Post on 02-Jun-2018
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Jack Welch (1981 2001)
OBJECTIVES
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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.
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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.
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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.
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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
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Situational Leadership Theory
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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
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Leader Participation Theory Making decision is as important as to what he or she decides Leader behaviour must adjust to reflect the task structure
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John Kotters 8 step plan and
Change initiative in GE
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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
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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
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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
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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
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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
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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
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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
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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