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Organizing for Empowerment

AES CorporationA Global Energy Company

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Introduction

• AES Corporation• Founded in 1981 by Chairman Roger Sant and

CEO Dennis Bakke• 90 electricity plants in 13 countries• Employs 40,000 people

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Why Empowerment

• Empowerment is becoming popular among corporations

• One of the few management topics that has received much attention recently

• Execute important decisions without top down interference

• Will give you a broader perspective as a future manager

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Presented By:

• Nick Rosendal – Interviewer

• Courtney Gehring – AES Rep

• Chris Bezooyen – AES Rep

• Ulf Geerds – AES Rep

• Catherine Henderson – Critic

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Vision of the Company

• Create a different kind of company that “we” ourselves would like to work for

• Embodied the four principles of 1) Fairness 2) Integrity 3) Social responsibility4) Fun

• Engage peoples hearts, minds and souls

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What makes these experiences possible

• Designed to make sure power gets distributed throughout the organization

• Lack of a hierarchy and organize around small teams

• Structure and practices • hiring • compensation • information flow

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What makes these experiences possible

• Every person at AES is like a CEO

• Eliminate all groups of functional specialists

• Each team has social responsibility in terms in their area• operation • maintenance

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How does that CEO perspective get formed

• Job rotation

• Employees begin to know most aspects of our operation inside and out

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Does eliminatingspecialists hurt efficiency

• Process of learning and doing is what creates engagement

• Worth the trade off because people gain• sense of control • social responsibility

• People with arrive to the level of trust and dignity that you invest in them

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Does eliminating specialists hurt efficiency

• Involving people changes them forever even though it may not have a large effect on the company

• Once a team figures out how to do certain projects it is time to pass the job onto other teams

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Hiring Practices

• Look for people that are enthusiastic about our values

• Usually have lots of selection therefore:• Best cultural fit first• Expertise second

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Performance Evaluation

• Visit plants and listen to peoples concerns

• All employees fill out value surveys

• Read by top management and leaders• Gives a better sense of what is happening in

all plants• Make sure employees adhere to the principles

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Hourly vs. Wage

• Want all employees on salary but that is their choice

• Believe people contribute more than just time to the company

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Information Flow

• Information is widely circulated• Very few secrets

• The system works because people volunteer information – they share knowledge

• Information is needed for good decisions

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Accountability Enforced

• Consequences for• Poor performance• Violation of the second principle, Integrity

• Penalties vary• Loss of bonus• Demotions • Pay cuts

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Mistakes & Forgiveness

• Serious mistakes are punished financially

• Making mistakes is part of learning

• Forgiveness is required through fairness

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Role of a Leader in an Empowered Organization

• Four roles for leaders in AES• Advisers• Chief guardians of principles• Chief accountability officers• Chief encouragers

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Why Empower

• Companies must exist primarily to benefit society

• Reinvent capitalism around a sense of mission

• The point is improving the world

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Business Should Benefit Society

• Companies should handle the third principle, social responsibility, in an integrative way

• Build it into its values and practices

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Make Money

• Profits are a consequence of doing a good job

• Profits are not the central purpose

• Competitors stakeholders too

http://finance.google.com/finance?q=AESOctober 24, 2006

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Empowerment Applicable

• Possible in other Companies as well

• However• Empowerment also means more

accountability• Greatest problem is giving up power for the

higher management

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Challenges to go into the world

• Less than expected

• All four values exist all over the world

• Sometimes the Non-American employees get the concept faster than the American employees do

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What about Alliances

• AES does not work very well with other companies• Do not like to sacrifice four core values to be

compatible with other old hierarchy companies• On the other hand, new situation with Williams

companies seems to work fine but only on a contractual basis

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The Future

• They are worried that the company will stop living up to the values

• But, too many employees in the company believe in the values and will carry them on

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Conclusion

• Empowerment Through1) Fairness

2) Integrity

3) Social Responsibility

4) Fun

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Questions

• So what are the four principles that make empowerment possible?

• Any Questions!