Aes Restructure

Global power producer AES Corp., founded and incorporated in1981, by Roger Sant and Dennis Bakke, has mission to help serve the world’s need for electricity in a socially responsible way by creating inexpensive power in large amounts and selling it to larger power consumers internationally. AES has approximately 30,000 employees operating in 26 different countries. Their values are a key component of their corporate culture and are as follows:

Put Safety First - We will always put safety first - for our people, contractors and communities.

Act With Integrity - We are honest, trustworthy and dependable. Integrity is at the core of all we do - how we conduct ourselves and how we interact with one another and all of our stakeholders.

Honor Commitments - We honor our commitments to our customers, teammates, communities, owners, suppliers and partners, and we want our businesses, on the whole, to make a positive contribution to society.

Strive For Excellence - We strive to be the best in all that we do and to perform at world-class levels.

Have Fun Through Work - We work because work can be fun, fulfilling and exciting. We enjoy our work and appreciate the fun of being part of a team that is making a difference. And when it stops being that way, we will change what or how we do things.

The latter value, for the most part, depicts an organic organizational structure and culture that influences a corporate strategy that uses “disciplined opportunism” in a decentralized environment to achieve innovation, empowerment and growth. This philosophy places their values at the apex of their success, putting society first, fundamentally undermining the interests of the share holders (profits). In fact, all of its management practices are aligned with these values. Human resources hire people for their general competence, talent and their ability to fit into the AES culture to encourage a low turnover rate. Their push for decentralizing authority and responsibility even to those people without extensive experience through a flat corporate structure reduces status differences within the management. They encourage their employees to take new challenges and learn from their errors and also make them solely responsible for their own training development. People work with AES because they appreciate the company’s culture and enjoy what they are doing. Money is not the motivation for them to stay (McNeil Hamilton, 2003).

But this loose structure would soon become a catalyst for ruin. In 2003, the company lost $3.51 billion, its stock plunged to historic lows and bankruptcy was barely kept at bay. And thus, AES began its restructuring. The company's previous strategy may have gone too far in the decentralized direction, but it allowed the company to grow as fast as it did. Once the company became too large, from a couple of hundred employees in the 1980s to about 40,000 at its peak, it became difficult to manage with a system that worked when everyone knew everyone else and what they were doing. To increase their profits, their sale of assets placed emphasis on selling for strategic reasons rather than primarily to increase