Corporate Social Responsibility

Abstract

Corporate Social Responsibility is defined as the duty of a corporation to create wealth in ways that avoid harm to, protect, or enhance societal assets. The term is used to legitimize the exercise of corporate power. In the case of Jack Welch and General Electric, Welch exercised much of his corporate power to turn a good business into a great business financially. In doing so though many may have not liked him, he was respected for the work he did.

The case of the Jack Welch Era at General Electric started off with a man who came from a working class family and rose to the high ranks of the corporate world. It is very common in the business world that leaders of high ranking typically come from a high-class family. Welch started as a simple worker for GE and due to his intensity and blunt personality he began to climb the ladder to leadership. I can see how a person with a strong drive could accomplish anything that they are dealt with. Welch did not enter a company that needed a financial overhaul due to the success GE was already experiencing. But what he did see was potential to make GE an even better organization. Welch believed that managers should confront reality and adapt to the world as it is, not as they wish to be.

Once Welch became CEO it was inevitable that his cutthroat style of managing was going to overhaul the company's current management model. He felt that the company was bloated with layers of bureaucracy due to the many different sections of leaders who had to approve decisions and then pass the information along. Where most companies see having different managers for different parts of a large company is an asset, Welch saw it is slowing down decision-making and change. So with this becoming a nuisance to him, he decided that GE would have three areas of the business and no more. They included core manufacturing, technology, or services. Anything outside of these areas was subject to closure or sale. He also believed in a boundary-less organization where ideas were freely exchanged to that organizational learning could rapidly occur. Welch did in his 20 year run as CEO for GE closed and sold many businesses and eliminated nearly 132,000 workers. He did as well, buy and sell other businesses along the way, which increased the stock of GE. "Workout" sessions were also introduced to employees in order to carry out his more informal and open company culture that he wanted.

The vitality curve was a way to promote high performance amongst managers. It was a model that showed the rankings of management based on performance. The top 20%, the A's, were to get promoted and salary increases as well as stock option, the B's were the 70% who were retained but trained to meet the expectations of an A employee. The C's were the bottom 10% and these people were automatically fired. It was a cutthroat way of handling performance but it did make people work harder.

"Some think it's cruel or brutal to remove the bottom 10 percent of our people. It isn't. It's just the opposite. What I think is brutal and "false kindness" is keeping people around who aren't going to grow and prosper . . . The characterization of a vitality curve as cruel stems from false logic and is an outgrowth of a culture that practices false kindness." (Welch)

I feel that GE in the Welch era did not fulfill its corporate duty to society due to the incident of the Hudson River, where GE released PCBs that were known to be toxic to humans and animals. Instead of taking responsibility for their actions, they in turn attempted to cover their wrongdoing and even had the nearby townspeople take sides over who was right or wrong. I think that it doesn't matter