1 How difficult a challenge did Welch face in 1981. How effectively did he take charge? Welch encountered a very difficult situation in 1981; the economy was in a recession, almost one of the worst recessions any organization has witnessed since the Great Depression of 1929. The strong dollar was losing value and the unemployment rate was at an all time high. Interest rates were consistently on the incline during the time Welch took over as CEO of GE. Jack Welch was both a transformational and transactional leader who displayed an aggressive competitive style of leadership.
He did not let the recession deter him from maintaining a competitive advantage over the competition. His philosophy was to ensure that GE was either #1 or #2 in their current industry. His strategy was to “fix, sell or close”, for example, when Welch took charge of the company his objective was to fix the problems hindering GE from operating to its fullest potential; sell the company if it is more of a liability than an asset; or close the organization altogether and start from scratch.
Welch entered the organization with a strategic methodology that consisted of undergoing a comprehensive restructuring process that would eliminate the deadweight or terminate low-performers that are unproductive or unprofitable. Unfortunately, Welch came into the realization that his current management staff was unable to lead the corporation to success, therefore he proceeded with organizational downsizing. In essence, Welch’s methods were extremely effective, his decision to downsize, destaff and delayer has awarded GE increased levels of profitability and an increase in sales revenue.
For the most part, Welch’s focus was geared towards much needed change, innovation and a fresh perspective. 2. What was Welch’s objective in the series of initiative he launched in the late 1980? s and early 1990’s.? What was he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rational supporting the change process? After Welch restructured and reorganized GE’s internal infrastructure, it was now time to focus on increasing the company’s productivity erformance. Welch developed two initiatives such as; “Work-Out” and “Best Practices. ” Welch’s objective for the “Work-Out” initiative was to eliminate all forms of unnecessary bureaucracy and promote an atmosphere in which executives and employees can work together effectively. As far as the “best practices” is concerned, Welch wanted the company to identify the practices of other organization to determine the “best practices” of success among the competition.
This method would enable GE to develop their own strategy based on the strategy of other organizations. This method of identification is otherwise known as “benchmarking. ” It was in GE’s best interest to select a few of the top-performing organizations and analyze their competitiveness and what makes each company #1 or #2 within in their (other companies) current industry . Welch’s initiative enabled GE to build alliances and achieve global expansions through acquisitions and partnerships in Japan and Europe. GE’s rational is that the company has the best training and development resources and an environment committed to providing opportunities for personal and professional growth. “. “Organizational change is a process to be managed. Employees tend to resist change due to self-interest and fears about losing something of value, lack of trust and understanding, fears about uncertainty, differences in perspectives and goals, and their own cultures that may value tradition.
Change may be implemented through Lewin’s unfreezing, transformation, and refreezing approach or by using the restraining and driving forces to create a situation where the change will be accepted. Change can be implemented from top down or through bottom up processes. Overcoming resistance to change is facilitated by communication, education, employee involvement, and sometimes by negotiation or even coercion. Top management must be committed to the change for it to succeed. “
3. How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch’s various initiatives added value? If so, how? A cardinal rule of any CEO is to “refrain from fear” of taking risks. From the moment Welch took control of the company his strategy for change implementation was a risk, GE’s method of downsizing over 100,000 employees could have endured significant ramifications during a recessionary period, however, in the midst of a very difficult time he maintained his focus to change, resulting in a successful turnaround.
Not only was Welch determined to move forward with his change initiative, he also understood the importance of developing a work staff to be the best they can be. He took pride in restructuring and reformulating an adequate staff that adheres to meeting the same objective as GE’s new leader. An organization in general will drastically increase revenue if the organization values and appreciates their staff members like Welch demonstrated through his competitive leadership style.
GE has ventured into new opportunities, enhanced their global markets and expanded the realm of their service industry thus adding value of a 60% increase. 4. What is your evaluation of Welch’s approach to leading change? How important was he to GE’s success? What are the implications for his replacement? In my opinion, Welch was a prominent business man who had a mission to transform and organization to excel as a top-tier performing corporation who prides itself on meeting the needs of consumers while creating a positive atmosphere brimming with employee satisfaction.
I find that his overall leadership style facilitated change from the inside out and from the top-to-bottom hierarchy. As previously stated, Welch was a transformational and transactional leader that was committed to embracing new opportunities for the benefit of organization as a whole. Welch was a significant factor in GE’s success, “Welch was a sharp contrast to his predecessor, the statesman-CEO Reginald H. Jones, who was almost as admired in his day as Welch is now.
Jones risked his reputation by pushing Welch over several other candidates. Indeed, some GE board members considered Welch too impetuous to take the helm. Welch started his reign with a bang, dismantling GE through a series of dramatic restructurings and layoffs. From 1981 to 1985, he cut 100,000 jobs, an act so painful to employees that they began referring to him as ”Neutron Jack,” after the nuclear bomb that vaporizes people but leaves buildings standing. “