Ge Case

Before Jack Welch stepped up into corporate office position, the world-famous corporation was on its route for imminent crisis which was barely noticed by anyone. As a result, he decided the company needed a change to combat economic and competitive challenges of the market place. With his various strategies regarding business leadership, he has led the company into salient and radical revolution of corporate restructuring, with the goal of transforming GE into a global leader for benchmarking and achieving maximized productivity and labor efficiency. His tactics for restructuring included purchases and sales of business units, moving away from bureaucratic culture and structure to one of openness and flexibility, removing unnecessary layers of middle-management and laying off thousands of employees and creating new rewards and recognition system. The result was that in 1991Welch anticipated to receive 5 dollars in sales for every dollar of working capital invested in 1991 thus making it one of the most profitable firms in America. However such dramatic undertakings created for Jack Welch challenges due to internal resistances stemming from cultural and personal values and beliefs.

There were a number of issues that I have come across when reading this article. Many of the concerns facing GE originated from bureaucratic structure of the company that was present in the organization since its establishment. Jack Welch, when elected CEO, saw that routine loads of paperwork, prolonged procedures of decision making and a centralized, rigid hierarchy no longer were effective for the company. Resources and human capital were not utilized efficiently and he immediately set on the path of organizational restructuring. However, he understood that with such change came the cultural change throughout the whole organization and this is where many of the problems began to emerge. As a result of massive changes in operations of GE, the personnel have experienced a substantial amount of cultural shock that might have adversely affected their attitudes and motivation to work and has created some a number of problems. To begin with, there was great concern with job insecurity among the current employees of GE as results of considerable layoffs, Welch administered in trying to pursue the strategy of restructuring. This ultimately could have resulted in stress, anxiety and poorer health among the workers fearing that they might be next for dismissal, regardless of how well they were performing their jobs. Additionally, this might have put extra strain on those managers who resisted the change in GE falling into the trap of status quo unwilling to part with traditional centralized structure at GE. They feared the new actions and criticisms that might follow from their new responsibilities and tried to protect their ego. Consequently, it might have resulted in firing of competent people who did not adhere to the new culture thus losing valuable human capital and maybe even trade secrets. Another issue directly linked to predecessor is lack of self-confidence among the employees who were working under pressure of strict rules and procedures. This created another barrier to change. GE did not have openness and real communication among employees and managers aimed at supporting interactive processes among various levels of personnel in organization. This inhibited real understanding of business objectives and created even more anxiety among the employees amidst changing organizational frontiers. Loss of loyalty was another major concern in GE. After consumer electronics business was traded for Thomson’s medical systems many employees felt that it was “ultimate signal that anything was for sale” feeling that Welch shattered the long-lasting bond the glued GE Corporation for so many years. Personnel developed distrust of Welch’s motives and the overall direction of the company which CEO had engaged in. Moreover, Welch’s changes to compensation and reward program created even more dissatisfaction among the personnel. More recognition and higher rewards were given to those individuals who achieved superior performance and generated exceptional results but many people felt overloaded with work and new responsibilities. In the eyes of employees Welch’s redesigned bonus system was much more discriminating. When all of the above concerns would be solved, a major issue presented in the text would also be resolved to a large extent which is the challenge of GE in becoming a truly boundary-less company, trying to link “GE’s 13 businesses through “integrated diversity,” the ability to transfer the best ideas, most developed knowledge and most valuable people freely and easily across businesses in a boundary-less company”.

In order to overcome job insecurity and build self-confidence, managers should help employees move away from rigid bureaucratic principles,