JackWelsh CaseStudy

8/11/2019 JackWelsh CaseStudy

1/17

Jack Welch (1981 2001)

OBJECTIVES
http://en.wikipedia.org/wiki/Image:Jack-welch.jpg


2/17

C h a n g e s #1 or #2: Fix,

Sell, or Close

O b j e c t i v e s GE to be

perceived as aunique, highspirited,entrepreneurialenterprise

L o g i c

/ R a t i o n a

l e There was nopoint to investinuncompetitivebusiness.

C h a n g e s Downsizing,

Destaffing andDelayering

O b j e c t i v e s Centralisation

and to reducethe number ofhierarchicallevels

L o g i c

/ R a t i o n a

l e By downsizingthe operatingprofits rosefrom $1.6bn to$2.4bn.

C h a n g e s

Going Global

O b j e c t i v e s

To make GE #1company onworld marketposition

L o g i c

/ R a t i o n a l e Took advantageof economic

downturn.


3/17

C h a n g e s Developing

Leaders

O b j e c t i v e s GE as a place

where peoplehave thefreedom to becreative, theplace that bringsout the best ineverybody

L o g i c

/ R a t i o n a

l e He spent $45million on newbuildings andimprovementsat Crotonvillemanagementdevelopmentfacility

C h a n g e s Appointed

Paolo Fresco ashead ofInternationalOperations

O b j e c t i v e s Going Global

L o g i c

/ R a t i o n a

l e He was keynegotiator onthe Thomsonswap

C h a n g e s

GE values

O b j e c t i v e s

Everybodyshould carrythe values

L o g i c

/ R a t i o n a l e

He removedthe people whodoesnt sharethe values ofthe company.


4/17

C h a n g e s Boundaryless

Behaviour

O b j e c t i v e s Open environment,

seeking and sharingof new ideas, toremove the barriersbetween thedepartments

L o g i c

/ R a t i o n a

l e Canadian GEidentified a processof producing a broadrange of products inefficient manner,which was thenapplied in GEsAppliance park inUSA

C h a n g e s Stretch:

Achieving theimpossible

O b j e c t i v e s To push the

employees andcompany

beyond its limit

L o g i c

/ R a t i o n a

l e Targets wereset very highthen the

forecasted ones

C h a n g e s

Service Business

O b j e c t i v e s

To reduce GEsdependence onits traditionalindustrialproducts

L

o g i c

/ R a t i o n a l e

He started aServices Councilthrough whichtop managerscould exchangeideas and targeton value addedservices on the

roducts.


5/17

Fiedler Contingency ModelWillingness to change is a strength, even if it means plunging

part of the company into total confusion for a while.

I own the People. You Justrent them

1 or 2 Fix, Sell, or Close

How do I add Value HowDo I make people on the linemore effective & Competitive


6/17

Situational Leadership Theory


7/17

Path oal Theory

GOALS Restructuring

Rebuilding Cultural Change Employee Skill Set Enhancement High Productivity Globalization Great Place to work Value Added Service Provider 6 Sigma E-commerce

Motivation

Subordinates


8/17

Leader Participation Theory Making decision is as important as to what he or she decides Leader behaviour must adjust to reflect the task structure


9/17

John Kotters 8 step plan and

Change initiative in GE


10/17

Establish a sense of urgency Recession in the US economy #1 or #2, Fix, Sell or Close Study of impact of quality program showed huge error rate

and loss(Six Sigma) Removal of type 4 managers, who do not share GE values Release of least effective (rank 5) team members


11/17

Create the guiding coalition Replacement of 12 of 14 business heads in 1986 Varsity

Team Appointment of Paolo Fresco for internationalization effort as

vice-chairman Gary Reiner- in charge of Six Sigma training program Hiring of Jim Baughman(Harward) & Noel Tichy(Michigan) for

Crontonville management development facility


12/17

Develop a change vision Going global-mid-1980s Software initiative in mid-1988 Work-out to remove bureaucracy Best Practices-1989 Boundaryless Behavior-1990s Stretch-1990s

Service Business-1994 Six Sigma-1995 E-business-1999


13/17

Communicate the change vision forbuy-in

Company-wide program rollout by two dozenoutside consultants for Work -out

Training program for Best Practices throughout theorgnaisation

Urge to managers to see economic downturn asbuying opportunity

Idea sharing among various dept. for boundarylessbehavior

Inspiration of 15% op. margins for achievingStretch

Compulsory participation for Six Sigma


14/17

Empowering broad based action Downsizing : GE eliminated 59,290 salaried and

64,160 hourly positions between 1981 and 1988.Divestiture eliminated an additional 122,700

De-staffing : Welch scrapped the laboriousStrategic planning system and made way for RealTime Planning

De-layering: In 1985, Welch eliminated the sector

level. He also made sure that all businessesreported directly to him by reducing thehierarchical levels from 9 to 4


15/17

Generating short term wins Welch came out with the notion of Stretch

where employees were required to set highergoals, those who achieved were rewarded withbonuses and stock options.

Expanded the number of recipients of stockoptions from 300 to 30,000, stock optionallocations being tied with individual performance s


16/17

Never letting up

Established and personally involved himself with thecompanys Management Development Institute

Concepts of Work Out and Best Practices Mergers and Acquisitions Came up with the Boundaryless theme Introduced the notion of Stretch to his employees


17/17

Incorporating changes into the culture

Developed a organizational culture which isdeeply committed to its people

Focused on creating an environment wherepeople could do their best

Harnessed this culture change by itsCrontonville management developmentfacility where he focused to develop ageneration of future leaders for GE

Documents

JackWelsh CaseStudy