External Demand for Talent HR Analysis and Reporting December 2000

1. External Demand for Talent HR Analysis and Reporting December 2000

2. Executive Summary In a quick review with internal recruiters and selected external placement agencies, we found the following information: • Enron’s risk of losing top talent is rated high for trading and technology positions. • Enron lost 100, or 1% of domestic employees, to competitors in the last six months. • In interviews with various HR leads, there is a consistent response that while they feel the treat of external parties is present, it is generally not high, except noted, due to the unique culture and incentives that Enron represents. • Tighter labor market, obviously, increases demand for top knowledge workers. • Enron’s exposure from external parties come from : • Ex-employees • Competitors in many industries • Placement Agencies • Start Ups • Generational changes

3. Enron’s risk of losing top talent • Enron’s risk of losing top talent is increasing and is rated high for trading and technology positions. • Enron lost 100, or 1% of domestic employees, to competitors in the last six months. • This statistic is believed to be understated as employees are not required to report the reason they are leaving and are more likely to choose another reason to “leave the door open” • Of these employees, they were mostly EBS engineers, Transaction Support, IT development and Human Resources. • This population represents 14% of the total voluntary terminations for the same period • In interviews with various HR leads, there is a consistent response that while they feel the treat of external parties is present, it is generally not high, except noted, due to the unique culture and incentives that Enron represents. . • Tighter labor market, obviously, increases demand for top knowledge workers. • Many technology employees report being pursued by outside recruiters. Percent of Total Workers Unemployed

4. Enron’s risk of losing top talent to external parties Enron’s risk of losing top talent to external parties come from : • Ex-employees • Particularly those who are in hiring positions as well as those who leave to companies with lucrative employee referral programs. • An example includes when Linda Clemmons left the company and her department followed her. Up to ten employees left. More importantly, this group represented a specialized skill. • Enron has a non-solicitation agreement that will help mitigate this risk that has been in the past required of selected employees but now is required by all new hires, starting mid 2000. • Enron has also a non-compete agreement that is selectively deployed. • A return strategy might include re-recruiting ex-top employees.

5. Enron’s risk of losing top talent to external parties Enron’s risk of losing top talent to external parties come from : • Competitors • Some of the most aggressive competitors to watch are : • Duke (commercial), Dynergy (transaction support and human resources) • Reliant, El Paso, Koch, TXU, Shell, Wiliams, Utilicorp, Telecoms, Startups • Risk is assessed at High for Ecommerce, Technology and Commercial positions • Some of the hottest skills are : • Trading • Network Engineering • IT Development Ecommerce, Java, Cisco, Unix, Oracle, C++ • Origination • Transaction Support • Technical recruiting • Enron should deploy/reinforce confidentiality and non-compete clauses to help mitigate these risks.

6. Enron’s risk of losing top talent to external parties Enron’s risk of losing top talent to external parties come from : • Placement Agencies • Enron has alliances with many reputable placement firms and should continue to maintain these strategic relations. • As top talent continues to become one of the most demanded commodities in this economy, placement fees are extremely attractive and alliances with placement agencies are of greater importance . • Placement agencies are quick to “poach” ex-customers. • Enron can mitigate this risk by monitoring calls or hits from recruiting agencies. This monitoring is not present today at Enron.

7. Enron’s risk of losing top talent to external parties Enron’s risk of losing top talent to external parties come from : • Start Ups • Enron cultivates an entrepreneurial environment which attract and retain entrepreneurial employees. The offset is that we have lost employees that have started their own companies or to start-up companies.. • Some examples are Linda Clemmons and several employees in EBS who primarily resided in Portland. These individuals have also taken some of the staff. • In the AA program, in the earlier part of the year, some high potential associates have left to dot-com startups. However, this departure has diminished since that market has declined.

8. Enron’s risk of losing top talent to external parties Enron’s risk of losing top talent to external parties come from : • Generational Changes • An inherent risk that Enron should consider also is related to the new generation that we are recruiting. • It is projected that the average tenure of Generation Xers is expected to be 3 years and is less than half of Baby Boomers. • Eighty percent (80%) percent of all new businesses started in the past three years belong to Generation Xers (born 1960’s to 1980’s), according to Fastcompany • Enron can mitigate these risks by adding more appeal for this generation to extend longevity by recognizing these generational differences and putting plans in place. These plans might include work life initiatives as these employees demand a quality of life, flexible management, fun environment, less structure, flatter organization, etc. A lot of these desires are present today at Enron. Another idea might be to commence a mentoring program that inverses the traditional mentorship. That is, young “web-heads” mentor more senior employees to gap any generational gap that might exist.