Case Analysis: GE's Two-Decade Transformation: Jack Welch's Leadership

This case is about a leader who led a company for twenty years and made for tune for

the company. The manager of the century, Jack Welch, has been so charismatic that

even today people give examples of his leadership.

In the analysis of this case, we will follow LFS framework which is all about 3 major

participants in any company. These participants are ‘Leader, Followers and Situation’.

We will analyze all three of these participants and will see how these three combined

turned the newly reorganized firm into a huge profit making giant.

Leader:

From all the steps he took in his 20 years of leadership, he proved himself as a quick

decision maker and change manager. Let’s use Big 5 personality model to see where Jack

Welch fits in.

Personality Trait Jack Welch

Extroversion Hi

Openness Hi

Conscientiousness Hi

Agreeableness Hi

Neuroticism Hi

As we can see from the Big 5 personality trait analysis, Jack Welch is emotionally stable

and agreeable person, who is also open to new and creative ideas and he likes to get

those idea implemented very soon. He is outspoken and he meets everyone in his

company, which makes him extrovert as well. All these personality traits show that he

was very energetic and caring about his organization. He used to plan both for short

term and long term. We also see that he used to build models for big things like his

vision to small things like quality assurance. Simple and easy to understand models can

be communicated easily to all the employees.

He always wanted and did remove all the redundant processes and extra employees. He

also removed the extra layer of management and started to communicate with the

businesses directly. Then he also introduced the relative rewarding system, which states

that top people will get stock options and bottom people will be fired. Due to this

system everyone started to work harder as no one wanted to be in the bottom ten

percent and to be fired.

He also believed in training the successors and making future leaders who can replace

the old leaders and put new energy into the businesses. He also believed in giving his

people the best as reward and recognition. He used to say that give all the resources

and power that are needed, and also give best rewards to the best people. He knew that

people’s voice is very important to he arranged such a system that every single

employee can be heard, his suggestions are taken seriously and his issues are resolved.

This created a sense of ownership in all the employees and they felt as being important

and part of the company. All these actions prove that Jack Welch was a true leader and

a great manager. Due to his strong leadership, he transformed the company in to a

giant.

Followers:

Let’s now look at the followers who actually worked at the ground level to make Jack

Welch’s vision a reality. The followers that Jack Welch had been carefully selected and

the system and processes have been created and managed in such a way that only the

best people are part of the businesses. All these best people of the industry were being

rewarded and recognized in the best way. And so they gave their best to the businesses.

Lets look at the followers and analyze them by Alderfer’s ERG Theory. Alderfer says that

there are three main levels of on which employees go one by one. These three are

‘Existence, Relatedness and Growth’. Lets see where the followers of the company are.

As we know that there were thousands and thousands of employees who existed and

worked for the business. They were being heard and their complaints and suggestions

were given serious

considerations. By this, they can

relate to the company and feel

being important and part of the

company. The top 25% of the

employees were also given

stock option and other benefits,

which included critical positions,

training and recognition. This

means that the company is

taking care of the growth of the

employees as well. So by this analysis done using ERG theory we can see that the

employees are at the top level which is the growth level.

This means that the followers were highly satisfied with their work and felt as being part

of the company. This kind of followers, for sure, gives their best to the company.

Situation:

Now let’s have a brief look at the situation. First of all we see that the company just had

massive reorganization in early 1980s when Jack Welch was nominated as CEO of the

company. This was the time, when a company needed a change manager who can

change the total picture of the company. This time Jack Welch took the initiative and did

change the whole company in 20 years. So we can see that the company was not

resistant to the changes because due to the situation, everyone was expecting changes

and they accepted the changes easily. So the situation helped here.

Growth

Relatedness

Existence

We also see that the time was of recession. This also gives favorability towards taking

the blood bath and taking out all the people and processes which are not adding value

towards the organization. As in these kinds of situations, everyone accept these changes

easily as well, so this was another positive of the situation.

Then we see that in 20 years the changes continued and these initiatives and changes

were widely accepted as most of the previous initiatives were highly successful and

people had trust on Jack Welch.

Conclusion:

As we analyzed the whole case using LFS (Leader, Follower, Situation) framework, we

saw that it was not only the leader who was charismatic, but the followers and the

situation also played their role in transforming General Electric into a profit making

giant. If the situation was different or the followers resisted, then the company could

have been a totally different one today.