ihab itani-shada zaroug-general electric-delayering

By: Shada Zaroug, Ehab Etani 7/29/2014

General Electric

• Is an American multinational conglomerate corporation.

• Headquartered in Fairfield, Connecticut in the United States

• Company operates in many segments such as:

- Energy, Technology Infrastructure, Capital Finance and Consumer and Industrial

•Organization started with 12 layers and an average span of control between three and four.

•Span of control is the direct number of reports, which was too narrow.

•With such a large number of layers, came a large number of pay levels.

• Our Strategy within the few years:- To have six layers at GE, and an average span of control, more than ten.

- Activities will be monitored by higher ranks in order to check their value, if those activities with the employees working within are not creating any value then they will be eliminated.

•This strategy focuses on the organization and the human resources.

•There is a need to change the hierarchy of reporting relationships.

•The implementation of this change is in order

- To Increase the organisations reaction time (responsiveness) which works towards improving the overall productivity.

•By focusing on changing at management level, this speeds up both information flows and decision making.

•Value based cost reduction focuses on process activities rather than the interaction of people

•Leaner managerial ranks tend to focus on work rather than coordination

1.Find the problem

-GE looked outside the company for perspectives, and set about gathering opinions on layers of leadership requirements in particular.

- Meet with leaders from more than 100 organisations, including large multinationals, small start-ups in emerging markets, universities, military institutions.

2. Offer a presentation Showing detailed analysis of the layers, levels and spans of control Charts, numbers, change in reporting and facts

3. Personal Leadership- Outcomes: That will help the employees have an image of the new organization. (Including new levels, layers)

- Interest: Using the influence of reason by showing different facts and ideas that will be presented

- Sources of power. Expert: Knowledge (Change Agent) / Legitimate: A change must occur by seniors

- Emotions: Influencing people to adapt by creating goodwill and updating the values (Employee treatment and benefits)

• 18 officers were separated from the CEO by 4 reporting layers

• 40% of the company`s managers were 8 or more layers.

• More than 800 people were in reporting chains of 11 or 12 layers.

• Middle Management had narrow spans of control

• Cost cutting is traditional at bottom layers because its lean.

•Management decreased the layers from 12 to 8.

•Achieved savings of roughly 30%.

•The idea was if savings were 10% or less, managers would only reduce costs part of budget execution.

•But if its more than 10% which is the case here then will use delayering that will help maintain morale.

• The main issue here is the reporting relationships, basically the communication between middle managers and their subordinates.

•The theory suggests we need to change the way they think (About the layers of transferring the reports) so by delayering this will allow the individuals to change the way they respond to situations.

• Infusing growth throughout the organization

• Instating the ability to work with the values of a leader.

• GE - Will implement a “Success Factors Project”, where

senior leaders from every business and functional area of the company will ask about their leadership approach.

- They will be asked what worked, what didn’t, and what had helped make them successful.

• Changing the hierarchy meant some subordinates will be cut or others had to report to other higher managers. (Internal Changes)

• By presenting facts acceptance of the situation will settle. Its less personal to eliminate frontline employees.

• Circle of change:- Problem-Planning (Analysis of different

layers/levels)- Taking action

•Increases the discipline within the organization

•Gives a sense of confrontation

•A clear sense of where do you want the company to move towards.Being an outsider (Change Agent Advice):- We’re hesitant to offer help because flattening a steep organizational pyramid is a very traumatic process for everyone involved.- Delayering process can damage relationships across an organization.

•There should be values embedded in the performance-management system, that determines rewards and incentives across the company that must be adjusted with the trends.

•GE was already a performance-driven culture, but this new aspect of including the Growth Values in performance reviews ensured that compensation would be based not just on what an employee did, but how they did it.

•Be clear about what, why and how the delayering process or any process within the organization.

•Getting the support of from different levels to increase satisfaction.

Cosmato, D. (2011, July 31). Organizational Restructuring: Strategies and Examples.Bright Hub. Retrieved July 29, 2014, from http://www.brighthub.com/office/human-resources/articles/122397.aspx

Shaping up: The Delayered Look. (n.d.). . Retrieved July 29, 2014, from http://www.bcg.com.cn/export/sites/default/en/files/publications/articles_pdf/Shaping_Up_The_Delayered_Look_Oct04.pdf

About Us. (n.d.). GE.com. Retrieved July 29, 2014, from http://www.ge.com/about-us/building

The Growth of values:How GE aligned its culture with its growth strategy. (2012, January 1). . Retrieved July 29, 2014, from http://www.cbi.org.uk/media/1925640/GE%20Capital%20growth%20values.pdf