AIG Case Study
What types of work behaviors did AIG intend to encourage through its retention bonus plan?
AIG was attempting to encourage efficiency. Because of failures in its Financial Products unit, it intended to shut this area of the company down. Arguably, workers within the unit would only work in a proactive manner if they received bonuses to 'work themselves out of a job.' However, there was no clear relationship between performance and pay: even during the height of the toxic real estate debacle, employees were still given bonuses.
Using the model of the individual-organizational exchange relationship, explain the relationship that employees of AIG's Financial Products unit believed they had with the company. How was this exchange relationship violated?
Employees at the company believed that if they performed the actions they were bidden to perform, they would be rewarded. Under the exchange model, workers are paid for performing work and meeting goals, not for upholding ethical ideals. However, the actions of the Financial Products unit were such that they nearly brought down the company (and much of the world economy)...
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Jet again this is one of the fundamental lessons of ethics, and that is when the balance of advantage leans too far to one side, unethical advantage occurs (Josephson, 2010). This was a tough lesson to learn for AIG as it was the catalyst of salary limits on the entire investment and financial services industry. Conclusion AIG shows what happens when a company loses track of their core business of service
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