Introduction
When Jack Welch was hired as the CEO of General Electric, the U.S was in recession and the companies were finding it nearly impossible to sustain growth. Out of the list of various complexities for GE, The major one was how to control the uncertainty cause by the external environment. All these economic and environmental factors were collaboratively affecting the employment rate in the country.
Case Analysis
Challenges Faced by Jack Welch
Jack Welch was a replacement for the successful Reg Jones. Reg Jones was popular amongst the people as he was voted as the “CEO of the year.” He had been greatly successful during his tenure at General Electric. Jack Welch had to live up to the standards which were set by his predecessor.
On his arrival, he was threatened by the evolution of the Japanese industry as well. This rivalry with the Japanese was a battle that had to be fought with recession going on and the restructuring of the organization, which was led and introduced by Reg Jones himself. This restructuring also caused issues for the new CEO to maintain productivity and growth at the same time and this made his job tough. The restructuring caused problems for Jack Welch. The salaries of the workforce were reduced.He had lesser number of employees, evaluation of the budgeting process and corporate planning process.
Reg Jones’ mainly focused on the strategic planning and he had built the hierarchal system accordingly. Decision taking powers were mostly in the hands of the top level management that also gave birth to concerns for Jack. There were 9 levels of hierarchy when he was hired and he quickly wanted to reduce the levels of hierarchy in the organization.
As a new CEO, Jack was not only facing challenges from the external sources but had to resolve the structural lacking within the organization. As a newly appointed CEO, Jack managed to cope with these challenged efficiently and quickly. From the very first day, he knew what steps he had to take and what things he had to focus on. Changes to the organization were continuously being made. General Electric was being moved towards change and Jack was the driving force for it.
Jack Welch started with the restructuring of the organization. The structural changes that were made by Reg Jones were tailored to focus on the strategic planning. Jack altered the structural system of the organization to achieve higher growth and productivity. Jack reduced the levels of hierarchy and the downsizing was also removed from the organization to overcome the difficulties he was facing.
Objective of Jack Welch
The main objective of General Electric was to provide the customers with more benefits, meeting the customer expectations to create long term relation with the customer and built a strong base for the company’s growth and productivity. In addition to this, Jack wanted the company to be perceived as highly productive enterprise with high spirits. He wanted General Electric to be perceived as the most profitable and highly diversified enterprise on the globe.
In order to achieve his goal, he tailored the organizational structures according to him. He changed the management styles of the organization. He wanted the organization to be able to face reality, openness and frankness. The major elements were changed inside the organization and the organizational culture that increased speed, self-confidence and simplicity were introduced. These implementations of the new organizational culture mainly focused upon making the organization more competitive in the global world. He wanted the cultural changes to affect the hierarchy of the organization right from the bottom to the top.
He started two initiatives that were Work-Out and Best Practices. The idea behind these initiatives was to create the desired culture and management style in General Electric. The idea behind “Best Practices” was to increase the adaptability of the organization. The companies that were more productive and profitable than General Electric, the individuals were motivated to learn from them and brainstorm for ideas that how can these be applied to General Electric. On the other hand,“Work-Out” gave the chance to the individuals of the organization to sort out the issues within the organization. Methods for dealing with each other and how employees can communicate more efficiently with their bosses and what approaches they can follow, this was the idea behind “Work-Out.”...................................
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