netrashetty
Netra Shetty
Organisational Structure of American International Group : American International Group, Inc. (AIG) (NYSE: AIG) is an American insurance corporation. Its corporate headquarters are located in the American International Building in New York City. The British headquarters office is on Fenchurch Street in London, continental Europe operations are based in La Défense, Paris, and its Asian headquarters office is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was once the 18th-largest public company in the world. It was listed on the Dow Jones Industrial Average from April 8, 2004 to September 22, 2008.
AIG suffered from a liquidity crisis when its credit ratings were downgraded below "AA" levels in September 2008. The United States Federal Reserve Bank on September 16, 2008 created an $85 billion credit facility to enable the company to meet increased collateral obligations consequent to the credit rating downgrade, in exchange for the issuance of a stock warrant to the Federal Reserve Bank for 79.9% of the equity of AIG. The Federal Reserve Bank and the United States Treasury by May 2009 had increased the potential financial support to AIG, with the support of an investment of as much as $70 billion, a $60 billion credit line and $52.5 billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182.5 billion.[3][4] AIG subsequently sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets.
President
Daniel Dror
Director
Robert Derrick
Director
Thomas Craft
Director
Charles Zeller
Director
Scott Wolinsky
2
Director
Steven Plumb
CFO
Sherry Couturier
Secretary
RLR
Functional Structures
Functional Structures create a high degree of stability and efficiency within an organization, but this structure type has its disadvantages, as well.
Figure 7: The Functional Organization Structure 9
The Functional Structure is by far the most popular organizational structure in the business world — probably 65% to 75% of companies use the Functional Structure, because it’s basic and it makes sense. The Functional Structure is how most organizations align themselves into various departments (for example, Production Department, Sales Department, R&D, Accounting, et cetera). Within the Functional Structure, people of similar skill sets are grouped together and managed by somebody who presumably knows a great deal about those skill sets. But what are the advantages and disadvantages of the Functional Structure?
Advantages and Disadvantages of The Functional Approach
First of all, the Functional Structure follows the Centralized Decision Making model, such that decision making in the Functional Structure occurs at the top. This can be advantageous in the sense that there is more upper management control in the organization. It can also help individuals in their career paths, inasmuch as motivated employees move upward within the organization to assume decision-making positions. For example, you come in from college, join the Accounting Department as a Junior Accountant, move up to Accountant, and then move up to Senior Accountant — it’s a very well-defined career path.
Functional Structures foster stability and efficiency. Everybody knows what his job is, and as a group they all use similar processes, so it’s a very effective way of operating. When you’re working with this type of structure, you can also take advantage of economies of scale.
Of course, the Functional Structure has its disadvantages, as well. Perhaps the most critical disadvantage is that of poor communication and conflict between departments. A great deal of literature on Functional Structure is focused on the effect of what we call Siloing. Siloing is when an organization has very thick walls, so that the various departments are entirely isolated from one another, and members of
Organizational Structure:
A Critical Factor for Organizational Effectiveness and Employee Satisfaction 11
those departments don’t think in terms of company-wide teamwork. They only attend the business of their specific department.
Communication and collaboration between the departments is difficult, at best, and this is not a good organizational situation. Also, customers can become frustrated by the lack of responsiveness from organizations that are functionally structured — the scenario of customer complaints “passed off” from one department to another is familiar to most of us.
Another disadvantage of the Functional Structure is that employees tend to identify themselves with their respective departments but not so much with the organization as a whole. Although the Functional Structure is the most popular and pervasive in the business world, companies should understand that the siloing effect is potentially detrimental to individual employees, departments, and the organization as a whole.10
The Horizontal Dimension of Organizational Structure
Divisional Structures
Divisional Structures are concerned with placing groups of people with similar abilities where they are needed all across the organization.
The other dimension of an organization, the one called the Horizontal Dimension, basically addresses the division and assignment of tasks and functions across various departments within the organization. Herein we examine the second of the Organizational Structure types, the Divisional Structure.
AIG suffered from a liquidity crisis when its credit ratings were downgraded below "AA" levels in September 2008. The United States Federal Reserve Bank on September 16, 2008 created an $85 billion credit facility to enable the company to meet increased collateral obligations consequent to the credit rating downgrade, in exchange for the issuance of a stock warrant to the Federal Reserve Bank for 79.9% of the equity of AIG. The Federal Reserve Bank and the United States Treasury by May 2009 had increased the potential financial support to AIG, with the support of an investment of as much as $70 billion, a $60 billion credit line and $52.5 billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182.5 billion.[3][4] AIG subsequently sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets.
President
Daniel Dror
Director
Robert Derrick
Director
Thomas Craft
Director
Charles Zeller
Director
Scott Wolinsky
2
Director
Steven Plumb
CFO
Sherry Couturier
Secretary
RLR
Functional Structures
Functional Structures create a high degree of stability and efficiency within an organization, but this structure type has its disadvantages, as well.
Figure 7: The Functional Organization Structure 9
The Functional Structure is by far the most popular organizational structure in the business world — probably 65% to 75% of companies use the Functional Structure, because it’s basic and it makes sense. The Functional Structure is how most organizations align themselves into various departments (for example, Production Department, Sales Department, R&D, Accounting, et cetera). Within the Functional Structure, people of similar skill sets are grouped together and managed by somebody who presumably knows a great deal about those skill sets. But what are the advantages and disadvantages of the Functional Structure?
Advantages and Disadvantages of The Functional Approach
First of all, the Functional Structure follows the Centralized Decision Making model, such that decision making in the Functional Structure occurs at the top. This can be advantageous in the sense that there is more upper management control in the organization. It can also help individuals in their career paths, inasmuch as motivated employees move upward within the organization to assume decision-making positions. For example, you come in from college, join the Accounting Department as a Junior Accountant, move up to Accountant, and then move up to Senior Accountant — it’s a very well-defined career path.
Functional Structures foster stability and efficiency. Everybody knows what his job is, and as a group they all use similar processes, so it’s a very effective way of operating. When you’re working with this type of structure, you can also take advantage of economies of scale.
Of course, the Functional Structure has its disadvantages, as well. Perhaps the most critical disadvantage is that of poor communication and conflict between departments. A great deal of literature on Functional Structure is focused on the effect of what we call Siloing. Siloing is when an organization has very thick walls, so that the various departments are entirely isolated from one another, and members of
Organizational Structure:
A Critical Factor for Organizational Effectiveness and Employee Satisfaction 11
those departments don’t think in terms of company-wide teamwork. They only attend the business of their specific department.
Communication and collaboration between the departments is difficult, at best, and this is not a good organizational situation. Also, customers can become frustrated by the lack of responsiveness from organizations that are functionally structured — the scenario of customer complaints “passed off” from one department to another is familiar to most of us.
Another disadvantage of the Functional Structure is that employees tend to identify themselves with their respective departments but not so much with the organization as a whole. Although the Functional Structure is the most popular and pervasive in the business world, companies should understand that the siloing effect is potentially detrimental to individual employees, departments, and the organization as a whole.10
The Horizontal Dimension of Organizational Structure
Divisional Structures
Divisional Structures are concerned with placing groups of people with similar abilities where they are needed all across the organization.
The other dimension of an organization, the one called the Horizontal Dimension, basically addresses the division and assignment of tasks and functions across various departments within the organization. Herein we examine the second of the Organizational Structure types, the Divisional Structure.
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