Aes Corp

Strategy

AES distinguishes itself through developing new products and applications at a low cost. It is committed to social responsibility and empowering its employees through its four main principles which include integrity, fairness, social responsibility and fun. It is "different" from other corporations because AES is focused on retaining its core values and culture as the corporation expands in size. The company's sources of sustainable competitive advantage include technical leadership through its innovative research and development team and its worldwide network of distributors and strategic partners. AES is committed to penetrating international markets, specifically in developing or emerging economies, and constantly improving on product development. The case states that AES believes their competitive advantage is a result of its "agility or speed and its ability to commit to corporate equity and to arrange complex financial transactions."

Structure

AES is operating in a network structure. In this structure, employees form groups to solve problems and achieve common objectives. Employees may volunteer for task forces, without any formal credentials, because they are interested in a particular subject or want to set effective company policies. Although employees are not given a formal career path at AES, they are given latitude to move up the career ladder within the company to other positions.

The organization has five hierarchical levels, consisting of a set of divisional/regional managers, and three additional levels that exist in the plant. The plant organization consists of three levels: the plant manager, the seven area superintendents, and the front line people. The two cofounders decided "to avoid creating bureaucratic organizations resembling the government" because of their bad experiences working for the government. As a result, the structure of AES is highly decentralized. This allows managers and employees to both take ownership of their roles and have input on the success of the company. It also allows individuals to develop leadership skills for potential promotions. This flat management structure encourages high employee involvement in all decision-making opportunities.

Systems

The case revealed that AES uses four measures of performance; shared values, plant operations, assets and sales backlog. Shared values is described as how fun or fair the organization is along with how socially responsible. Plant operations are measured on the basis of how safe, clean, reliable and how cost effective a plant can be. Assets, such as the company's associates are tracked to determine what changes have taken place. And the Sales Backlog measures the contract revenues during the year.

Systems also include the data integrity or systems information. And as they noted in the case, AES' intentions are to grow internationally, which means that a common form of communication will play an integral part in the success of the organization.

AES offers guidelines for its compensation and benefits package. Individual salaries are determined by looking at industry standards. In fact, there is no set salary schedule for individual jobs within the company. AES does offer three forms of incentive pay including, individual bonuses, plant performance bonus, corporate-wide bonus and annual raises. The company also offers a retirement system based on company stock and a tuition reimbursement program to assist employees attending school.

Staffing

AES states they hire creative, trusting, responsible and unique people that enjoy a challenge. The goal of the hiring process is to select people who fit well with culture of the company. AES believes technical skills can be learned if the candidate is motivated and dependable. In fact only 20% of the Thames plant employees have college degrees with the remaining 80% coming from the Navy or General Dynamics. In addition, there are only twenty to thirty employees with an MBA at AES, most of whom are from non-U.S. countries.

Since there is no human resources department at AES, recruiting, hiring and training are completed by plant personnel. Employees volunteer to look at resumes, conduct phone interviews, and then conduct one-on-one interviews. So, once new hires begin with the company, senior employees will help to train them.

Skills

AES does not emphasize technical skills, but rather allows each employee to gain experience on the job and try new tasks throughout the company. Employees are given the opportunity to work in departments where they can gain valuable experiences and be challenged to develop in their career at AES.

Responsibility and knowledge are distributed throughout the organization, which AES views as a competitive advantage. In fact, the chief financial officer, Barry Sharp stated that his job was "not so much as running a centralized finance function but rather as helping all the AES employees as they made important decisions about financing and investments in a very capital intensive business". This level of trust and respect is what has helped to create a low turnover rate for the company.

AES takes pride in being socially responsible by delivering electricity in a safe and reliable manner, as well as improving the lives of employees and members of the community. As a result, it has set up an employee environmental task force to address AES' industrial issues and how it affects society. This task force shows employees how to effectively manage and work with the environment.

Style

The leadership style of managers at AES can be described as informal. There are no formal policies or rules for employee relations. Managers at AES are encouraged to use their own discretion when dealing with employees. They believe there is no one course of action that is best for everyone, rather, people should be dealt with on an individual basis when it comes to resolving performance problems or personal issues.

The management style at AES focuses on empowering employees and enabling them to try new things. Employees are encouraged to learn on their own, by asking questions and soliciting help from others. AES believes that set rules and procedures limit innovation, so management allows employees to complete tasks in their own way.

Decision-making at AES is also decentralized and informal. Each plant uses a task force system made up of employees to make decisions on areas that affect all plant employees. The participatory style of decision-making at AES allows employees to be involved

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