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We are taking a brief look at the man who took General Electric that at the time was still a profitable company. To the powerhouse industry changer and innovator that it is today. The leader is John Welch, his methods and insight that were not common back in the 80’s. Still he took GE from a modest 13 billion enterprise to a 400 billion dollar powerhouse at the end of his reign in 2001. In 2001 he stepped down to retire as GE’s most successful CEO to date.
Humble beginnings. John Welch, received his M.S in chemical engineering at the University of Massachusetts in 1957, from there he went on to acquire his Ph.D in the same field from the University of Illinois in 1960. With no notable training in the areas of business management, his only education on the subject it would seem would be in dealing with GE as he worked his way up the ranks. According to GE’s website, http://www.ge.com/about-us/leadership/profiles/john-f-welch-jr, the company was a 26 billion dollar enterprise. Which at the end of his 20-year reign he had apparently taken it to a 410 billion dollar industry. He disregarded the old way to do business and added his way into the mix. One thing he was known for is his disregard for any type bureaucratic nonsense that his predecessors may have had. He took over in 1981 becoming the 8th CEO of the company, and apparently he operated the business like a bunch of smaller cells or independent companies. By this methodology, it would seem that they could change on a whim what they were doing to adjust better to the market trends. It would seem as though his philosophy was to adapt continuously to consumer demands and what was needed. And through his insight this method worked.
Managing the rigors, according to this next website viewed from Harvard Business Review https://hbr.org/1989/09/speed-simplicity-self-confidence-an-interview-with-jack-welch, written by Noel Tichy and Ram Charan in September 1989. First on the agenda was to eliminate the usual rigors of the company. General Electric had been involved in many different facets of just about everything. Though they were still making money, they had assists spread out in areas where there was no sure pay back. He decided to streamline this task and focus on what mattered to the company, knowing that spreading the company too thin was hurting the possible revenue it could make. The decision was not to pull out of everything, just some areas so they could narrow their focus. Giving out a blunt message to the company that it was not feasible to focus on everything, and that in the long run there needs to be objectivity. Doing anything else makes the company lose money. One impactful notion that was done in his time was to make sure to reward management on their styles of business acumen. He believed that they should manage themselves with no intervening interruption from GE, and the people under them. Just as long as they followed the code of ethics and conduct that, he laid out for them.
Building the right team, according to his philosophy that you can view here, http://welchway.skillsoft.com/how-welch-way-leadership-program-works.asp, and the hardest part is hiring the right kind of people. A highlight of this short speech is that you must love and respect the people you put into your company. After all they are here for you, they walked into this position because you needed them, and they are doing you a service. They help make you and your company money. Though one can never be too confident that they are making the right choice, it is best to let them flower or whither but never ignore them. After all, it is best to keep up with your choice and make sure it was a good option if they are not the right choice you cannot just kick them to the curb. Much praise goes out to this man and how he takes care of the hiring mistakes, and it is not a cold shoulder, rather a warm hand, and an even gracious goodbye.
Empowering the employees. Most of the time for smaller business owners and the like is about empowering them and not the employee. The employee is looked at as though they are resources that can be spent and lost at the drop of a hat. This is not correct one notion that is included in his business model is to empower the employee and encourage creativity, and not to focus on the things that can weigh down a company. The most important focus for him was the negativity management can take on as they gain power and hold others under the metaphorical boot. The key to having a truly productive company is to make every employee of the enterprise feel as though they are part of the business. Not a door mat that you can walk over when you feel like it. The key is making them feel like a member. Everyone has a role to play in the company and should be respected on a human level. They shouldn’t only be measured by how they can weigh into the enterprise.
His methods seems to align with a few different management theory’s one, in particular, which can be called out for certain would be the Path-Goal Theory. His primary focus was on the employees and empowering them to make the right choice while still maintaining the employees from afar. He would judge their character and make assessments on where they are best suited for the company. From there he would kind of turn, them loose to interact with the company and make their decisions supporting them until he would see a flaw in their judgment.
A little bit of the Vroom and Yetton Model comes to mind. As he would involve all the employees in the business, maybe not allowing all the average workers to make decisions on what affected the company. It was encouraged however within the different cells of the enterprise’s and divisions to make decisions. Though this method takes longer because, you involved everyone in the decision-making. He did something even riskier and took himself out of the equation just as long as the employees under his stead made the choices in the direction that he wanted to make the company.
The Leader–Member Exchange Theory seems to be in here a little bit. Granted he did not favor one employee over another if they did not show results they were corrected or removed from a position where they could do harm to the company. His goals were not to crush the employees under his foot, and it is a safe assumption that a considerable number of the workers were in the in-group compared to the out-group. Granted this perspective is formed from what was extrapolated from different data on him. It is hard to say if any other theory of leadership would have worked any better for this man and this company. In this tinier he has seen the enormous rise of this company to the powerhouse it is today.
On a side note prior to 1981 the business was not failing as in a matter of fact its 7th chairman Reginald H. Jones was also looked at as a great businessman in the GE timeline. Though John Welch may dwarf his accomplishments, he was still considered a major player in the U.S. economy. Mind you that he may not have had the acumen to realize how to empower the employees of his company but by no means was this a failing company.
From studying this man and his accomplishments it seems that we should not take everything for granted, every employee is a human being and should be treated as such. They are the lifeblood of the company and will work hard if the people above their position work hard for them. Mistakes happen when we hire people, and the situation should be rectified, but not rashly, give that person that held up other job offers for you a great exit. Focus is key, do not try to do everything, make sure that your managers and teams are focusing on projects that suit your company’s need. Make sure it is the company’s policy and your policy to empower the workforce, so they feel that they are a part of something great. By John Welch’s lead do not get caught up in the bureaucratic problems of running a company all that does is create toxic waste and toxic assets that hold the company from moving forward.
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