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.
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...
References: 1.Organizational Alignment: The 7-S Model, Harvard Business School, November 19, 1996
2.Human Resources At The AES Corporation: The Case Of The Missing Department, Graduate School of Business Stanford University, February 1997; Mgt 7640 Course pack
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