Aig Case Solution
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LEADERSHIP AT AIG: DOES STYLE MATTER?
Case Overview
This case deals with executive leadership styles. In particular, this case deals with American International Group, the world’s insurance company, and its CEO Maurice “Hank” Greenberg. Greenberg, an autocratic leader, was recently deposed by his board of directors after problems emerged regarding possible earning manipulation. It describes his leadership style, reasons his two sons (former employees) left the company, and Martin Sullivan, Greenberg’s successor. Like his former boss, Sullivan micromanages the organization, but is well liked by employees.
Teaching Objectives
1) To show students the impact of autocratic leadership style on employees.
2) To distinguish between micro and participative management in an organization.
3) To introduce the concept of leadership succession and its effects on organizations.
Purpose
This case presents various leadership styles used by CEOs. It suggests that executives who uses a more participative leadership style are more likely to create an effective employee workplace.
Relationship to Part 4
The relationship of this case to part 4: leadership and its styles, possible motivation of employees through style, the encouragement of team work and communication. This case can draw on various theories in all four chapters of Part 4.
Questions
Question
1. AIG Chairman and CEO Maurice “Hank” Greenberg was considered an autocratic leader and a micromanager by many employees; yet the company grew dramatically during his reign as CEO. Does leadership style matter as long as the company performs well and shareholders are satisfied with their return on investment?
Answer
Leadership does matter. A company may perform well, and shareholders may be satisfied with their return on investment, but on another level this style of leadership may do irreparable hard to employee effectiveness and morale.
LEADERSHIP AT AIG: DOES STYLE MATTER?
Case Overview
This case deals with executive leadership styles. In particular, this case deals with American International Group, the world’s insurance company, and its CEO Maurice “Hank” Greenberg. Greenberg, an autocratic leader, was recently deposed by his board of directors after problems emerged regarding possible earning manipulation. It describes his leadership style, reasons his two sons (former employees) left the company, and Martin Sullivan, Greenberg’s successor. Like his former boss, Sullivan micromanages the organization, but is well liked by employees.
Teaching Objectives
1) To show students the impact of autocratic leadership style on employees.
2) To distinguish between micro and participative management in an organization.
3) To introduce the concept of leadership succession and its effects on organizations.
Purpose
This case presents various leadership styles used by CEOs. It suggests that executives who uses a more participative leadership style are more likely to create an effective employee workplace.
Relationship to Part 4
The relationship of this case to part 4: leadership and its styles, possible motivation of employees through style, the encouragement of team work and communication. This case can draw on various theories in all four chapters of Part 4.
Questions
Question
1. AIG Chairman and CEO Maurice “Hank” Greenberg was considered an autocratic leader and a micromanager by many employees; yet the company grew dramatically during his reign as CEO. Does leadership style matter as long as the company performs well and shareholders are satisfied with their return on investment?
Answer
Leadership does matter. A company may perform well, and shareholders may be satisfied with their return on investment, but on another level this style of leadership may do irreparable hard to employee effectiveness and morale.
References: [edit] Chronology of September 2008 liquidity crisis On September 16, 2008, AIG suffered a liquidity crisis following the downgrade of its credit rating [edit] Additional bailouts of 2008 From mid September till early November, AIG 's credit-default spreads were steadily rising, implying the company was heading for default.[50][51] On November 10, 2008, the U.S |AIG collateral postings to credit default swap counterparties, from the period September 16, 2008 to | |December 31, 2008[73] | [edit] Record losses On March 2, 2009, AIG reported a fourth quarter loss of $61.7bn (£43bn) and revenue of −$23.7bn (−£16.2bn) for the final three months of 2008 Due to the Q3 2011 net loss widened, so on November 3, 2011 the AIG shares has plunged 49 percent year to date. The insurer 's board has approved the share buyback of as much as $1 billion.[117] [edit] Litigation On February 9, 2006, AIG and the New York State Attorney General 's office agreed to a settlement in which AIG would pay a fine of $1.6 billion.[121]