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Jack Welch Leading Organizational

Change at GE
Introduction
• General Electric (GE) is an American multinational conglomerate(MNC)
incorporated in New York and headquartered in Boston, Massachusetts.
• On January 13, 2016, it was announced that GE will be moving its
corporate headquarters from Fairfield, Connecticut.
• As of 2016, the company operates through the following segments:
Aviation
Current
Digital
Energy Connections
Global Research
Healthcare and many more.
• In 2017, GE ranked among the Fortune 500 as the 13th-largest firm in the
U.S. by gross revenue.
• In 2011, GE ranked as the 14th most profitable.
• As of 2012, the company was listed the fourth-largest in the world among
the Forbes Global 2000.
• The Nobel Prize has twice been awarded to employees of General
Electric: Irving Langmuir in 1932 and Ivar Giaever in 1973.
• On January 13, 2016, it was announced that GE will be moving its
corporate headquarters from Fairfield, Connecticut (where it had been
since 1974) to the South Boston Waterfront neighborhood of Boston,
Massachusetts. The first group of workers arrived in the summer of 2016,
and the full move will be completed by 2018.
Jack Welch
• John Francis "Jack" Welch Jr. (born November 19,1935 )
is an American retired business executive, author, and
chemical engineer.
• He was chairman and CEO of General Electric between
1981 and 2001.
• During his tenure at GE, the company's value rose
4,000%. In 2006, Welch's net worth was estimated at
$720 million.
• When he retired from GE he received a severance
payment of $417 million, the largest such payment in
history.
Lessons From Jack Welch
• Today, GE succeeds in dozens of diverse businesses, and is continuously at the vanguard
of CHANGE. Some years ago however, in locations throughout GE, local managers were
operating in an insulated environment with walls separating them, both horizontally and
vertically, from other departments and their workforce. Employee questions, initiatives,
and feedback were discouraged.
• Determined to harness the collective power of GE employees, create a free flow of ideas,
and redefine relationships between boss and subordinates, Jack Welch, CEO, General
Electric, created a new corporate culture. It's key elements are:
• Redesigning the role of the leader in the new economy: creating followers through
communicating a vision, and establishing open, caring relations with every employee
• Creating an open, collaborative workplace where everyone's opinion is welcome
• Empowering senior executives to run far-flung businesses in entrepreneurial fashion
• Liberating the workforce; making everybody a participant through improving vertical
communication and employee empowerment.
Neutron Jack
• Welch’s initial strategy was to become number 1 or 2 in every business
sector of GE.
• Respective managers had options of fixing the problem, selling their
particular business or closing it.
• Welch removed the sector level and eliminated thousands of salaried
and hourly employee positions.
• This was done to streamline GE’s organization and increase span of
control (means each managers has atleast 10 or 15 subordinates) for
him and his managers.
• 'Neutron Jack' so-called because of his propensity to eliminate people
and jobs while leaving the corporate buildings standing.
Jack Welch’s Strategies
• Jack Welch changed the GE organization totally by using the following
strategies or policies implemented by him during his tenure as the
chairman:
• Work-Out
• Best Practices
• GE’s Training Center
• Dream Targets
• Six Sigma Approach
Work-Out
• 3-day sessions.
• Superior presents challenges to the team and leaves while the groups had
to find solutions to problems with the help of facilitators.
• On the last day, superior has 3 options to choose for the problem
solutions.
• Those were to accept the proposal, not to accept it, or to collect more
information.
• Puts more pressure on managers.
• The GE Work-Out change acceleration process provides a comprehensive
framework within which to overcome barriers of rank, function,
geography, bureaucracy and culture to foster what GE originally called
“boundaryless behavior.”
Redefining Relationships between
Management and Employees
The Four Key Goals of GE's Work-Out Meetings

❶ Encourage employees to share their views in a collaborative culture

❷ Vest greater responsibility, power, and accountability with front-line employees

❸ Eliminate wasteful, irrational, and repetitive steps in the work process (which
would come to light through employee feedback)

❹ Dismantle the boundaries that prevent the cross-pollination of ideas and efforts.
WorkOut is a time-tested process that will help you:
• Streamline & simplify existing processes
• Eliminate non-value added work
• Quickly identify, prioritize & meet new business initiatives
• Speed up decision making & implementation
• Build an empowered, "ownership" workforce
Best Practices
• Program to improve effectiveness and efficiency.
• The program was to observe other companies’ business strategies
• Analyze those strategies
• Include those strategies in GE’s process to improve company’s
performances.
GE’s Training Center in Croton Ville
• How important are values?
• Former CEO Jack Welch wrote in his 2000 letter to GE shareholders that, forced
to choose between
1) a manager who shares GE values but isn’t quite making her numbers or
2) a manager who delivers the numbers but doesn’t fit the corporate culture,
• He’d give a few more chances to the former but immediately fire the latter
while there was no hope for those who fail at both aspects.
• Those who don’t share the company’s values “have the power, by themselves,
to destroy the open, informal, trust-based culture we need to win today and
tomorrow,” wrote Welch.
• And he coached those who are willing to follow both these aspects in GE’s
training center in Croton Ville.
Dream Targets
• This approach was similar to creating objectives used in some
management-by-objectives programs by other companies.
• These dream targets were used to supplement the traditional
objective-setting.
• Jack Welch always pursued his employees to “Always Overdeliver”.
Six Sigma Program
• What does Six Sigma mean to a company like GE? It means measuring the number of defects in your
company processes to “systematically” determine how to reduce error and get as close to perfect
efficiency as possible. According to the statistical formula behind Six Sigma, the process must only
have 3.4 “defects” per million opportunities, or chances for error. Obviously, this requires something
very close to perfection.
• Managers were required to participate in the program to receive bonuses according to their
achievement of quality level.
• An appraisal system for top 10 percent to bottom 10 percent was also introduced where the top 25
percent received stock options as their rewards.
• According to Bright Hub PM, just two years after adopting the Six Sigma strategy, GE gained $700
million in corporate benefits. Welch applied Six Sigma in four key ways that ultimately translated to a
formula for success:
• 1. Training: GE required almost all employees to take a two week, 100-hour Six Sigma Training
Program. Afterward, employees were asked to complete a project implementing those
methodologies.
• 2. Mentoring: Mentoring was key to GE’s success. Full-time, Master Black Belt Six Sigma
professionals were required to train and mentor employees whose jobs were integral to key
processes. After those employees were trained and mentored to become Black Belts as well, GE
Black Belt teams carried out different Six Sigma projects within the company. Green Belts were also
able to join projects teams to a certain capacity.
• 3. Leadership: Welch also asked for commitment to their Six Sigma goals from
both executives and the GE workforce, linking promotions and bonuses to
improvement in quality. A Green Belt certification became a minimum
requirement for promotion at GE and almost half of each area of bonuses
depended on the successful implementation of a Six Sigma project. Even the CEO
and President attended training sessions.
• 4. Focused Implementation: GE used three key implementation approaches.
• “Show Me the Money” meant GE focused on the bottom line, cutting costs to
compete in price-sensitive markets.
• “Everybody Plays” meant that even outsourced suppliers were expected to
participate in the Six Sigma initiative to make sure that the quality was assured
from start to finish for each product.
• “Specific Techniques” meant GE used process maps and other Six Sigma tools to
rank and associate projects to overarching business goals.
Learning Outcomes