Term Paper: Jack Welch Leadership Strategies

Pages: 25 (9411 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Leadership  ·  Buy This Paper


[. . .] In the mid-nineties, Welch was quick to implement Six Sigma in GE, when there were signals that the quality systems in the company were falling short of the increasing expectations from the markets.

Leadership in management:

Welch was a leader who was ready and willing to throw the old rule-book of management at GE. Defying well-respected tradition, he dared to evolve a new set of principles. Much to the surprise of even the best management gurus, he emphasized that managers must learn to manage less and not more. At first glance, this may look contrary to common logic, according to which managers must be able to manager more for better performance. However, on deeper reflection it becomes obvious that Welch wanted decision making power and freedom to percolate down to the lower rung of employees. He had the strong conviction that GE's managers were spending far too much time in attending to routine and mundane things which could be best left to the employees who had the knowledge and skills to get them done effectively. Often, managers were getting in the way of subordinates and tried to question or alter their decisions, which resulted in waste of time.

This also meant that much of the productive time of managers was lost in dealing with day-to-day situations and the resulting weariness prevented them from contributing to the vision of the company. Welch believed and made sure that managers gave enough leeway to employees to do their work and more importantly, stay out of their way in decision making. To achieve this, managers had to give more respect and show confidence in sub-ordinates. Once they started doing so, the results were obvious. Employees showed greater responsibility and commitment to work. Over a period, managers started gaining more time to think of the vision and form strategies that will take company to higher levels.

Another one of his highly rated leadership virtues is total delegation. After hiring the best managers and providing them sufficient training and knowledge, he reposed confidence in them and never interfered in their decisions, unless something went wrong drastically. Amazingly, Welch had the courage to admit that he did not know many intricacies or the technicalities of the various businesses that GE ran. For instance, he never interfered in the style or specifications of the products that GE made, although he ensured, again through competent managers, that the products are in line what the market wanted. While he was glad to provide a vision for business, he steered cleared to the actual operations to his able managers. But it would be wrong to assume that Welch did not have any control of GE's businesses.

In fact, he closely monitored them to the extent that he was always able to sense situations when something goes or is about to go wrong. In such situations, he was quick to step in with remedial measures and provided resources and support to get the business back on track. Welch stressed great importance on information and evolved mechanisms that would provide him accurate information on a sustained business. According to him, no business can be too complex to manage and managers must develop the tendency to understand business by breaking it into five simple parts - (a) the global environment of the business in which the company operates (b) business strategy and activities of competitors - the company's strategy to counter competition (d) the possible future strategy of competitors (e) the company's counter strategy to keep ahead of competitors. Welch strove to find answers to these questions on a continuous basis and he knew that the answers could change quickly depending on the changes in market place. He realized that by tracking the fast changing business dynamics, he could alter even the vision of the company and take it to much greater heights.

Leading the team:

The quintessential element of leadership is the management of team members. Every leader, sooner or later, must face situations where he will evaluate members and provide reward or punishment, depending on their performance. When it comes to performance measurement, the traits of effective managers come into the picture. Yes, leadership is a very good concept, but performance is almost always measured in terms of effective management. In an attempt to understand the characteristics of managers, Welch was convinced the yardstick comprised of two distinct elements - performance and values. Once he started working on this angle, it was not difficult for him to come up with four types of managers:

Type A - managers who deliver on commitments and share GE's values

Type B - managers who neither meet the commitments nor share GE's values

Type C - managers who do not deliver on commitments but share GE's values

Type D - managers who deliver on commitments but do not share GE's values

In the early stages of dealing with this issue, Welch strongly advocated that the type A managers must be rewarded and groomed for higher responsibilities. This group was central to the company's success and hence he solidly backed anyone with these qualities. Most importantly, Welch ensured that such managers were promoted as many times as possible and as quickly as feasible. This endeared many excellent managers to GE and to its leadership. Type B managers were a full problem set and hence Welch had no hesitation in suggesting that GE would be better off without them. They provided no value in any form and hence there was no justification in carrying on with them. With respect to Type C managers, he felt it was a tricky situation.

After much deliberation, he came to the conclusion that managers who performed but did not share GE's values must be given another chance in another environment so that they are given enough leeway to fall in line. If they did not use the second chance, then they should be on their way out. While these were quite rational decisions, what shocked the mammoth workforce at GE was Welch's unrelenting position that Type D managers should be promptly sent out of the company. This meant that even competent managers could be tossed out if they did not display the expected behavioral codes. Welch reasoned that values were core to the organization and could not be compromised under any circumstances. Put simply, competence and performance came second to values, which is a not a measurable and tangible element. This stand evoked sharp criticism many on the grounds that value is a psychological parameter and may not be easily quantifiable.

A few years down the line, in 1997, Welch reaffirmed these views but with some changes. He suggested that Type B managers should also be given a chance, at least in certain cases. If such managers were willing to adopt GE's values then it is only matter of training before they start performing to acceptable levels. This time, he insisted that the Type C managers should not be tolerated, probably because the effort of trying to coax unresponsive managers towards better performance was not worth its salt. Till the end of his career, he maintained these principles and tried his best to follow them to the hilt. He gave importance to numbers, but then without subscribing values, numbers meant nothing to him.

Welch's ruthless moves to get rid of 'off-the-mark' managers evoked praise and criticism. At times, the criticism was more pronounced on the basis that he saw people who could be put in place and thrown out as one would do with lifeless objects. While he attached importance to values, he did not seem to care about psychological issues such as depression, anxiety and guilt when it came to dismissing employees. When confronted with this issue, Welch had a clear-cut answer. He said that the main factor behind all the emotional problems relating to firing was guilt. When one stops feeling guilty the bigger picture slowly but surely emerges. According to Welch, removing a person from a position in which she is not comfortable is nothing short of doing a favor to the organization and the business. Taking it a bit forward, it could also be a favor to the person herself, although the immediate reactions could be one of pain and disappointment.

Business leadership:

One of the most obvious but often overlooked characteristics of Welch is that he had the thirst to be a leader, real in every sense. In practical terms, he wanted all businesses of GE to be either number one or at worst, number two. He openly declared that he would not hesitate to shut down businesses that did not hit the top chart in the market arena. This was a real shocker, as common financial sense had drilled down the philosophy over generations that as long as businesses made money and good profits, ranking hardly mattered. But Welch had different ideas. He argued that in many markets, during downtrend conditions, it was the lower… [END OF PREVIEW]

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