Aes Honeycomb Case Analysis Essay Example

new employees were neither carefully screened nor educated about values. They simply did not care about the corporate values. Most employees cited “good pay as their reason for liking their job”. Low shared values rates also can be seen from the shared values survey ([5], Exhibit 11). Therefore employees’ incentives did not match the corporate interests and led to harmful actions.

An example of how poorly the corporate values were promoted was an episode of a ground-breaking ceremony of AES’s donation to the town of Panama located next to Shady Point. When asked to elaborate on the purpose of the donation, instead of taking opportunity to communicate the corporate value of Social Responsibility and Community Involvement, the plant manager replied simply, “We’re trying to be a good neighbor. ” 2) Failure to communicate the corporate strategy to people who has authority.

Understanding and following corporate strategy is important to making a right decision. By deploying a honeycomb structure Shady Point empowered its employees to make important decisions including “not to encourage rotations across families” [5]. However the company did not communicate to the employees the corporate strategy. Unlike the Themes Plant practice, where people were visible and had extensive trainings during first month’s of their job, in Shady Point the plant manager “might not even meet the hire until he or she had been on the job for several month”.

It is obvious from this and the previous example that the manager did not understand the corporate strategy and importance of values, and did not deliver them to the employees. 3) Failure to build trust. Employees did not trust AES and did not know what to expect from

the company, as result “they falsified the samples because they feared for their jobs if they reported a violation” ([5], Exhibit 10). Also Shady Point values survey results ([5], Exhibit 11) shows low trust rates among the employees. The luck of trustworthy relationships led to misunderstanding of corporate policies, employers fear and the fraud. ) Luck of control. There were no tools implemented in Shady Point to control employees’ actions. Strict control of processes and assets is a crucial element of every organization, especially in areas related to public safety and corporate finance. Most organizations have at least two layers of controlling employees. First, they use cross-employee control in a form of a conveyer style organization or shifting jobs, like it was on The Thames Plant. Second, they perform internal audit. Neither form of employees’ control was deployed in Shady Point.

This, combined with too much authority given to employees, led to a problem. 3. What do you think AES should do to solve this problem? First of all, using the “Systems thinking” approach [1], they have to analyze the situation, understand the root cause of the problem and address the cause. It could be helpful to compare The Themes Plant to Shady Point and analyze which factors contributed to success of one plant and were missing in another. In my opinion, they should do the following to solve the problem: 1) Preserve core values.

Hire against values, perform values trainings, and set up appropriate metrics to measure people performance against values. In order to achieve success companies “build their firms upon a set of core capabilities and core values. These foundations provide focus and a strong

sense of direction which, in turn, become a platform for strategic innovation and change”[2]. 2) Educate decision makers. Make sure that every team “includes members with the relevant expertise, skills, and information to make decisions”[2]. 3) Implement control tools in the facility: * Shift employees between “families”.

This will reduce the risk of unethical behavior, because everyone’s work will be visible to others. According to Dr. Applegate, “decision making and control require intense collaboration, interaction, and real-time sharing of information across functional boundaries and organizational levels” [2]. It will also allow people to explore more type of jobs, find a better fit, exchange experience and share best practices. * Set up internal audit by experts in the area. After all, public takes safety issues extremely seriously and government regulations may change any time.

It would be helpful to monitor safety metrics closely and educate the employees, since Safety is crucial to AES’s two main domains in Organizational Environment – Government (regulations), and Financial Resources (Public). (See [4], Exhibit 1). 4) Engage people into face-to-face communications. “Human moment at work” [3] will help to build trust and set up open relationships between people and organization. Avoid situations when the manager “might not even meet the hire until he or she had been on the job for several month”.

Bibliography [1] Strategies for Systems thinking, by Peter Senge [2] Designing and Managing the Information Age Organization, by Professor Lynda M. Applegate, Harvard Business School, HBS 9-196-003 [3] The Human Moment at work, by Edward M. Hallowell, HBR 99104 [4] Note on organization structure, HBR 9-491-083 [5] AES Honeycomb, LYNN SHARP PAINE, HBS 9-395-132 Exhibit 1. Schematic of AES’s honeycomb organizational

structure Groups of “families” of 5-10 employees each located around the world. Authority is granted to the families.