1 Organizing for Empowerment AES Corporation A Global Energy Company

2 Introduction AES Corporation Founded in 1981 by Chairman Roger Sant and CEO Dennis Bakke 90 electricity plants in 13 countries Employs 40,000 people

3 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

4 Presented By: Nick Rosendal – Interviewer Courtney Gehring – AES Rep Chris Bezooyen – AES Rep Ulf Geerds – AES Rep Catherine Henderson – Critic

5 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 responsibility 4)Fun Engage peoples hearts, minds and souls

6 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

7 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

8 How does that CEO perspective get formed Job rotation Employees begin to know most aspects of our operation inside and out

9 Does eliminating specialists 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

10 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

11 Hiring Practices Look for people that are enthusiastic about our values Usually have lots of selection therefore: Best cultural fit first Expertise second

12 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

13 Hourly vs. Wage Want all employees on salary but that is their choice Believe people contribute more than just time to the company

14 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

15 Accountability Enforced Consequences for Poor performance Violation of the second principle, Integrity Penalties vary Loss of bonus Demotions Pay cuts

16 Mistakes & Forgiveness Serious mistakes are punished financially Making mistakes is part of learning Forgiveness is required through fairness

17 Role of a Leader in an Empowered Organization Four roles for leaders in AES Advisers Chief guardians of principles Chief accountability officers Chief encouragers

18 Why Empower Companies must exist primarily to benefit society Reinvent capitalism around a sense of mission The point is improving the world

19 Business Should Benefit Society Companies should handle the third principle, social responsibility, in an integrative way Build it into its values and practices

20 Make Money Profits are a consequence of doing a good job Profits are not the central purpose Competitors stakeholders too October 24, 2006

21 Empowerment Applicable Possible in other Companies as well However Empowerment also means more accountability Greatest problem is giving up power for the higher management

22 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

23 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

24 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

25 Conclusion Empowerment Through 1)Fairness 2)Integrity 3)Social Responsibility 4)Fun

26 Questions So what are the four principles that make empowerment possible? Any Questions!