AES's advice process: no rules or approval chains — 40,000 employees decide

When Roger Sant and Dennis Bakke founded AES in 1981, they wanted a global electricity company where daily work itself was engaging — built on fairness, integrity, social responsibility and fun. Instead of a hierarchy that hoarded decisions, they designed one where every employee was expected to act like a mini-CEO.

A company with no approval chains: whoever is closest to a problem decides, after seeking advice from everyone it affects — bigger calls mean wider advice.

The mechanism was the advice process: the employee whose area was most affected, or who spotted the problem, proposed an action, sought advice from everyone affected or expert, then decided and owned the result. Bakke tried to limit himself, as CEO, to one significant decision a year. AES removed functional departments — there was no corporate marketing or human-resources division — organized work around small self-managed teams, and shared all information across the company.

By 1999 AES ran this way with about 40,000 employees, and at its peak the company reached roughly $8 billion in revenue with some 50,000 staff. Bakke reported that decisions made through the advice process were at least as good as those from conventional management — while thousands of decisions that once belonged to leaders spread across thousands of employees.

Dennis Bakke and Roger Sant founded AES in 1981 with an unusual ambition for an electricity company: they wanted people to have engaging experiences at work every day. That meant power could not sit with a small headquarters staff. AES grew without a conventional hierarchy, without approval chains, and even without functional departments — no corporate marketing division, no human-resources department — while employees organized themselves into small teams responsible for operations and maintenance.

The practice at the center of the model became known as the advice process, a term Bakke coined. Any employee could make any decision — from a plant repair to a large investment — as long as they first asked for advice from everyone affected and from people with relevant expertise. The bigger the decision, the wider the net: peers, other plants, the home office, even the board. After taking that advice, the decision maker acted and bore responsibility for the results. Bakke, as CEO, tried to restrict himself to one significant decision a year.

The experiment scaled: by 1999 the HBR interview with Sant and Bakke described all 40,000 AES employees as truly empowered, and Corporate Rebels later recorded peak revenue around $8 billion with roughly 50,000 employees. Bakke argued the advice process produced decisions at least as good as traditional management, and that it turned everyday work into accelerated, on-the-job education — every decision a real case study with consequences.

The person closest to a problem usually has the best information, and also lives with the consequences of the call.

Asking for advice is an act of humility that draws people in, so they become informed critics or cheerleaders rather than bystanders.

Removing approval chains and functional silos turned employees into well-rounded generalists instead of narrow role holders.

Open information made real delegation possible — a decision process is impotent if people lack the data to decide well.

Push the decision to the person closest to the problem, but pair freedom with a duty to seek advice and with open information — empowerment without shared values is just technique.

When Enron collapsed in 2001 and the energy industry's credit dried up, AES faced a liquidity crisis; under pressure from banks and investors it moved to centralize decision making. Bakke resigned in 2002, and Corporate Rebels' later assessment concluded that little of the progressive practice survived inside AES. He took the same advice process into Imagine Schools, which grew into one of the largest non-profit charter-school networks in the United States, and codified his philosophy in books including Joy at Work and The Decision Maker.