Aes Corporation Case Solution

MEMORANDUM

      AES Corporation is the world’s largest independent power generator, and it does not like other company in the electricity generation industry. Our company has unique structure, unusual management approach and special company value. AES’s strategy focused more on social responsibility and empower employees. During 2001 to 2002, AES Corporation influenced by three major unforeseen industry and global calamities events: the Californian power crisis, Enron’s collapse, and overseas difficulties in Argentina. Those events raised serious problem inside the company. In the face of current challenges, I argue for the founders to continue to be in charge, any changes made will be left up to the founders, and no changes will be dictated by the Board. In order to represent my decision, there are three major reasons.

COMPANY SUCCESS IN THE PAST

      The success of company is a strong evidence to show the ability of the leader, and it has strong relations with leader’s effort. From AES’s history, we can see how two co-founders, Roger Sant and Dennis Bakke, used their ability and vision to build the company and guide their employees. In the beginning of the company, Sant and Bakke recognized the great opportunity and raised money successfully in order to have chance to build plants overseas. Both of them have enough expertise and vision to learn from failure and make right decisions. Because of them, AES becomes the S&P 500 in 1998 due to its almost uninterrupted growth and quickly rising market valuation. Also, Roger and Dennis also helped company have rapid expansion in the past few years. During the 1990s, we had similar crisis, the first power station Oklahoma issue and Florida disputation. Our company has been able to adjust and solve the problem successfully. It is really important to see that Sant and Bakke not only understand the company needs of profit, but also focus on social responsible. Under their lead, our plants performed 95 percent among the best in the industry. From all evidences in the past, two founders can use their knowledge and experiences to analysis our company problem and find best solution to lead our  company to better future.

COMPANY VALUES VS. FOUNDERS’ BELIEFS

      A key point of AES company culture is to “shared principles and value”. The company developed these policies and principles as a way to encourage greater involvement and share values among employees. This company values also empowered each employee, and allow them to have greater involvement, a sense of fun, integrity and fairness to encompass workforce. Moreover, the sense of social responsible of environment. AES’s unique management style are directly result by the company values, also those values’ creation due to the personal beliefs of two founders. Thus, this is another major reason to keep founders in the position.

      Our two founders have their own personal beliefs, and they pursue their value successful into company. Bakke emphasizes responsibility, which is a important factor in business world, especially as a leader of company. Also, he prefers build for the future and share good fortune with others. Vision to the future, share with others, and shoulder the responsibility are all the good leadership characters. From Bakke’s attitude toward his value and beliefs, we can tell he is a good leader and he will help company overcome the challenges. In another hand, Sant more focus on the environmental movement. As AES has a mission of “ serving the world’s needs for electricity in a socially responsible way”, he can lead us to achieve this mission due to his experiences and knowledge of environment. In addition, AES is electricity generation industry, environment for the company is really important. Thus, we have the responsibility to protect our nature and provide electricity to people. Both two men can cooperation, provide best company value and positive image to the company. these two men adhere to an ethical belief and commitment to values can bring our company back to success. If we decided to change the founder, it would cause negative impact on company’s value, culture and influence employee’s confidence to company..

COMPANY STRUCTURE OF SELF-MANAGEMENT

      The main characters of AES are our “honeycomb” self-managed company structure and empowerment management style. Those are also special strengths for our company. Employee is a major component of company success. As we talked about the founders’ value and company’s principles, AES created a fun working environment and adopted decentralized organizational structure in order to motivate employees to make decisions and come up more creative ideas. Decentralized structure gives more responsibilities to lower level employees and encourage everyone to be involved. The company want to motivate employees to make a difference in the world and not simply make a profit. Profit is not view as important as employee’s loyalty and performance in the company in our company. We are focusing on shared values among our employees, and it have to be fun, fairness and integrity. We do not have functional departments, teams, and complex hierarchical levels because we want our employees become independent and motivated, take the responsibilities to their job even though there are no clear instruction. The most important factors of value employees performance are motivation, attitude, and a willingness to learn new things. We trust our employees, so they will put more effort on their job and have more confidence on their job in order to build healthy relationship with company. We has a small organizational layer, so we need every employee participated in make decisions. Thus, the company’s future depends on every employee, we need to keep our human nature management style to make everyone passion about their works. Moreover, the most important advantage of self-management is speed up in make decision, prepare bids, and complete project. It increase performance efficiency. Therefore, we should continue our unique company structure and provide more shared value to our employee. When employees enjoyed their job, they will provide our company more profit as a result. This unique management style can also decrease employee turnover problem.