Power to the People

That's the case at Santa Branca, a small Light facility that sits along the Paraiba do Sul river, northwest of Sao Paulo. Until AES took over Santa Branca, its only function was to redirect water to another hydrostation located down river. Yet it employed 32 full-time workers. "How many people do you need?" Prieto marvels.

Prieto chose Santa Branca as his initial experiment in transplanting AES's bottom-up culture into Light's top-heavy bureaucracy. First he announced a massive downsizing. Then he unveiled an upgrade - a $35 million construction project that will enable Santa Branca to fuel two hydroelectric generators. Then he asked for volunteers who would run things the AES way.

He quickly picked Carlos Baldi, 34, an engineer from Fontes, to be his leader in Santa Branca. "I knew he was the right person," says Prieto. "He was young, eager to do more." Then, after agreeing on shared goals and expectations - zero accidents, thrifty construction budgets - Prieto turned Santa Branca over to Baldi.

Didn't Prieto worry about distributing too much power too fast? "I trust people - without fear or hesitation," he says. "The best way to let them perform is with absolute freedom: I release you of all constraints, including the constraints imposed by your boss."

Freedom "was very scary at the beginning," says Baldi. "Every time I had to make a decision, I thought, 'Should I call Oscar?' But he just said, 'You know better than I do - you decide.' "

Now Baldi operates the same way with his people. Claudio Jorge Coelho de Souza, 36, runs electrical-engineering projects at Santa Branca. "I'm always getting his opinion," says Baldi. Aldir Cardozo Carreiro, 47, a former maintenance supervisor, oversees the facility's entire $1.3 million operating budget. "Aldir had never done anything like this," says Baldi. "So we got him an accounting program. Now he budgets salaries, writes contracts, oversees all maintenance."

What's next for AES? According to Dennis Bakke, it involves going beyond how people work to how they're paid. Bakke has long been critical of U.S. wage-and-hour laws, which require that non-management workers be paid strictly on an hourly basis. Such laws "are one of the major hindrances to creating a fun, meaningful and empowering workplace," he wrote in a letter to then-Secretary of Labor Robert Reich in 1996.

Bakke's argument has fallen on deaf ears in the United States. So his company is introducing change in places where the barriers aren't so formidable. Plants in Argentina, Pakistan, and England are moving to an all-salary format. So are plants in South America.

Oscar Prieto experimented with the idea at Cabra Corral, Argentina, another privatized hydroelectric plant that has experienced a big downsizing. "We broke all the rules," says Prieto. "No overtime. No bosses. No time records. No shift schedules. No assigned responsibilities. No administration. And guess what? It worked!"

Now Prieto is unveiling a similar approach at Santa Branca, whose employees have punched time clocks throughout their working lives. Even for free spirits like Carlos Baldi, the new system is a shock. "Brazilians want to know exactly how much money they're going to have at the end of the month," Baldi says. "And they want to know that they're never going to have to work on Sundays."

Prieto and his colleagues know they're in uncharted territory. But they're eager to explore. "If you treat human beings fairly, they will respond as adults," he says. "It's a matter of believing in people."

Alex Markels alexm@nyct.net is a former staff reporter for the Wall Street Journal. He is writing a book on AES's values-driven culture.