The Jack Welch Era at General Electric

Led to a more lean company structure Welch as manager of the century (e.g. global. trend) Employment gets better

The founders of the Lincoln Electric Company left a legacy of an organization culture that promotes high productivity through sound management policies which have stood the test of time. The exponential growth of the company after the death of James F. Lincoln was a direct result of the establishment of a rich culture mix based on values that were widely shared and accepted by the members of the organization. Management empowered employees to become part of the decision making process through the contribution of ideas through the Advisory Board which was elected by the employees from amongst themselves. Reward management systems and all the other artifacts of the Lincoln Electric’s distinguished strong organizational culture will be analyzed in greater detail in this essay.

Did GE in the Welch era fulfill its social responsibility duty? Could it have done better? What should it have done?

In three words Dismal, Denial, and Diswoned! Mr. Jack Welch’s, reigned as Chairman and CEO of GE during the years of 1981-2001, taking over from his predecessor Reginald H. Jones.

Jack Welch did make GE the most valuable company in the world. He was described as “the most important and influential business leaders of the 20th Century” by some Wall Street analyst. Nevertheless, Jack Welch as the CEO did not fulfill the duty of social responsibility. He did not avoid harm or protect societal assets.

GM also was forward thinking when considering their employees.  G.M. was a leader in compensating their employees favorably, while continually churning out a steady income for investors resulting from their high-speed growth. The organization also provided by far one of the country’s most copious health care and benefit plans. Throughout the 1950s G.M. leaders and workers were pleased to declare the company had the highest compensated employees in the US. To ensure employees were accessible to return after shutdowns for model year changes, G.M. consented to a revolutionary union clause that compensated workers idled by shutdowns. Also, G.M. made available great pension plans with significant retirement compensation and maximum benefits for long-time employees. This “Success Formula” permitted G.M.to take control of the industry. The company’s identity to be the largest – the General – was wedded to their strategy of owning the biggest distribution along with the broadest product range. And the Success Formula was effective, as each and every year G.M. sold far more cars and trucks compared to anyone else even while creating outstanding rates of return from the 1940s throughout the 1960s and into the 1970s.

The stayed employees were competent enough to accomplish their jobs; 2) The new system supported a better organizational structures. Downsizing the 17 layers of managers to 7 would not only significantly reduce the time of making decisions but also make mistake-correcting process less resistant; 3) Under the new system, employees were motivated to perform well without additional reinforcements provided by the organization. All the employees understood that they would lose their jobs if they don’t perform well. 4) The new system emphasized on people, which is a good choice since their responses will determine whether the system will succeed or not. In addition, concentration on personnel controls has relatively few harmful side effects and relatively low out-of-pocket costs.

General Electric was founded by Thomas A. Edison in 1878 as the Edison Electric Light Company. In 1892 it merged with Thomson-Houston Electric Company to create General Electric as we know it today. The mission statement of General Electric is to work on things that matter. General Electric employees will reference this as GE Works.

Detailed examination of the impact Jack Welch has had as CEO over the past twenty years reveals a leadership style that is the driving force behind a

Widely regarded as a leading global corporation in the 20th century with operations in over a hundred and seventy countries and over three hundred thousand workers, General Electric remains an icon in best management practices. With its operations in power, appliances, energy management, aviation, oil & gas, and transportation among others is ranked as among the top leading firms in the US. It is also a global leader in the digital industry with interests in transforming needs into responsive, connected and predictive solutions. With its vast operations, GE is involved in innovation, product development, and funding startups among others (Hydle and Karl 261).

Besides showing traits of a transformational leader, Welch undertook the management of General Electric with a somewhat “ruthless toughness” (Thompson, 2004:44-45) that was highly frowned upon, and deemed to be far from an ideal model of leadership. The organisation’s culture made leaders

1 How difficult a challenge did Welch face in 1981. How effectively did he take charge?

Analysis - GE has likely been so successful over the years because of its ability to foresee major trends and capitalize upon them. In the 1960s, for instance, GE was one of the eight major computer companies. Even recently, since 1986, GE has continued to acquire several organizations; portions of NBC, wind manufacturing, universe pictures, aerospace industries, international firms, software and hardware manufacturing, even oil companies abroad. The company culture describes itself as not one company, but many each unit a vast and complex enterprise in and of itself, with a corporate

     When Jack Welch was named CEO of General Electric, Welch saw a company in trouble even though the business world saw GE as an intrinsically healthy corporation, secure in its position as a world industrial leader. Welch knew that the company was too large to fail yet GE was too unwieldy to adapt for further growth. The changes he instituted restructured and revolutionized GE and made Welch the most respected CEO in business today. After reading the book there were three parts that really stood out for me.

Jack Welch’s vision of what GE was possible of gave the company a vision for twenty years while he was the CEO and chairman. He states, “leaders make sure people not only see the vision, they live and breathe it.” (Winning, pg 67) He not only allowed for employees to stretch, but demanded it. In teaching workers to stretch Welch knew that workers “may fail. In fact, they probably will fail. But stretching, and stretching the business, is going to improve performance results.” (Jack Welch on Leadership, pg 105) He also states that “only by setting the performance bar high did it become possible to discover people’s capabilities.” Jack Welch’s emphasis on candor and breaking the bureaucracy of modern business separated him from his contemporaries. He excited others of the possibility of being the biggest and best company in the world and rewarding his best employees that shared the values of GE. According to FORTUNE Editorial Director Geoffrey Colvin In "The Ultimate Manager, Welch leads the annals of management history not for anticipating the new world's changes ahead, but for acting on them: "His great achievement is that having seen it, he faced up to the huge, painful changes it demanded, and made them faster and more emphatically than anyone else in business. He led managers into this new world, which we still inhabit, and just as important, he showed business