Ge - Leading in an Organization - Jack Welch

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Best Practices

Welch understood that those on the front lines are often best suited to identify inefficiencies and suggest solutions thus “Work –Out” sessions were born and institutionalized. These sessions brought employees together in a town hall like setting to discuss concerns, issues, and ideas surrounding unit challenges and directives. Managers were not present and employees were assisted by the efforts of a facilitator. When the session was concluded, managers were brought in and presented with the proposals developed. They were then required to make a decision, in front of the group, on a minimum of 80% of the proposals. The remaining 20% could be tabled but had to be addressed within 30 days.

In an attempt to improve performance GE employees were being developed, evaluated and compensated based on a demanding 360 degree evaluation process called “Session C”. This process was an in depth review that assesses the performance of individuals and business units all the way up to the CEO. Managers gave their group members candid feedback based on achievement of stretch objectives and demonstration of company values. To quantify their performance, employees were then placed on a 9×9 grid reflecting these two dimensions (Ashkenas, 2011). Everyone in GE could expect detailed feedback on their performance and a clear plan for developing their skills and what they need to improve. Welch believed that all employees should be evaluated every year and divided into one of three categories.

The top 20% of performers should be praised and given generous rewards. They should be looked up to and emulated. The second group or the 70% would be targeted for development and training to chart a course to join the top 20%. The bottoms 10% were targeted for dismissal His theory was that the right combination of recognition and reward to the right percentage of performers fosters a high performance work environment (Vollmer, 2005). Welch believed that rewarding any bigger a group than 20% would be a mistake (Murray, n.d.).

Billions were invested in upgrading the Crotonville Management Training Center and developing programs to educate management, promote the GE way, and disseminate best practices across divisions.

II. Organizational Vision

Strategic Plan

Throughout Welch’s reign as CEO, divisions that were unable to rank first or second on a global scale were sold, shut down, and replaced. GE would no longer operate divisions that could not be competitive and profitable. The 1980’s saw cutbacks or closure of its transformer, ordinance, and electric power equipment manufacturing divisions. GE sold underperforming or in Welch’s opinion stale divisions such as aerospace and small appliances (Schoenberg, 2016). In their stead he made acquisitions of RCA, which was the parent of NBC, and made headway into finance with the acquisition of Kidder Peabody.

Having accomplished most of his business restructuring goals, and realizing that he had gotten as much as he could out cost cutting measures, Welch turned his focus toward organizing and optimizing his human capital. His strategy was to gain a competitive advantage through better people and ideas. Everyone was expected to lead through contribution and ideas were solicited from everyone. GE would move with high speed and beat their competition to the punch.

By 1995 GE had become a lean and nimble competitor with a dedication to unlocking creativity, elimination of waste, and unnecessary processes. Welch however was faced with a decision. Sit back and see returns stagnate or find a way to wring further efficiencies out of already lean processes. After being introduced to the Six Sigma program, Welch decided to adopt it, and incorporate its tenants into GE’s new direction (Nayab, 2011). Six Sigma would allow GE to further differentiate from the competition and improve their reputation for high quality and increase brand leadership.

Vision

Welch had a vision to transform the company from a top heavy manufacturing conglomerate to a modern agile service and technology centered company. A company dedicated to quality with its management and people equipped to quickly take advantage of opportunity and enhance shareholder value. To accomplish this he used concepts of informality, free flowing ideas, and management training.

For years GE had been run like an army with a strict hierarchy, uniforms and strict rules. The chain of command was rigid and everyone knew who was in charge. Privates never talked to generals even though the private did most of the work (Krames, 2002, P.3). Welch believed in an informal work environment. Formality got in the way of being great.

Welch rarely wore a tie and everyone, regardless of their position called him Jack. At any time Welch could make a surprise visit, have an unexpected conversation, or reach into his pocket and surprise someone with an unexpected bonus (Byrne, 1998). The importance of this reorganization to informality is that it facilitated creativity and the sharing of ideas. An idea from anywhere was the theme.

The concept of ideas from anywhere meant that the culture Welch inherited, a culture with disdain for any ideas that were not internally generated, was gone. GE would now learn from other companies that were achieving greater growth and higher productivity. Michael Frazier was assigned the “best practices” project and his team studied nine companies that included Ford, Hewlett Packard, and Xerox (Bartlett & Wonzy, 2002, p.4). This project produced results that assisted managers in understanding the limitations and errors of their existing management practices. New programs were designed to train managers at Crotonville to look for opportunities for improvement and change their perception of what good actually looked like (Bartlett & Wonzy, 2002, p.5).

Welch invested billions in renovating The Crotonville Training Center and its curriculum, and spent much effort reinforcing its significance (Kleiner, 2003). Training at Crotonville would now bestow status on the participant. Trainees were sent there on the recommendation of their superior and united in the confidence that the company felt they possessed superb managerial potential. Leadership style, thinking and direction were transformed due to the new training programs. Training that was being coupled with the newly adopted practice of “Work-out” to create an incubator for innovation, creativity, and change.

With this in mind Welch brought these open forums to the entire company to enhance the flow of ideas and make employees