American Insurance Group: Organizational Team Model

Subject: Employee Management
Pages: 6
Words: 1711
Reading time:
7 min
Study level: PhD

Introduction

One of the major challenges faced by American International Group (AIG), an insurance multinational corporation, is the need to unite its diverse employees to effectively work together to achieve its goals. In most cases, the management of AIG struggles to foster working relationships between employees who have different national and cultural setups (Haas, 2010). Although the management has put in place a number of strategies to assist the company to achieve this goal, its success is yet to be realized. The failure is evident from the difficulties that AIG employees encounter when they are assigned to work in foreign countries. However, this problem can be solved by developing an effective organizational team model (Liang, Rajan, & Ray, 2006).

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It is not only difficult for AIG employees to catch up when they are assigned to foreign countries, but such assignments are also expensive for the corporation as it is forced to spend large sums of money in trying to help them adapt and settle in the foreign countries. The difficulty that the employees encounter when they are assigned to work in foreign countries is caused by orientation differences, which result in international conflicts and make it difficult to achieve the corporation’s goals (Haas, 2010).

In spite of knowing that establishing an organizational team model is the most effective solution to the employees’ problem at AIG, there have been no attempts by the company’s management to incorporate the strategy into its management system. The models that have been applied by the management are less effective and as a result, the problem is still negatively affecting AIG’s business (Liang, Rajan, & Ray, 2006).

This research paper, by developing an effective organizational team model for AIG, addresses the problems that its employees face when they are assigned to work in foreign countries. The paper also addresses the team members’ characteristics and issues that affect them at the different stages of the model.

Methodology

The research study that is featured in this paper is purely qualitative. It was aimed at obtaining information to be used in the establishment of an organizational team model for AIG, a multinational insurance corporation that is based in the United States. The method of data collection employed in the research consisted of a literature review. The materials used in the review were peer reviewed journal articles, which are less than ten years old. The decision to use the articles that are less than a decade old was facilitated by the urge to obtain information that is recent, reliable and relevant to the topic of study.

Results

American International Group (AIG)

American International Group (AIG) is a multinational corporation that offers insurance and financial services in approximately 130 countries. The international insurance company offers its services to commercial sectors, institutions, and individual customers in the countries where its subsidiaries operate (Harrington, 2009). AIG subsidiary companies, which comprise SunAmerica Financial Group, Chartis, and Aircraft Leasing, provide life insurance products and other financial services such as retirement benefits (Taub, 2011).

To expand its business in more regions in the globe, AIG embarked on extensive expansion programs between February 2011 and December 2012. For instance, the multinational corporation expanded its operations in Japan by setting up a number of subsidiary companies in the country. Some of the companies set up in Japan in 2011 include Nan Shan Life Insurance Company Limited, AIG Edison Life Insurance Company Limited, and AIG Star Life Insurance Company Limited. For it to expand its businesses farther, AIG, through its wings of ILFC and AIG Life and Retirement, acquired AeroTurbine and Woodbury Financial Services; the two acquisitions were completed on 2011 and 2012 respectively (Taub, 2011).

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The Aspect of Teamwork

The proposed organizational team model for AIG is based on two main aspects: behavior and perception of behavior. The first aspect, behavior, offers an effective basis for developing the model. Firstly, behavior is measurable and easily assessable since it is an observable characteristic. Through behavior, one can effectively assess employees’ and clients’ intentions, thoughts, feelings, attitudes and values. Secondly, behavior can be used in communication; for that reason, it is a great communication tool (Zellmer-Bruhn & Gibson, 2006).

The second element that determines the appropriateness of an organizational team model is the perception of behavior. People, in many occasions, evaluate others through observable behaviors that they can easily evaluate. Consequently, appropriateness of behavior refers to a quality that people can assign to the behavior they observe on their colleagues. In the perspective of a multinational corporation, appropriateness of behavior refers to what employees from different nationals believe in, in relation to what they observe in staff from other regions (Wing, 2005).

Several research studies use a cultural setup of an observer in a team to define the behavioral norms that are exhibited in a team. The study also uses the cultural orientation to explain the differences in the behavior of the employees of AIG. The key factor as regards the model is the presence of employees with different national and cultural backgrounds in AIG. The employees who work in AIG come from different countries. This implies that they may find it difficult to portray the cultural characteristics of the customers they are required to serve in a particular country (Thompson & Keating, 2004).

AIG and the Proposed Model

The first major component in the proposed model is how employee practices should be evaluated and rewarded. AIG is known to have effective approaches to the way it manages host country subsidiaries; it employs efficient employees who hail from the hosting nations in each of them. However, AIG may choose to adopt the geocentric approach (Liles & Mustian, 2004). If it was to use the approach, AIG would be forced to carry out staffing in the parent country in the same way it does in its subsidiaries. This implies that it would not consider nationality as a factor when staffing its headquarters as well as its subsidiaries. The main advantage of the geocentric approach is that it may enhance cross-national interactions throughout the corporation (Sisaye, 2005).

AIG can also decide to use the polycentric approach in employing people to work in the United States and other subsidiary countries. In this approach, only the nationals of the United States can be allowed to work in the parent company; the nationals in the subsidiary countries are then allowed to work in their own nations. However, this approach is not recommended as it hinders exchange of valuable information among employees from different national and cultural backgrounds. The approach could hinder behavioral and social development among the employees of AIG (Sisaye, 2005).

The second element in the proposed model is foreign investment. A multinational corporation is determined by its ability to employ workers from different national backgrounds. The workers are also expected to have international interactions among them to exchange information and other resources with each other. AIG can achieve this by investing heavily in foreign operations. As the amount of investment in foreign business increases, the vigor with which employees of different national backgrounds hold cross-national interactions also increases (Rajan & Wulf, 2006).

The cross-national interactions provide a platform where employees and clients can exchange their cultural values. This may give the employees an opportunity to understand the cultural setups and values of the foreign countries in which they are posted. It is has been proven that behavioral norms and behavior in general are influenced by cultural setups. Consequently, the employees in foreign countries are likely to learn from the manners and norms that they observe in their colleagues (Liles & Mustian, 2004).

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The last element in the proposed model is integration; multinational corporations are able to integrate the activities of their subsidiary firms into the parent company. There are different levels of integration, which AIG can choose. However, the level chosen should reflect the organization’s strategic needs for it to realize an optimal exchange of knowledge and to be highly efficient in all the nations it serves. The most effective level for AIG is the one in which the organization’s team depends on; this group should coordinate its activities with other teams from different countries. If this level is to be adopted in AIG, then the cross-national interactions should be given first priority (Lin, Standing, & Liu, 2008).

Discussion

This research paper provides a lot of information on the organizational team model beyond what other studies have illustrated. The paper defines the appropriateness in the model and illustrates the most essential elements that such a model should have. The research, by conducting an elaborate literature review, constructs a comprehensive organizational team model for AIG, which is a multinational insurance corporation. It is appropriate to note that these elements are the factors that make an organizational team model look real and practical (Mellahi & Collings, 2010).

Secondly, the research relates to the social values and employee performance at AIG. It is evident that the social values that an employee develops assist him or her to understand the ideals of his clients in the foreign countries where he/she is assigned to work. Social values explain how team members can imitate the behaviors of their colleagues to their advantage. These values specifically assist in developing a good working relationship between the employees and customers (Luo & Shenkar, 2006).

Lastly, the study brings to light the relationship between cross-cultural interactions, employee performance, and the connections within AIG. Unlike other studies, which only focus on the comparison of cross-cultural interactions across nations, this research explains the importance of those interactions in setting up a multinational corporation. The research proposes that cross-cultural interactions should be used to promote a good working relationship among AIG’s employees (Wing, 2005).

Conclusion

This research paper develops an effective organization team model for the American International Group (AIG). AIG is a multinational corporation, whose headquarters is in the United States; it has more than 130 subsidiary companies and it offers mainly insurance and financial services to its clients. The organizational team model developed in this paper is intended to enable AIG to enhance its employees’ working relationship, especially those who work in foreign countries. The proposed model places more attention on, among other factors, cross-cultural interactions, social factors, foreign investments and integration. This paper recommends full incorporation of the proposed model into AIG’s management system.

References

Haas, M. R. (2010). The double-edged swords of autonomy and external knowledge: Analyzing team effectiveness in a multinational organization. Academy of Management Journal, 53(5), 989-1008.

Harrington, S. E. (2009). The financial crisis, system risk and the future of insurance regulation. Journal of Risk and Insurance 76(4), 785-819.

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Liang, P. J., Rajan, M. V., & Ray, K. (2006). Optimal team size and monitoring in organizations. The Accounting Review, 83(3), 789-822.

Liles, R. T., & Mustian, D. (2004). Core competencies: A systems approach for training and organizational development in extension. The Journal of Agricultural Education and Extension, 10(2), 77-82.

Lin, C., Standing, C., & Liu, Y. (2008). A model to develop effective virtual teams. Decision Support Systems, 45(4), 1031-1045.

Luo, Y., & Shenkar, O. (2006). The multinational corporation as a multilingual community: Language and organization in a global context. Journal of International Business Studies, 37(1), 321-339.

Mellahi, K., & Collings, D. G. (2010). The barriers to effective global talent management: The example of corporate elites in MNEs. Journal of World Business, 45(2), 143- 149.

Rajan, R., & Wulf, J. (2006). The flattening firm: Evidence on the changing nature of firm hierarchies from panel data. Review of Economics and Statistics, 88(1), 759-773.

Sisaye, S. (2005). Teams and management control systems: A synthesis of three organizational development approaches. Leadership and Organizational Development Journal, 26(4), 172-185.

Taub, J. S. (2011). American International Group (AIG). Corporate Governance 1(1), 235-252.

Thompson, K., & Keating, M. (2004). An empirical study of executive nationality staffing practices in foreign-owned MNC subsidiaries in Ireland. Thunderbird International Business Review, 4(6), 771-797.

Wing, L. S. (2005). Leadership in high-performance teams: A model for superior team performance. Team Performance Management, 11(2), 4-11.

Zellmer-Bruhn, M., & Gibson, C. (2006). Multinational organization context: Implications for team learning and performance. Journal of Academy of Management, 49(3), 501-528.