Ge’s Two-Decade Transformation: Jack Welch’s Leadership

1329 Words Mar 17th, 2012 6 Pages
Before Jack Welch became the CEO of General Electric (GE), the business was carefully managed by highly complex with bureaucratic structure under the leading of prior CEO, Reg Jones. There were massive network of 46 divisions, 190 departments, 10 groups, 43 SBUs and each one developed a strategic plan to be reviewed by CEO. However, Reg Jones was unable to keep up with the reviewing and approving these massive volumes of the 43 strategic plans. After Jones retired, Jack Welch became CEO in 1981.
How difficult a challenge did Welch face in 1981? How effectively did he take charge? In 1981, Welch became CEO of GE; he was facing with the economic crisis. The U.S. economy was in recession, there were high interest rates, strong dollar, and
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While the new cultural initiative and the global pushed were implementing, Welch was considering to realign the skill sets and mindsets of the employees. He started by create environment in which people could be their best, changing a compensation structure, rewarded best employees with company stock and options. Besides, he invested heavily in improving Crotonville management development facility in order to developed generation of leaders aligned with GE’s new vision and cultural norms. Moreover, the 360° feedback process was introduced. It was a powerful tool for detecting and changing as every employee gave feedback on their direct reports as well as their boss. Entering the 1990s, Welch began to focus on integrating diversity by encouraged each employee to become boundaryless. It removed the barriers among engineering, manufacturing, marketing, sales etc. and quickly learns from each other. The “integration model,” developed a model guided the actions of managers, realigning the organization and remove blockers. After the boundaryless behavior has been spread throughout GE, Welch then introduced “stretch”. This strategy let employees set their goals beyond the minimum and force each aspect of the company to dream big. Targets were not replaced traditional forecasting, managers still had to hit basic targets, and they wanted to keep a positive attitude. Though most of the company’s stretch goals were not met, the mindset they fostered led
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