Strategic Human Resource Management at AES Harvard Case Solution & Analysis

Strategic Human Resource Management at AES Case Study Solution

The case illustrates the human resource practices carried out at AES (Applied energy service).That offers the service of power and electricity distribution and production at various locations. Since, after its birth, the company has practiced decentralized structure of organizing and managing people and resources, without any sublime control over the employees. The company from the start, laid the foundation of organization by empowering people, by making them their own boss. This has resulted in great proactive attitude and decision making skills in the employees, making them responsible and accountable for their duties. Also, since there is no human resource department in the organization, the proper guidelines and boundaries of job description has not been resent, making employees work in different grounds and function. Also, AES emphasizes on its 4 shred value and includes the security and mental stability of employees working in AES, as a part of CSR captivity.However, the competition is rising in the industry, and so the footprint of the company. The human resource director has to make the decision of whether to devise an HR department, as it has to hire 25000 more people, or should he rely on the old organizational structure without human resource. The dilemma here is the sustainability of the culture, which might get effected by changing the organizational structure of the company.

Keywords:human resource planning, Empowerment, Decentralization, AES.


Applied Energy Service has been founded by Dennis and Roger, the two MBA graduates of Harvard Business University, set out to establish the power generation house that offers the power to the country.In order to offer the social role of making the life of people easy. Since, both partners have strong professional background working in different government sectors, they are well-aware of the pros and cons of long bureaucratic system that exists in Government companies.

Strategic Human Resource Management at AES Harvard Case Solution & Analysis

AES offers consulting, manufacturing and production facilities to energy sectors. With its long expansion plan, the company has successfully landed in china, USA,Argentina and currently Pakistan.Since, the mission statement of the company propose the emphasis on shared values and social responsibility, the company practices in a way that keeps a balance between betterment of the society and profitability maintenance.Since, the company started from a small scale and engraved the shared value of Fun, empowerment and ownership, it structured the organizational system as “decentralized system”.In which employees are offered the power to take the decision and remain their own boss. The approach has tremendously effected and enhanced the company’s profitability,with strong retention rate and control over turnover rate. Due, to the absence of Human resource department, the hiring and strategic planning is done by involvement of the key players in the particular department. Since, the core value of the company,is to empower and enlighten the employees. They look for someone who “fits” with the organizational culture.

In addition, the cultureis the main component of the AES organization.The management offers open, friendly, and Fun environment to the employees. By empowering them to decide the best technique and method, and also by involving them in key decision making. This reduces the organization issues, and hence has strengthened the organizational functions of AES. However, in the current years, the company has to hire additional 25000 employees, with the alignment for increased demand in the market.Which has made the AES management to rethink over its organizational structure and devise an action plan to sustain its value and culture, yet also secures the profitability and smooth functioning of the company.

Industry Analysis

AES operates in the energy sector. It offers the consultancy and production service to the energy and power sectors. Since, after the birth the company has faced tremendous and enormous growth in the market, probably in US, CANADA and other developing and under-developed countries. Infect, the growth has super success in developing nations, as compared to developed nations for power and energy. This has made the industry attractive, and hence have attracted multiple players in the market, making the market intense and competitive.


Core competence and competitive advantage

The company has a well-developed de centralizes organizational system, which enables it to develop innovative strategic techniques to reduce the cost, and hence offers it the competitive advantage through cost leadership. Since,the competition is rising in the market, it is important for Aes to reduce its cost of production, in order to improve the profitability and sustainability of the business in the competitive market.

The organizational structure of the company enables and empowers the employees, to identify and locate cost effective method and after receiving the bud, apply the process without any bureaucratic chain of command to pursue. Thus, leads to immediate implementation of the techniques, making the organization innovative and ready to change.This leads to the organization acceptable to change, and hence offers the competitive advantage to the company.In dealing with the turbulent situation,due to immediate change adaption.

In addition, in Aes, the employees are offered the ownership through offering the company share,along with the vast period of 5 years. This enables the employees to serve and perform the job as their own business.Also, the empowerment and freedom to speech motivated the employees to work and perform to highest level.Hence,improving productivity and reducing the cost of operation, making the company competitive in the market...............

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