Dennis_ Bakke, the CEO of AES, a company that develops, builds and operates electric power plants, sat in his office late in 1996 and thought about the question that wasperennially posed to him: could AES, soon to have some 25,000 people located literally all over the world following a recent purchase of power plants in Kazakhstan, continue to operate with virtually no staff _fimetions and, specifically, without any human resource staff anywhere in the corporation? The absence of centralized staff— or, for that matter, much staff at all — bad been one of the themes guiding the design and operation of the corporation since its founding. The company, in addition to having no personnel department, had no public relations, legal, environmental, or strategic planning departments. Its chief financial officer, Barry Sharp, saw his job not so much as ninning a centralized fin2nce function but rather as helping all the AES employees as they made important decisions about financing and investments in a very capital intensive business.
But the company was becoming much larger and -increasingly geographically dispersed. Perhaps these early decisions needed to be rethought Could what worked for so long continue to work as the corporation grew and operated increasingly on a global basis? Could the advantages of flexibility and having virtually every employee feel responsible for almost all aspects of the corporation's operations continue to outweigh the costs of an absence of specialization and the need to have people always learning new tasks and new things? Was this continuous teaming of new things really a disadvantage at all, or as Bakke thought, how one created a real "learning oraanization?" What Bakke recognized was that AES was different from most other corporations. How different should and could it remain? And if it remained different, how should it deal with the strains that growth and geographic differentiation would inevitably place on an organization that had always been manazed by a strong set of values and shared culture?
This case was prepared by Professor Jeffrey Pfeffer as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Support for this case was provided by the Human Resources Initiative of the Graduate School of Business.
1. Provide an executive summary that indicates your analysis of the key Strategic HR-related issues presented in the case concerning the AES Corporation (AES), as well as the highlights of your recommendations for moving forward relative to the Strategic HR practices of the organization (see question #8).
2. What evidences are there that AES has adopted an investment orientation towards its human resources (Mello Exhibit 1-6)?
3. What is the strategic mission of AES? How is the Process of Strategic Management (Mello Exhibit 3-1) evident at AES? Does AES employ primarily the Industrial Organization (I/O) model or the Resource-Based View (RBV) model of strategy formulation?
4. Does AES appear to understand and implement the "HR-Minded Equations" we have discussed in class? People" x (Material + Capital) = Results EQ > IQ Culture = Everything
5. Has AES adopted a strategic approach to HR (Mello Exhibit 4-5)? Who are the HR managers/practitioners at AES? Does AES demonstrate an understanding of the outcomes of adopting a strategic approach to HR (Mello Exhibit 4-10)?
6. Does AES manage its human resources in a manner consistent with an HR-minded Christian worldview as discussed in class (namely, that human resources are image-bearers, yet sinful 'jars of clay")? What specific evidences do you see to support your position here?
7. What is your overall analysis/assessment of AES staffing practices? Specifically, do AM' recruitment and selection procedures concern you at all from the perspective of EEO/AA compliance?
8. What is your overall assessment of AES' training and development, performance *management, and compensation practices? Are there any evidences that AES understands the critical interdependencies here (Mello Exhibit 9-6)?
9. Is AES, on the whole, a strategic "HiR-Minded" organization? What are your top 3 or recommendations relative to AES' strategic HR practices, processes, structures, and staffirlg to enable the firm's success story to continue? Can ABS continue to succeed without any fall-time HR professionals/staff? Be specific.
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