There are many factors that lead to an organization’s success, but no matter the company’s strengths and weaknesses, it is necessary for it to build a framework that will advance long-term value creation. An extensive amount of literature indicates that compensation packages, organizational transparency, and managerial leadership and ethics are three factors which greatly influence the long-term success of any business enterprise. One such corporation that has failed to long-term value creation by neglecting these three factors is American International Group, Inc. (AIG). This article will investigate how AIG’s current management structure and value system is flawed and the impact of this flawed system on AIG’s long-term financial and productive health. If AIG were to implement a Value Driven Management (VDM) strategy, the company will experience developments in consumer trust, employee loyalty, managerial leadership, organizational ethics, long-term profitability, market share growth, and societal confidence that AIG is a valuable member of society. In the end, AIG’s past and current management structure and values are counterproductive for its future profitability, as displayed by AIG’s recent bailout by the U.S. federal government and for AIG to succeed, it needs to enforce comprehensive change.
Introduction
It is a well established fact that money is valued by everyone in society because money is what permits members throughout society to purchase and sell goods and services and conduct trade. Nevertheless, money can have perverse incentives and cause people to act illogical, reckless, or even criminal, especially within a business organization (Mitchell & Mickel, 1999). This is no more evident than in recent years with the 2007–09 global financial crisis, and AIG was at the forefront of this financial crisis and in need of U.S. government bailouts (Sjostrom, Jr., 2009). So how does a multi-billion dollar international corporation
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