Jack Welch and His Impact on General Electrics

Introduction

Jack Welch, being a man of creativity and sincere hard work, changed the history of General Electric by introducing many strategies in the organization. These strategies are discussed in the following paragraphs. General Electric was all about seeking and building great people. The secret was the system to choose and develop great people. This initiated a systematic structure and logical sequence so that every employee in the organization knew and understood the rules and regulations of the game. Apart from this, a new addition was made to the formal structure at the main business locations, such as Human Resource reviews, two-hour videoconference follow-ups, and sessions to confirm and finalize actions. Alongside this, there was an informal and unspoken personnel review section. Such a deep focus and carefulness given to recruiting people really defined the managing structure at GE. All these efforts were mainly done to distinguish GE’s best employees and managers from the rest of the pack.

Welch's Innovative Strategies

Welch also developed a ranking tool named the 'Vitality Curve' within the company. Each year, every business was asked to rank all of their top executives: those who were in the top 20 percent, the vital middle 70 percent, and the bottom 10 percent. When employees did not meet the expectations of management, they had to quit and leave the organization. Consequently, the bar of rankings was raised to a higher value year after year. This vitality curve increased the caliber and skills of the organization in a dynamic process, making every employee in the organization count and accountable for his or her own performance and misbehavior. Welch also introduced a new concept named the ‘boundaryless’ culture that would totally eliminate unnecessary barriers among all the various functions in the organization. There was no more difference between ‘domestic and foreign’ and ‘suppliers and customers,’ meaning everybody became a part of the process. Being boundaryless also meant rewarding those who recognized and developed a good, fresh, and new idea and also encouraged leaders to share their credit for ideas with their team. Every morning, the people of General Electric had to wake up with the intention and goals of ‘Finding a Better Way Every Day’ (Welch, 2005).

Types of Managers

Jack Welch mainly described four types of managers in his organization:

• Type 1: This type of manager delivers with commitment and shares the organizational values.
• Type 2: This type of manager doesn’t meet commitments and also doesn’t share organizational values.
• Type 3: This type has no commitment but shares organizational values. They will be provided with a second or third chance.
• Type 4: They meet commitments but don’t share the values. This type of manager has no role in General Electric.

‘Finding a Better Way Every Day’ wasn’t just a slogan and motive of General Electric; it was also the essence and is considered so important that it was put on laminated cards for all employees (Welch & Byrne, 2001).

Globalization and Quality Improvement

In the beginning of the 1980s, the CEO of General Electric's globalization drive put people in charge of their own global activities, and Jack didn’t give much importance to the global direction of General Electric. In his mind, there was not even a single thought of a global company – he purely believed in the concept that companies are not global, but businesses are. In the early 1990s, General Electric pushed its growth by acquisitions, alliances, and by shifting its best people into global assignments. His view on globalization was contrarian as he moved General Electric into areas of the world that were either in transition or out of favor. In 1995, the subject of quality came into the scenario of General Electric. Jack had never been a fan of the quality movement, which became a concern for many General Electric employees. At that time, they had 35,000 defects per million operations, which was regarded as an acceptable rate but yielded quite unacceptable results. Jack Welch wanted GE to shift to a Six Sigma quality level (less than 3.4 defects per million operations) (Harry & Schroeder, 2000).

Six Sigma

Six Sigma was much more than a simple quality control and statistics method; it drove leadership to higher levels by providing tools and skills to think through tough and hectic issues. Six Sigma’s core is an idea that can turn a company totally inside out, focusing the organization outward on the customer. The best people in General Electric became Six Sigma leaders. They were taken away from their jobs for up to two years to become ‘Black Belts’ in Six Sigma strategies and practices. Thousands of ‘Green Belts,’ who were able to solve problems in their everyday work environment, were also provided training. Six Sigma was backed up with its reward system. Since 1991, no General Electric employee can be considered for a management job without at least passing Green Belt training (Pande, Neuman, & Cavanagh, 2000).

Digital Transformation

One fine day, General Electric went digital. Jack Welch admitted that he was indeed super slow to recognize the power and opportunity of the Internet, but when he got on track, he used the opportunity with full drive. He later recognized that buying and selling became faster, more global, and had a shorter time to reach the breakeven point. Jack Welch founded a number of principles that helped him lead General Electric effectively over the years:

• Always maintain your integrity and have only one agenda.
• Set the tone of your company.
• Personal intensity of individuals often determines the organization’s intensity.
• Maximize intellect and potential of your employees and organization.
• Find and take the best ideas and share them with others.
• Be open to what everyone in the organization has to contribute.
• People always come first, and strategy comes second.
• Choose the right people for the right jobs at the right time.
• Everybody in the organization counts and knows they count; a proper, sound relationship should be maintained.
• Be self-confident.
• Have the courage to be open, to welcome new changes and new ideas.
• Don’t ever be afraid to have your views challenged.
• Proper appraisal should be provided to employees all the time.
• Always let your people stay aware of where they stand in the organization.
• Mind your culture always.
• When merging, establish a new culture.
• Recognize the ultimate benefits of speed, quicker, and faster actions.
• Forget and ignore the zeros.

Conclusion

Jack Welch's leadership at General Electric was marked by a relentless pursuit of excellence and innovation. His strategies and principles not only redefined the company but also left a lasting impact on the business world. Through his visionary approach, General Electric became a model of efficiency, adaptability, and success.

References:

• Harry, M., & Schroeder, R. (2000). Six Sigma: The Breakthrough Management Strategy Revolutionizing the World's Top Corporations. New York: Doubleday.
• Pande, P. S., Neuman, R. P., & Cavanagh, R. R. (2000). The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance. New York: McGraw-Hill.
• Welch, J., & Byrne, J. A. (2001). Jack: Straight from the Gut. New York: Warner Books.