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Author Chetri, Prerna, author

Title AIG's bonus payments controversy and its decision to adopt the "forced ranking" system / written by Prerna Chetri
Published Hyderabad, Andhra Pradesh : IBS Center for Management Research, [2011]
copyright 2011
Online access available from:
Human Resource Management Online    View Resource Record  

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Description 1 online resource (14 pages) : tables
Series Human resource management online (text)
Summary This case is about American International Group, Inc.'s (AIG) decision to revamp its compensation system in early 2010 and to adopt a 'Forced ranking' system that would influence incentive payments. In 2009, the leading insurance corporation in the US faced a severe backlash from taxpayers and the media after it became public that the company had made bonus payments to the tune of US$1 billion. Such a generous payout, coming as it did shortly after a total bailout of US$173.3 billion from the government which rescued AIG from complete bankruptcy, led to this backlash. Though AIG attributed the enormous bonus distribution to the compensation system followed at AIG and the need to attract and retain its human capital, critics were not convinced, and this forced the company to revamp its compensation system. As AIG opted for the 'Forced ranking' system, it once again triggered a debate on the appropriateness of relative performance rating systems. Industry observers also wondered whether the company would be able to handle the pay related challenges and whether it would be able to implement the new incentive system that sought to strike the right balance between rewarding its top performers and keeping the government happy
Notes Case code: HROB143
Title from resource description page (viewed May 26, 2015)
Bibliography Includes bibliographical references (pages 13-14)
Notes In English
Subject American International Group, Inc. -- Case studies.
Bonuses (Employee fringe benefits) -- Case studies.
Employees -- Rating of -- Case studies.
Genre/Form Case studies.
Form Electronic book