.  
?	Reviewing your supervisor - Employees will have the opportunity to review their supervisors and to rate the effectiveness of their supervisors' delivery of feedback.
?	Disclosure of Ratings - Disclosure of a rating in cluster 5 is mandatory across the organization; disclosure of ratings in clusters 1-4 is at the supervisor's discretion.  
?	Access through ClickAtHome - U.S. employees will be able to access and complete feedback and self-evaluation forms through the ClickAtHome portal at www.enron@clickathome.net <http://www.enron@clickathome.net>.  This will provide employees the convenience to complete these forms at home or at the office.

PRC is part of our competitive edge.  It is our goal to make you aware of any changes to the process and system as soon as we are able to do so.  If you have any questions regarding PRC or PEP, I encourage you to speak with your supervisor, contact your HR representative or e-mail perfmgmt@enron.com <mailto:perfmgmt@enron.com>.  PEP opens May 7, 2001; feedback closes on May 25, 2001.  PRC Meetings will take place from June 4-29, 2001.  The Executive PRC meetings are 
July 23-24, 2001.  Thank you for your participation in this process.