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Work Ethics

by Andy Boynton

In a provocative new book, Dennis Bakke '68 explains his idea of joy on the job

What makes work fun? In annual surveys of the nation's best employers, magazines often play up the perks: beer Fridays, concierge services, limo rides, free Thanksgiving turkeys, even promises not to lay off workers. Are these the keys to happiness at the workplace?

Bunk, says Dennis Bakke '68 in a new book, Joy at Work. "The key to joy in work is the personal freedom to take actions and make decisions using individual skills and talents. This is a simple concept but almost impossible to carry out because of the roadblocks thrown up by large organizations."

Bakke has spent a career putting these ideas into practice. With Roger Sant, he co-founded The AES Corporation, an electricity provider, in 1981, and he later became its president and CEO. By 2002, the energy giant had plants in 31 countries, $8.6 billion in yearly revenue, and $33.7 billion in assets. BusinessWeek magazine once called AES "probably the biggest company that nobody has ever heard of."

Along the way--and before the Enron scandal and the energy market's collapse forced Bakke's exit in 2002--he and Sant developed a highly unorthodox workplace model, marked by radical decentralization, decision-making pushed to the lowest levels of the firm, and a system of "shared values" that employees agreed to abide by inside and outside the company.

As Bakke says in the book--which has received praise from the likes of Bill Clinton, Jack Kemp, and Seattle Seahawks coach Mike Holmgren--much of this philosophy originated with his mother, who gave all the children chores at their Saxon, Washington, home. "Somehow, she created an environment in which everyone was energized, not from fear of punishment or promise of rewards but from a desire to accomplish something positive."

At age five, Bakke was hired by his grandfather to chase cows back to the barn for milking. (Part of his earnings went to the local church; the rest were used to buy government savings bonds.) A few years later, he began cutting kindling from old cedar logs and selling it to Seattleites, an experience that taught him "how to package a product and how to price it for the marketplace."

Following his years at Puget Sound (where he played quarterback for the football team), Bakke attended Harvard Business School, and later landed at the Federal Energy Administration. Upon ending work for the Energy Productivity Center at Carnegie Mellon Institute, he and Sant decided to form an energy company, and Bakke vowed to avoid the bureaucracy and drudgery he'd experienced at the federal government. "I desperately wanted AES to be a different kind of organization."

In their corporate philosophy, which would be refined and expanded over the coming years, the two emphasized the key values of Integrity, Fairness, Social Responsibility, and Fun. What's more, Bakke and Sant determined that the goal of the company was not to turn a profit. Rather, the goal was to serve a need in society--in this case, provide electricity at a reasonable price. Profitability was merely a way to reach that goal.

"Some companies seem to exist only for profits," Bakke writes. "Selling a product becomes the means to that end. In my opinion, a much better case can be made for reversing the means and ends. The end should be selling a product, and the means to keep doing so should be making a profit."

Later, in 1990, in AES's public-offering memo, the approach even appeared as a "Special Risk Factor" at the urging of the Securities and Exchange Commission: "If the company perceives a conflict between these values and profits, the Company will try to adhere to its values--even though doing so might result in diminished profits or forgone opportunities. Moreover, the Company seeks to adhere to these values not as a means to achieve economic success, but because adherence is a worthwhile goal in and of itself."

Early would-be investors were skeptical of this approach, and some saw the company as arrogant and self-righteous. "A banker who worked with us expressed amazement at his visit to AES headquarters. 'I went by an office and two VPs were arguing about whether something was fair or not. Can you believe that?'"

In pursuit of this vision, Bakke made moves that might be deemed heresy at other, more traditional companies. Functional groups such as human resources, finance, and communications were eliminated, as were detailed job descriptions and titles like "employee" and "manager." In a company of 40,000 people, Bakke set a goal to have no more than two layers of supervision between him and any entry-level worker. The concept of sick days didn't exist. "When you are sick, stay home," Sant once said. "You don't need a handbook to tell you when or how long you can be sick or what you should do about it."

Most important, Bakke pushed responsibility, decision-making, and accountability to the lowest rungs of the company, and restricted himself, the CEO, to one significant decision a year. In Joy at Work, he compares it to the thrill of an athlete taking the game-winning shot. "Most people experience game settings as 'fun,' 'exciting,' and 'rewarding' when they are playing for something important and have a key role in deciding the outcome of the contest."

"I believe the biggest source of joy," he continues, "is the opportunity to use their abilities when it really counts."

Bakke, a devout Christian, has been asked how his strong religious beliefs shaped the value system at AES. "We live in a pluralistic world and our company reflects that world to a remarkable degree," he once wrote. "AES's shared principles and values tend, to great extent, to fall within the common intersection of many of the great philosophies of life. We didn't really design them that way; it just happened."

When Enron collapsed, the California blackouts hit, and the stock prices of AES and other energy companies plummeted, Bakke's "values" system--which was already well established during the company's late-'90s financial heyday--came under increased scrutiny by the board of directors. One board member chided the "absolute" nature of the approach, telling Bakke, "You are too dogmatic, especially with the religious stuff. You need to be more flexible and pragmatic."

Eventually, Bakke was edged out as CEO, and he retired from AES for good in 2002. He's since gone on to found Imagine Schools, one of the largest charter-school companies in the United States, with his wife Eileen, a lifelong educator. There, he aims to apply many of the same principles he employed at AES, a goal he calls "perhaps quixotic but worth every last ounce of my energy."

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