Organizational behavior is the study and application of knowledge about how people, individuals, and groups act in organizations. It does this by interpreting people organization relationships in terms of the whole person, whole group, whole organization, and whole social system. The major purpose of this is to build better relationships by achieving human objectives, organizational objectives and social objectives. In this paper, am going to elaborate on how the organizational behavior of all the stakeholders has affected the management of American international Group.
History of AIG
AIG history dates back to 1919, when Cornelius Vander Starr established an insurance agency in Shangai china. He was the first Westerner in here to sell insurance to the Chinese, which he continued to do until AIG left China in early 1949 and moved to its current headquarter home, New York City. In 1962 Starr gave management of the company's U.S lagging U.S holdings to Maurice R. Greenberg, who shifted its focus from personal insurance to high margin corporate coverage. Beginning 2005, it was found in a series of fraud investigations which led to Greenberge being ousted amid an accounting scandal in February 2005. He was succeeded by Martin J. Sullivan who later resigned on June 15, 2008 after disclosure of financial losses and subsequent falling in stock price. Willumstad was also forced by the US government to step down and was replaced by Edward M. Liddy on September 17, 2008. (Shelp R, 2009)
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The working environment at AIG is so negative that the supervisors don't even look the staff in the eye. The motto at the company is work more with less sacrifice. It has been said that when you visit the offices you only meet a bunch of clueless people running around and responding to the latest government ruling. And after they work to the point of exhaustion, they are forced to go even more. This is as close to a sweatshop as it gets. No one could ever produce good results in such an environment however good they are. The management at AIG office is constantly going in meetings together, managers gathering files and sneaking them to HR who is constantly on the floor with his pad in meetings with mangers. Such scenarios instill panic into the workers since they feel under pressure and fear losing their jobs at any time.
Rumors of people being sucked are out every day. How people lick this information can only be directed at poor leadership skills and dishonesty among the employees who snitch one another to the supervisors. How are people supposed to work in such environment? The best thing to do at such a point is to set an investigation into who leaks out such information amongst the supervisors and punish them.
Problems within AIG
Failure in Leadership within AIG.
The major problem within AIG has been accounting fraud especially as from 2005, due to poor leadership. The company was fined by the New York Attorney General a total of $1.6 billion because of the criminal charges against some of its executives. This shows that most the executives are out to fatten their pockets at the expense of other stakeholders. This was also witnessed in March 2009 when the company announced that they were paying out$165 million in executive bonuses. President Obama who voted for the companies bailout as a senator was angered by such plans and even mentioned that it was hard to understand how derivative traders at AIG warrant any bonuses, much less $165 million in extra pay at the expense of the taxpayer who keep the company afloat. Most politicians on both sides reacted with outrage to the planned bailouts, for instance Senator Dick Durbin said this was ridiculous and reminded the executives that the only reason they have a job is the taxpayers. (Keen P, et al 1997)
The blunder of leadership in AIG showed how selfish and inconsiderate they were to an extent that they had the courage to even demand bonuses from the backs of taxpayers who keep the company afloat. There has also been breech of performance values in AIG when the executives wanted to cash in so much money and yet the kind of work they did does not deserve any applauding. In any case disciplinary action should be taken against them. At one point finger pointing rose to a high level that president Barack Obama had to step in to assume the blame that was rightfully on the shoulders of the company leaders.
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Numerous problems have also been experienced credit card holders. A good example is Jerry of Shelton who had an auto policy with AIG the previous two years that he had paid for in full. He then received a collection notice (2 years) later) from Vital recovery services, Inc. for 54 because they claimed they had to insure him for 30 days after he had canceled. This is not proper because it's like they force insurance on him after he has canceled. He however later contacted the commissioner of the state of Connecticut Insurance and was informed that this was an illegal practice. This is a clear act of blackmail which is in any circumstance illegal. These shows how unethical the employees of the company can be which translate to bad blood between the taxpayer and the company. It's such cases that have no doubt led the destabilization of such a big company.
Finally, the company's reputation was also dented through the lack of integrity shown by the leaders. If they were wise enough and trustworthy the systems of checks and balances would have operated effectively and prevented the companies' decline. Most people have lost trust in these leaders. Building and maintaining the trust of the people you lead should be an ongoing task of leadership. Not only must you try to create trust between you and your followers, effective leadership also requires that you build trust among your followers. Even if they trust you, you won't really be able to move them towards desired organizational goals unless they trust each other. (Salacuse W, 2006)
Changing of the company name may be one of the ways to try to improve its image. AIG brand is so badly damaged by the companies huge losses because of the taxpayer bailout and the constant fighting with its long term CEO that the use of its subsidiary names to improve product sales may show the AIG board and management that the company needs a new name to improve its standing with consumers and the companies it does business with. The mention of the name AIG recaptures bad memories by most of the taxpayers and therefore most people would try to avoid being associated with any product or any form of business related to the company. Changing of the name will give the company a difference face altogether although the inside may remain one and the same. The psychological nature of human beings however will make them take it as a different company. (Hoover's 2008)
The company should change the way it operates and cut on the expenses. The operating cost of the company is also so high. It therefore calls for comprehensive review of its expense structure to significantly reduce operating cost. Restructuring will also improve corporate governance and transparency to maximize its value so that when the world economy improves, potential investors will consider AIG as their first priority. This will defiantly boost the company's working capital.(Gilson S, 2001)
Change in Employer associations and industrial relations should change.
The company should encourage workers to engage in more innovative, constructive bargaining to reduce the disturbingly wide gulf between those employers using enterprise bargaining to achieve meaningful, innovative, lasting change and the very many who were seeking to cut costs without innovation. (Sheldon M,1999) in his book , "employer association and industrial relations" says , to stem the bad working relation, members need to rebuild a working environment based on trust, security and employee involvement in some of the major issues that affect the employees either directly or indirectly.
As AIG has illustrated, no company, however big or popular it may be can achieve its objects unless there is proper understanding and good will amongst the employees and their bosses. Here should always be proper relationship not only between leaders and followers but also amongst the followers themselves.