Jack Welch: Culture at General Electrics

General Electric does not have a specific mission statement but their philosophy and business objectives are clearly expressed in the way they operate their business, which is founded on their values: imagine, solve, build and lead. (GE, 2010)

What is the GE?

The General Electric Company is Multinational Corporation that is located in New York City.

It is one of the world’s leading innovative companies in the world; it has been named as the world second largest company by Forbes magazine. Furthermore, the company deals with varies types of product from building engines to making medical equipment that is why the company is divided into five different segmentations which are: Energy Infrastructure, Technological Infrastructure, NBC Universal, Financial & Consumer Department and GE home and Business solution. (Wikipedia, 2010)

The history of GE:

Thomas Edison, the inventor of the electric light bulb, is the original founder of General Electric. However, before General Electric was formed the owned a small company that he created called as the Edison General Electric company in 1896. Edison produced most of his inventions and he constantly patented his work, eventually resulting in 1063 patents. Meanwhile Edison noticed a competitor that have entered the market, a firm called Thomson-Houston Company, which was led by Charles A. Coffin. Edison saw it as an opportunity (which is considered a special kind of problem in management) rather than a threat. Together they merged and created a new company called the ‘New Organization of General Electric Company’, which stands to this present day as General Electric. Today, 114 years later, the company has to become one of the most powerful and innovative corporations, being named as one of the top ten most powerful companies in the world. (McGuigan, 2010)

The Previous CEO Jack Welch

John Francis “Jack” Welch is one of the most well known and well respected business managers in the world. He is the former CEO and chairman of General Electric (GE). Welch joined the company in 1960 starting out as a junior level engineer. He moved his way up to vice president in 1972, senior vice president 1977, vice chairman in 1979 and finally the CEO in 1981 becoming one of the youngest CEO in GE. During his time as the CEO of GE he implemented many changes; one important revolution is transforming the company from a traditional system to an employee involvement. This led to a more relaxed setting that would give managers and employees the opportunity to implement their own ideas, as long as they comply with the companies values and ethics. He transformed the company by introducing the Work Out program, which completely changed the geography of traditional hierarchy.

What is the Work Out Plan?

The Work Out is an informal meeting consisting of a large cross-functional team that works in solving problems with no vertical or horizontal boundaries. The genius program changed the culture of GE and created a more effective, innovative organization with more active employee participation. It started out with the intention of motivating 300,000 employees including people on the front line. Welch recognized that in order for the change to happen, he needed to empower them.

Jack Welch’s Influence

It was estimated that before Jack Welch became the CEO, GE’s net worth was roughly around $ 26.8 billion and during his last year as the CEO in late 2000 the company was estimated to be around $140 billion. During his last year as CEO he earned $4 million, which was later followed by his controversial retirement plan of $8 million a year. Moreover, GE grew and expanded tremendously under the guidance of Jack Welch making it one of the most valuable and largest companies in the world. He was named as the “Manager of the Century” by Fortune magazine in 1999. Now it is estimated that Welch’s net worth is roughly around $720 million. (Wikipedia, 2010)

Research& Development department:

Over the years General Electric’s has grown and produced some of the most innovative products up to date. From airplane engines to plastics to electrical fans GE has produced a wide variety of products. In the beginning of the twentieth century GE produced its first electric toaster. Not only that, but they even started radio broadcasting around the world. Furthermore, their research in the development of the electric vacuum tubes led the company to the electronic age. Edison’s early inventions helped make way for all the new technologies that GE would make, such as the electric lighting and medical equipments, power transmissions and transportation vehicles. These were the areas where Edison held patents for when he formed his company so many years ago and this is one of the main areas where GE has a large holding in today. Today, the GE is considered as one of the innovative and technologically advanced company in the world their work on setting new altitudes records with airplanes, and building one of the world’s largest electrical facilities has put them on the forefront as one of the best technological companies on the planet. (GE, 2010)

Part II

5. Characteristics of Organizational Culture

Characteristics of Organizational Culture

Cultural Uniformity vs. Heterogeneity

The culture of GE is such that their innovation is part of their unifying culture that unites all their business around the world. So this shows us that cultural uniformity is a big part of the GE, even though there are different department in division they are all interrelated in the sense that they all contribute to the company’s overall result. In GE there is a higher importance on entrepreneurial, freewheeling, innovative risk-seekers that place little value on seniority. Deciding whether a company should lean more towards heterogeneity or uniformity depends on the product or service that they are trying to provide to the customers. The only time this may pose a problem is when different divisions of the same company have different cultures and have to collaborate together. To avoid this problem GE came up with the work out unit which allows mangers from different divisions to come together once a week to solve the company’s problems and to have an idea on what is going on in each department. This maintains the company’s uniformity and decreases heterogeneity. (Gomez-Mejia et al., 2008)

Strong vs. Weak Cultures

“A strong culture pressures people to do what the organization wants with less reliance on formal control mechanisms such as close supervision, hierarchies, rules, and procedures” (Gomez-Mejia et al., 2008). GE has a strong culture which is boundarylessness because its employees are able to communicate openly and honestly with each other without the regard of horizontal and vertical boundaries. This opens the ability for employees to learn and grow within the company allowing them to contribute to the overall development of the company. Espoused value plays an important role in this culture because each employee is self-motivated and works hard to complete the task he or she is given. However, employees with restricted boundaries would have a difficulties adapting to the rapid changes in the environment as compare to employee who come from a strong culture that promotes self-motivate and self-sufficiency in an employee. (Gomez-Mejia et al., 2008)

Culture vs. Formalization

“A Common destiny and shared meanings make it less necessary to create mechanisms to ensure compliance, predictability, orderliness, and consistency” (Gomez-Mejia et al., 2008). Cultures that value trust in their employee reduce the amount of written documentation, constant supervision and monitoring of their employees to show the trust that they have in them. In GE there is a healthy balance between the trust and formal procedures of decision making. Because of the strong culture present in GE, employees follow the rules and regulation without the need for legalized documentations. Each employee is given free rein to work and interact with their coworkers in a boundryless culture that promotes learning and improvement. (Gomez-Mejia et al., 2008)

National vs. Organizational

Cultural influences can go beyond the national levels and include regional influences such as ethnicity and religions which play an important role in culture. GE tries to minimize cultural difference and exclude national culture. By using the employee selection and socialization they mute the parts of culture that they don’t want to adapt in their company. Diversity is highly appreciated in the workforce especially since cultural trait overlaps across countries. For example, it is believed that Americans are more individualistic risk-takers whereas the Japanese are more of the team players that like to keep it safe. Different characteristics can be found in different countries thus GE thrives to attract diversity to best suits different departments in their company. Last but not least, GE maintains a consistent culture around the world by using a “global company culture”, this make it easier to communicate and cooperate between the different branches around the world. (Gomez-Mejia et al., 2008)

Part III

7. Baseball Team culture

“A Baseball team culture is present in an organization facing a rapidly changing environment, with short product life cycles, with high risk decision making, and independence on continuous innovation for struggle to survive and stay in the competition” (Gomez-Mejia et al., 2008). This type of culture best describe the cultural organization of the GE, this is mainly due to its competitive nature and fast shifting atmosphere. The GE is a technological corporation that deals with creating and inventing new types of cutting edge technologies. Technologies in today’s world has a very short life span that means that they go quickly out of style, so what is new today may be old news tomorrow. GE employees are encouraged to take risks, be innovative, and interact with each other regard to horizontal and vertical boundrylessness. (Gomez-Mejia et al., 2008)

Part IV

Case Answers

Case Answers

Types of change implantation

The type of tactic that he introduced were:

Employee involvement: He wanted to motivate and reach out to his employees and make them feel like they were moving along with the changes that were happening and that it would benefit them in the long term.

Communication and Education: Employees were informed about all the changes that were taking place. Different department of different organizations came together once a week to asses all the problems in the company. They met up for several days and came up with suggestions so as to improve work process and try solving all the problems the company faced.

Top-management support: Support for the change came from the top managers to who encouraged it by organizing events and meeting to discuss and solve.

In the type of change that was implemented by jack welsh; coercion was not the proper way of going about it. This is mainly because confronting and forcing employees, by threatening them is not the best way to go about when dealing change in culture change. A better way of dealing with it is making the employees feel like they are part of the team, the more they know about what is going on in the company the less resistant they became. Moreover, when employees feel like they are contributing to the overall result they are more likely to show motivation to succeed. Furthermore, a culture that tolerates and has more patients with their employees, have better results because the employees will feel like they are part of the team. (Gomez-Mejia et al., 2008)

The ability in employees to openly communicate and interact with each other without the regard to vertical and horizontal boundaries is called as ‘the culture of boundrylessness’ (Gomez-Mejia et al., 2008). John Welch work out plan is the foundation of cultural boundryless, it helps the company solve all its problems and it improves the rate productivity. However the benefits are more than just short term result, the advantage of the work out plan is that it focuses on improving the overall result of the company in the long run. The GE company tries to create a culture of boundrylessness by bring the managers and employees from different parts of the organization in an informal meeting to discuss the companies problems and find solutions to improve the work process. In addition mangers were required to answer on the spot questions and additional meeting are scheduled to implement all the suggestions that were made during the previous session, later the meetings expanded to include the suppliers and the customers. In the end, the idea became so successful and worked so well for the company that other companies started using the company’s work out plan. In addition, the meetings were no longer informal gathering between managers and employees but instead it became the process in which work was done and solved at GE. Today the work out plan is viewed as a way of solving problems in the company.

The company hero are individuals that best describe what the company’s value stands for and reflects what the organization strongly believes in. They are people that others want to imitate and be like and in the case of GE it is undeniably jack Welsh; he is the one that came up with the work out plan that worked really well for the GE Company. And from the time he became the CEO in 1981 till the last day that he step down in 2001 he managed to transform the company to one of the most influential and leading companies in the world. Their revenues sky rocketed and the company was named as one of the top ten leading companies in the world. This shows you that Jack Welch is most definitely GE ‘company hero’.

The key cultural values in this company are that GE values employee involvement, self-motivation and socialization between cross- functional and cross-disciplinary managers. They encourages their employees to interact and work together to improve the overall standards of the company.

Citations

McGuigan, B. (2010, September 9). What is the history of General Electric?. Retrieved from

http://www.wisegeek.com/what-is-the-history-of-general-electric.htm

Wikipedia, Initials. (2010, November 5). General Electric. Retrieved from

http://en.wikipedia.org/wiki/General_Electric#Businesses

GE, Initials. (2010, September 18). General electric. Retrieved from http://www.ge.com/

Wikipedia, Initials. (2010, November 5). Jack Welch. Retrieved from

http://en.wikipedia.org/wiki/Jack_Welch