General Electric Case Study

Introduction

General Electric (GE) was founded in 1878 by Thomas Edison. Since then GE have developed businesses in the areas of Appliances, Aviation, Consumer Electronics, Electrical Distribution, Health Care, Lighting, Oil and Gas, Energy, Finance for both Business and Consumers, Rail, Software Services and Water. They are now one of the most diversified companies in the world.

Findings

In 1960 Jack Welch joined General Electrics in the plastics division in Pittsfield, Massachusetts, USA, where he developed his leadership skills and ideas. In 1968 Jack Welch was made the company's General Manager; for GE in 1981 he was elected Chief Executive Officer. His vision was to become one of the most competitive business enterprises in the world. Shortly after Jack was elected he identified the organisation was bureaucratic - the environment was controlling, upper management made the rules and the juniors followed. The lower level in the hierarchy is controlled by the upper ones, and the planning and decision making is done in one place. The higher levels in the hierarchy have more freedom in doing their work as compared to the lower levels. In this case GE was represented by 9 layers of management from the shop floor to the CEO. Unfortunately in a bureaucratic environment people are afraid to speak out; employees find it difficult communicating with each other, and as a result the work is not productive.

Analysts projected that GE would become unprofitable by the end of 1982 if the company was not dramatically reconstructed. Jack Welch needed to change the culture of the organisation; he wanted to create a culture of openness, confidence, leadership and creative thinking. His goal was to lead and not manage employees. Employees should no longer be told what to do but should be empowered and given responsibility. Employees need a new way of thinking; participate in decision making and have full access to vital information needed to make those decisions. Jack Welch characterised this as creating a "boundaryless" organisation in which empowered employees were self directed and motivated to effectively reach their goals. Making GE boundaryless meant bringing suppliers and customers into GE's design and manufacturing processes. Empowerment gives a company a competitive edge; employees feel important and are highly motivated. "The only way to be more competitive was to engage every mind in the organization" (The Washington Post, March 23, 1997, Talking Management with Jack Welch) Employees began engaging in boundaryless behaviour talking to one another directly, informally and learning from one another.

Motivation is important to a business because the more motivated the employees are, the more empowered the team is. Team work and individual employee contribution make the organisation profitable and successful.

During periods of amendments, there be more adaptability and creativity. Motivation will lead to an optimistic and challenging attitude at work place.

How GE was restructured for the future

First of all he addressed this by eliminating the layers of management. Any business that was going to be part of the new GE in the market place had to be either number one or number two in their field; or they would face being closed or sold. He was confident that GE would prosper if he removed companies that were not performing, and acquired new ones that were. He streamlined the organisation by consolidating business units however by doing so, over 100,000 employees were terminated. In the 1980's he was convinced that inflation would become the most prominent enemy leading to slower worldwide growth. With all the downsizing and restructuring; he earned the name Neutron John. The employees who remained were unsettled.

Motivation and Empowerment

"Welch concluded in the late 1980s that his employees needed to be empowered, and not because he felt sympathy for their unsettled feelings. He understood that he had to provide new motivation to employees to work harder. The secret was giving workers a feeling that they were "owners" of the business, not simply forgotten cogs in a faceless machine." (http://www.ftpress.com/articles) He believes in having star performers and rewarding them accordingly; if employees