GEs Two Decade

Transformation: Jack
Welchs Leadership
Case Analysis and Review

Situation Analysis:
The case study describes the evolution of General Electric under the leadership of
Jack Welch from 1981 2001. Jack Welch was instrumental in bringing major
changes in the organization such as selling up the unrelated businesses, investing in
new acquisitions, reducing the number of hierarchical levels through destaffing,
delayering and downsizing. He was able to influence the employees in the
organisation to bring about a good change in the GE culture and challenged each
person in the organization to be better than his/her best. As a result, GE grew over
these two decades in terms of its reputation as the most admired company in the
US as well as in its revenue and profit. It does not appear that GE had anyone
nominated to take over for Welch upon his retirement. This was a major concern of
shareholders.

Evaluation:
Jack welch proved himself as a dynamic leader amidst of the various problems he
faced such as the recession during his appointment as CEO, newly reorganized
structure and the complexity of the vast business operations of GE.
Early on in his tenure as CEO, Welch made a big negative impact by deciding to
downsize the number of corporate layers and sell off many of GEs traditional
business units. These mass layoffs lead to some critics dubbing him Neutron Jack
for his practice of getting rid of the people.
However, he was always keen to putting employee first and thereby was able to
gain employee trust which is vital to influence them. For example, he identified
future leaders, took feedback from them regarding their expectations, trained them
to meet their goals and ensured effective succession planning.
Introducing the idea that massive reorganization was essential helped to reduce
employee resistance to the plan and was able to convince in both senior levels and
the lower hierarchy of employees.
Jack had a very practical approach for his work and most often gets himself involved
in the projects he implemented. This ensured a path goal approach with the right
mix of supporting behavior and reducing the pitfalls within the projects.

Even though initially there were some conflicts between Welchs vision from that of
employees, later he was able to influence the workforce due to his focused
approach to make sure that everyone is aligned in a long term goal.
When implementing Six Sigma, he tied the initiative to the annual bonus, which has
become the granting of stock options. Thus, he is using rewards to coerce the
managers to adopt Six Sigma. This shows that he was using fear as a motivator in
order to gain respect and acceptance of his ideas. This is the classic case of
expectancy theory where effort leads to performance, which leads to reward, that
was achieved through the bottom line results.
Welch wanted everyone to outperform the competition. He also wanted to hear
employees by having them provide annual surveys asking questions that would
determine if the employees needs were being met, and whether GE was a great
place to work. Jack tried to promote the idea of celebrating small wins.. He was
more focused on confirming the results were met.
While in the downsizing process, he also invested in his people by stimulating the
Crotonville Management Development Facility better train future leaders and treat
the process as a reward for the best employees. Welch used stories at GE to create
a unique culture and make the values come alive throughout the organization.

Recommendations:
The new leader should imbibe similar qualities that Welch had in successfully
driving GE forward. Hence Welch along with an expert panel can pick up his
successor within or outside GE.
Due to rapid globalization, stakes are high for the new leader and hence he/she
would have to make necessary changes for GE to remain competitive in the post
Welch- Era. He may have to introduce different team dynamics and new ways of
doing business.
Jack Welch demonstrated a great skill in balancing the needs of stability and
evolution against one another, and GE would be well served to have a CEO which
can provide his kind of leadership for years to come.

There must be minimal disruption on GE in terms of its people (employee

satisfaction and customer turnover) and a corporate culture which strives for
excellence. The initiation process must convey security and strength to the
shareholders, thus ensuring their confidence and support.