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 3 major participants in any company. These participants 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
Gro
this, they can relate to the wth

company and feel being

important and part of the Relatedne
company. The top 25% of ss
the employees were also
given stock option and other
benefits, which included
Existence
critical positions, 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 that the

followers were highly
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.