AES Corporation--Culture and Structure

Essay by msbonnielaneUniversity, Master'sA, May 2007

download word file, 2 pages 3.0

AES Corporation, one of the world's leading power companies in twenty six countries, is currently a Fortune 300 company founded by Roger Sant and Dennis Bakke. AES went through remarkable growth during the 1990s with assets jumping from $11 billion in 1997 to $37 billion in 2001. Soon afterwards the volatile market caused AES to begin a major restructuring effort which included the sale of assets not only for liquidity but also for “strategic reasons”. (Hamilton, 2003) Despite their financial crunch, in 1991, 1992 and 1993, Forbes magazine recognized AES as one of "America's fastest growing companies". This paper will discuss the organizational culture and structure at AES and the reasons for its reformation.

According to Martha Hamilton of the Washington Post, the company lacked a strong structure. Because there were less than 200 employees at the facility level, everyone knew one another. Personal relationships formed which kept accountability to a minimum.

With only three layers of management separating entry-level employees from plant supervisors, in addition to no in-house finance, HR, or Ops department, each facility was left the responsibility to handle their own issues and problems. Their makeshift HR person(s) or Accounting personnel lack the qualifications to effectively or legally. But because employees were so directly involved with every aspect of the company, it built up a great morale and allowed turnover to be less than 1% in the 90’s.

Challenges that AES faced when the reality of the restructuring took place were changing the culture of current employees to match that of the new employees. They initially increased the number of Head Quarter employees from eighty to almost two hundred-fifty bringing in new managers, supervisors, etc. Another great challenge to overcome was integrating the new and old employees without losing the quality of work from the already...