Case Analysis: GE's Two-Decade Transformation: Jack Welch's Leadership This case is about a leader who led a company for twenty years and made for tune for the company. The manager of the century, Jack Welch, has been so charismatic that even today people give examples of his leadership. In the analysis of this case, we will follow LFS framework which is all about about 3 major major partic participa ipants nts in any compan company. y. These These partic participa ipants nts are ‘Leader, Followers and Situation’. We will analyze all three of these participants and will see how these three combined turned the newly reorganized firm into a huge profit making giant.
Leader: From all the steps he took in his 20 years of leadership, he proved himself as a quick decision maker and change manager. Let’s use Big 5 personality model to see where Jack Welch fits in.
Personality Trait
Jack Welch
Extroversion
Hi
Openness
Hi
Conscientiousness
Hi
Agreeableness
Hi
Neuroticism
Hi
As we can see from the Big 5 personality trait analysis, Jack Welch is emotionally stable and agreeable person, who is also open to new and creative ideas and he likes to get those idea implemented very soon. He is outspoken and he meets everyone in his company, which makes him extrovert as well. All these personality traits show that he was
very energetic and caring about his organization. He used to plan both for short term and long term. We also see that he used to build models for big things like his vision to small things like quality assurance. Simple and easy to understand models can be communicated easily to all the employees. He always wanted and did remove all the redundant processes and extra employees. He also removed the extra layer of management and started to communicate with the businesses directly. Then he also introduced the relative rewarding system, which states that top people will get stock options and bottom people will be fired. Due to this system everyone started to work harder as no one wanted to be in the bottom ten percent and to be fired. He also believed in training the successors and making future leaders who can replace the old leaders and put new energy into the businesses. He also believed in giving his people the best as reward and recognition. He used to say that give all the resources and power that are needed, and also give best rewards to the best people. He knew that people’s voice is very important to he arranged such a system that every single employee can be heard, his suggestions are taken seriously and his issues are resolved. This created a sense of ownership in all the employees and they felt as being important and part of the company. All these actions prove that Jack Welch was a true leader and a great manager. Due to his strong leadership, he transformed the company in to a giant.
Followers: Let’s now look at the followers who actually worked at the ground level to make Jack Welch’s vision a reality.
The followers that Jack Welch
had been carefully selected and the system and processes have been created and managed in such a way that only the best people are part
of the businesses. All these best people of the industry were being rewarded and recognized in the best way. And so they gave their best to the businesses. Lets look at the followers and analyze them by Alderfer’s ERG Theory. Alderfer says that there are three main levels of on which employees go one by one. These three are ‘Existence, Relatedness and Growth’. Lets see where the followers of the company are. As we know that there were thousands and thousands of employees who existed and worked for the business. They were being heard and their complaints and suggestions were given serious
considerations.
By
this, they can relate to the company
and
feel
being
important and part of the company. The top 25% of the
employees
which
critical
positions,
included training
and recognition. This means that the company is taking care of the growth of the employees as well. So by this analysis done using ERG theory we can see that the employees are at the top level which is the growth level. This
means
followers
Relatedne ss
were also
given stock option and other benefits,
Gro wth
were
that
the
highly
Existence
satisfied with their work and felt as being part of the company. This kind of followers, for sure, gives their best to the company.
Situation: Now let’s have a brief look at the situation. First of all we see that the company just had massive reorganization in early 1980s when Jack Welch was nominated as CEO of the company. This was the time, when a company needed a change manager who can change the total picture of the company. This time Jack Welch took the initiative and did change the whole company in 20 years. So we can see that the company was not resistant to the changes because due to the situation, everyone was expecting changes and they accepted the changes easily. So the situation helped here. We also see that the time was of recession. This also gives favorability towards taking the blood bath and taking out all the people and processes which are not adding value towards the organization. As in these kinds of situations, everyone accept these changes easily as well, so this was another positive of the situation. Then we see that in 20 years the changes continued and these initiatives and changes were widely accepted as most of the previous initiatives were highly successful and people had trust on Jack Welch.
Conclusion: As we analyzed the whole case using LFS (Leader, Follower, Situation) framework, we saw that it was not only the leader who was charismatic, but the followers and the situation also played their role in transforming General Electric into a profit making giant.
If the
situation was different or the followers resisted, then the company could have been a totally different one today.
