Ge Transformation Case Study Jack Welch Notes

GE Transformation notes: Founded in 1878 Focus on Communication: Used initiatives such as training programs to increase communication Organizational Culture:  Welch’s Core Idea: the only way to shift a company’s culture is to change the habitual thinking and behavior of its fast-track executives. Initiatives * Work Out * Began 1988 * Groups of 40-100 employees involved * Removing unnecessary bureaucratic work out of the system * By 1992 200,000 GE employees participated in Work-out Began as a driving force for improving productivity and became a tool for cultural change. Best Practices * Program to Increase Productivity * Focus more on how things got done rather than what got done * Focused on customer satisfaction *These two initiatives helped refine GE’s organizational culture, characterized by speed, simplicity and self-confidence. * Globalization * 1986- corporate executive council meeting during * 1987- GE agreed to exchange consumer electronics business for the French medical imaging business. 1989- Welch appointed Paolo Fresco as head of international operations in 1992. * 1998- International revenues at $42. 8 billion. Company expected to do almost half its business outside the USA by year 2000. Global Best Practices Program opened communication channel for GE with outside companies * Session C HR planning * Adapted HR system to his goals, and began keeping tabs on upper management. GE management expected feedback, which they used as the basis for coaching and developing their staff.

Increased communication between CEO, and top managers, increased communication between top managers and lower employees, became means for training of new employees * Crotonville Management Development Facility * Managers learn about GE, and experience debating and problem solving Used as a hub for communications * 360° Feedback process * Became means for training needs, coaching opportunities, and career planning. * “A Players” Managers with vision, leadership, energy, and courage * Performance Appraisal System: Managers rated employees on a scale of 1-5, 5 being the lowest on effectiveness * All 5’s were to be let go, and all 1’s were to be rewarded with stock options, and higher promotional probability * In the new culture, role of the leader is to express a vision, get a buy-in and implement it. Increased feedback communication and expectations in the organization * Boundaryless Behavior * Purpose was to strengthen GE ‘s individual Business. There would be no distinction between domestic and foreign operation. Remove labels which get in the way of working together. Eliminated unnecessary communication filters, encouraged input from every employee, open communication channels gave employees the ability to speak about their concerns. Eliminated middle management that stood in the way of direct communication * Stretch * Created an atmosphere that asked everyone “How good can you be? ” * Managers not held accountable for these goals, but were reward for achieving them. Mid 1990’s established as part of GE’s culture, stretch targets increased employee values, attitudes and confidence. Service Businesses * Reduce dependence on traditional industrial products Changed internal mindsets from selling products to “helping our customer win” * Six Sigma Quality Initiative * Learned the program from Lawrence Bossidy (left GE in 1991) who borrowed it from Motorola, which improved quality for AlliedSignal Inc. * Goal was to increase quality * 30,000 Six Sigma projects were initiated in 1998 Required change in culture of the organization: employees would need technical training, and there was need of communication of the importance to the company’s strategic objectives.