Lamya Nur Zahidah I 29110406

Knowlede Management and Innovation Summary of 2nd Case : Human Resources at The AES Corporation

Human Resources at the AES Corporation: The Case of the Missing Department HR
AES (Applied Energy Services) is a company that develops, builds, and operates electric power plants. The company began operating its first power plant in Houston in 1986 and went public as AES in 1991. AES vision is to be a global power company. AES mission is to supply electricity to customers world-wide in a socially responsible way. By the end of 1995, AES had sold its product in the United States, England, Northern Ireland, Argentina, China ad had plant in Pakistan. Some plants were wholly owned by AES and others were owned under various joint venture arrangements. AES is a company which is focused on developing human resource competencies compared to earnings growth. AES primary goal is to continue its success to meet the needs of society which can achieved by having the impressive HR (human resources)-minded culture that all their employees perform. This is reflected in its core values which is consist of integrity, fairness, social responsibility, and fun. These values had continuously implemented in the form of various policies and practices that oriented on principles of decentralization and empowerment. Since there were not any HR department in AES and company's refusal to use the headhunter services, most human resource programs ranging from hiring, staffing, training and development, employment security are managed independently by employees of the company. For example, in the hiring process, people volunteered to look at resumes, make a telephone interview, and arrange one-on-one interview and also group interview. The company had provided the guideline for each hiring step. Interviewing was done by a cross section of all of the levels, not just the plant manager or superintendents. In the compensation and benefits process, pay was determined by looking at what others were being paid, both inside and outside company. The company involved employees determine their own salary based on individual performance review. The corporate culture and organizing principle came to be called honeycomb , which captured the idea of relatively small, flexible, interrelated teams of people working on projects and activities and learning a lot in the process. People were encouraged to simply use their discretion, good judgment and should try some new activities. Most financial decisions were made by AES project teams comprised largely of people with no formal training in finance. AES had both knowledge and responsibility as its significant competitive advantage. The organizing principle of decentralization and delegation was taken very seriously throughout AES, not just within the plants. To assess the effectiveness of the company's performance, each year AES administered a 60 to 70 item questionnaire to all employees that assessed their perception of AES and how well they thought the company was living up to its value. Although eschewing the pursuits of profits as the primary objective of the company, the company was nonetheless very financial successful. The company enjoyed a 105 percent growth in revenues between 1991 and 1995. During that period, its earnings per share grew 113 percent while its total assets grew almost 70 percent and its shareholders equity grew 289 percent.