The focus of this case assignment is to determine the usefulness of identifying organizations as socio-technical systems. Organizations labeled as socio-technical systems establish the framework for evaluating the social and technical elements of an organization and determines their level of integration. As with any business organization, the social and technological elements must be balanced and tailored to work together to sustain effective operations. The AES Corporation serves as an excellent example of a socio-technical system that drifted out of balance. Detailed below are the social and technical elements that impacted the rise, fall, and subsequent solutions undertaken by the AES Corporation.
The AES Corporation is a global power company that experienced extreme organizational changes in the past few years. Founded in 1981, AES made its entrance into the power market with its Texas plant. Over the next 20 years, AES went on to establish international markets in the United Kingdom, Argentina, Pakistan, Hungary, Brazil, West Africa, and Central America.1
Unprecedented growth rates afforded the company the opportunity to pioneer its efforts in new and emerging markets. As business revenues escalated throughout the 1990’s AES’s leadership began to lose control and was forced to implement drastic financial and organizational restructuring to save the organization.
Since its inception, AES was known for utilizing a decentralized management approach. Relatively flat organizational structure removed many of the supervisory tiers associated with contemporary organizational structures. This pushed decision making to the lowest possible managerial level, allowing lower level management to enact change without interfe ...