General electric's organization growth

General Electric was just a massive corporation producing average profits when Jack Welch became its chief executive officer in 1981. Jack employed organizational development strategies to restructure the business and increase its success in order to transform it. Three years after he took control, General Electric's stock price more than doubled as a result of his strategies' success. In this essay, Jack's numerous tactics are examined, along with their effectiveness and some of the challenges they presented.
Anderson proposes three methods for approaching organizational growth. In the first, management is in charge of the transformation. Here the management collects data and uses it to convince the employees that change is needed (Anderson, 2016, p. 192). The second one involves changing employee attitudes, relationships, skills and values to make them adaptive to change. The third one uses power and coercion through incentives and punishments to effect change. Jack Welch used the second approach to develop the organization and make it more profitable.

To effect change into General Electric, Jack introduced change systematically. This was done in five phases. First he made the company boundary less. He then globalized the organization, and improved the quality of GE products through the six sigma method. He also invested heavily in technology to make sure General Electric went digital.

Boundary less

When Jack took over at GE, there was a lot of bureaucracy in problem solving and decision making. This was slowing down the company especially when dealing with sudden problems that arose during their operations. Jack decided to introduce a few changes to ensure that problem solving, decision – making and implementation was done on time. He did this by introducing the “Workout Program.” This was a program where employees would come together despite their race, title and departments to identify problems, find solutions to them and implement them (Yadav).

Workouts normally took place and continue to take place at town hall meetings. All the stake holders related to a certain product would come together at a town hall to address issues concerning the particular product. The problems facing the product would be listed down and the goals of the company concerning the product enjoined. The management team, customer representatives, suppliers and employees would then brainstorm and come up with possible solutions. A member from the executive committee would then come in at the end of the meeting and be briefed on the possible solutions they had come up with. The member of the executive was then required to choose the most suitable solution of them all and direct its implementation. This ensured that all the stake holders had made contributions based on their own perspective. The customer representatives would identify some of the problems their members had experienced with the product and suggest possible solutions from their point of view. This ensured that General Electric always got effective customer feedback which enabled it to produce products that perfectly fit their customers need giving it an edge over its competitors. Having suppliers in the room also enabled them to feel as part of the company and not just contractors. The effect of involving normal employees was to build their confidence and give them a sense of belonging. It also made them feel as part and parcel of the company. It also provided them with the rare opportunity of differing with their superiors without backlash. At the town hall everyone was equal. There were no boundaries (Yadav).

The work out plan was very successful. It was welcomed and implemented so well that it is still being used to date. It is used all over the world. In fact, GE nowadays helps other companies set up their own workouts (Yadav). Even though the work out plan was so readily accepted, it faced a few challenges. There were still some employees who engaged in what the company called negative point and push. This is where the management spotted negative behaviors and engagements that did not encourage equality in opinion and push employees against it (Yadav). In fact, GE categorized managers who did not practice this equality in opinion as type four managers and fired them no matter how good they were at their jobs.



Globalization

During Jack’s reign, General Electric underwent massive globalizations into countries that it was not part of before. In the first half of his tenure, GE shied away from buying companies outside of the US. However, during the last half, GE expanded to Mexico, France, and Hungary. In the early nineteen nineties, GE made a more global push which saw GE make acquisitions all over Europe and send some of its best employees abroad. This acquisitions were mainly concentrated in areas that were transitioning, upcoming or going through tough financial times. Such places included Europe in the early 1990s, Mexico in the mid-90s and Japan in the late 90s (Jack).

In France, GE got into an aircraft engine manufacturing venture with Snecma. Jack also started a plastic manufacturing venture called Greenfield Plastics in France. He also swapped his consumer electronic business for France’s Thompson CGR. Two years after this purchases, Jack bought Hungarian lighting manufacturing company called Tungsram for one hundred and fifty million (Stewart, 1999).

Six Sigma and Beyond

Introduction of Six Sigma system to General Electric was done by Jack. Jack borrowed the idea from Motorola. Six sigma is used in quality control. Jack introduced the system when he noticed an increase in the number of defective products the company was producing. At that time, the number of defective products across the industry was very high at thirty five thousand per one million operations. It is then that Jack started looking for ways to reduce this defects and that is when he learned about six sigma (Jack). With six sigma, Jack aimed at reducing the number of defects to 3.5 in one million operations which translated to a 99.9996 percent.

Six sigma is a quality management control system that involves dissemination of the manufacturing process down to its core parts, evaluating each process and finding ways to improve its business structure and in the process improving quality. To implement, Jack directed his business executives to offer their best employees to be trained in Sigma Six. The employees were relieved off their normal jobs for up to two years. These employees were being trained to become ‘black belt’ Sigma experts. The company then trained thousands of greenbelt holders to implement Sigma into their daily jobs. Unlike black belt holders, green belt holders were not relieved off their normal daily jobs. To encourage employees to perfect their skills in Sigma, Jack altered the bonus compensation plans. He directed that sixty percent of the bonus calculations be based on financial performance and the remaining forty on Sigma results. In 1998, Jack directed that no employee would be considered for a managerial job without achieving a greenbelt in Sigma (Jack).

Jack realized that Sigma could be used by almost anyone in the company. Human resource managers could use it to reduce the cycle time of hiring new employees. Regional sales managers could use it to forecast pricing variations and reliability. Plant managers could use it to reduce waste and therefore free up space. They could also use it to improve on product consistency (Jack).

Introduction of Sigma to General Electric proved very fruitful. The results started showing in the first year. During this year, General Electric saved up to one hundred and fifty million. By 1999, GE had saved up to 1.5 Billion dollars.

Digitalization of GE

After the introduction of Sigma, came the digitalization of General Electric. This involved doing away with all the paper work they had and moving to a more efficient digital system. According to Jack, companies who did not embrace internet were on the blink of being wiped out. As such, he dedicated resources to the digitalization of the organization. Digitalization was to happen in three phases. The first phase was through the formation of an e – work platform. This platform was to enable employees go on about their duties normally but this time in a digital system. The next phase was the e – boardroom. This was a system that involved the use of email and intranet to send information both vertically and horizontally within the organization. This ensured that employees would be able to communicate with each other in real time no matter their geographical locations. There was also the implementation of e – learning. On this platform, all employees of the company were required to complete fourteen hours lessons on e-commerce. The company also developed e – metrics. This were Sigma measurements that were used to measure and ensure improvement of e – business processes (Caruthers).

In conclusion, General Electric underwent numerous changes when Jack was the Chief Executive Officer. Some of these changes were technological while others were managerial. Some of the most significant changes was the introduction of Sigma and Workout programs. These were the most successful of the all the changes he introduced. They were readily welcome and implemented. So far, the company has had no trouble implementing them and I don’t foresee them running into any. The digitalization of the organization was also very important since it is made the organization more efficient

References

Yadav, Bhupesh. Analyzing Learning Organizations; Learning at GE. Retrieved from http://ideasmakemarket.com/2013/03/analysing-learning-organizations-boundary-less-at-ge.html

Stewart A. T. (1999). See Jack, See Jack run Europe. Retrieved from http://archive.fortune.com/magazines/fortune/fortune_archive/1999/09/27/266162/index.htm

Jack; Straight from the Gut Summary. Retrieved from http://www.businesstraining.com.mx/egaii/docs/Jack.pdf

Carruthers, Kate (2001). GE Case Study 2001. Retrieved from http://katecarruthers.com/writings/GE_Case_Study_2001.pdf

Anderson, D. L. (2016). Organization development: The process of leading organizational change. Sage Publications.