AES: Corporate Culture

Essay by cavepilotUniversity, Bachelor'sA+, October 2004

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"Culture is comprised of the assumptions, values, norms and tangible signs (artifacts) of organization members and their behaviors. Members of an organization soon come to sense the particular culture of an organization" [McNamara]. Interaction with one another and communication between departments of different areas is the primary way to develop a corporate culture. Conveying this culture from one area of the corporation to the other using the same norms and standards among areas further develops the corporate culture. When the corporation does not utilize communication and does not enforce these standards and norms, the culture can break down. That is what happened to the corporate culture at the AES Corporation.

AES Corp is "a huge company with $33 billion in assets in 28 countries on five continents" [Hamilton]. This is an incredibly large area of operations to be as decentralized as AES was. The corporate headquarters would staff an average of 40 employees before restructuring.

There was no main unit of leadership to set standards and norms within the organizations headquarters to convey to the other regional headquarters to develop a culture. What happened as a result was "Multibillion-dollar decisions were made on the ground, in such places as Argentina and Brazil and England, where projects were being developed, and not always by those who had the best training, experience or company-wide perspective" [Hamilton]. At the time of this vastly decentralized state of AES, the corporation had a fortress culture. A fortress culture is when "employees don't know if they'll be laid off or not. These organizations often undergo massive reorganization. There are many opportunities for those with timely, specialized skills" [McNamara].

A massive reorganization was required to fix the problem and that is just what AES did. The company had no choice because...