Indeed, authority tended to be given to people who did not have the necessary work hours behind them, and this is where the company's lack of centralized management created a problem. The loose management structure of the company then played a central role in its lack of accountability and sound decision making, and the company lost $3.51 billion, with a record low in stock prices and looming bankruptcy as a reward for this.

Although the initial organizational structure allowed the company's rapid growth, it was therefore time for change, especially in the areas of discipline and accountability, as well as in the management structure. For this reason, a larger number of managers were employed at the upper level of the company, and a sense of responsibility were included with fun as one of the company's core values.

3) the financial situation of AES made it obvious that restructuring was necessary. The loose, decentralized model worked when there were only a couple of thousand employees, and it was easy to track and eliminate mistakes and potentially harmful decisions. The company however outgrew the ability of its few managers to handle the responsibility of so many employees. On a human resource level, the restructuring was therefore necessary in order to regain control of employees who were used to working independently; a paradigm that some were tempted to abuse.

Restructuring was also necessary in terms of finance. The company for...

AES did this by selling more than $600 of its assets. This helped to increase cash reserves. It replaced high-priced debts by selling $1.8 billion of its corporate notes. In this way, AES was able to extend the date at which their debt matures in order to give it more time for the restructuring process. In addition, the company has written down billions of dollars in investments in its worldwide subsidiaries, which particularly extends to Latin America. These actions all served to keep the company away from the danger of bankruptcy.
In terms of management, the company's headquarters was expanded to 200-25o employees. Considered decisions were made in terms of selecting people for top management positions in areas such as business performance, information technology, human resources, internal audit, risk management, analysis and planning, global sourcing, and controlling. These positions were awarded mainly to applicants from outside the company, although existing managers were also chosen for top management positions. This management restructuring process, although unpleasant, gave the company the core strength it needed to survive.

Sources

AES Corporation. 2007. http://www.aes-corp.com/

New York Times. AES Corporation News. 2007. http://topics.nytimes.com/top/news/business/companies/aes_corporation/index.html