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An Examination of His Leadership Under Different Approaches During his Service as the CEO of General Electric
This assignment is centralised on Jack Welch. He born in 1935 and grew up in Salem, Massachusetts. He attended the University of Massachusetts and then he took his master and doctorate degree in chemical engineering at the University of Illinois. He joined the plastic division of GE in Pittsfield, Massachusetts in October 1960. Then at the age of 33 he became the youngest manager of GE. In 1980, at the age of 45 he became the 8th CEO of GE in a period where the American economy was recessing with low interest rates and high unemployment rates. Then he launched his "revolution" by introducing the "Fix, Close or Sell" approach to the company, resulting to the sell of more that 200 businesses of the company and the acquisition of 70, including the acquisition of RCA that cost $6 bill. Jack Welch was initiating and have been the CEO of GE for two decades.
This assignment will begging by analysing Welch leadership under the Trait Approach of leadership, which examines some of the personal characteristics of a person and thus it can distinguish whether that person is a leader and even more an effective leader. This section is followed by an analysis under the Leadership Style Approach. In the later stage this assignment will examine Welch according to the Transformational Leadership Approach. In the final section, Welch as a leader is going to allocated on the "five-level" Leadership Framework.
Table of Contents
1. Traits Approach
1.1. Intelligence - Charisma
Jack Welch could be characterized as an intelligent personality. This is because he was able to distinguish options that were profitable for GE and bring the change by incorporating the key people of the organization. Through his leadership, he was driving people to understand the need and the potentials of the change. Additionally he was always next to his people as he was frequently travelling to the Management Development Institute of the company where he was teaching his people and he was also incorporating them into a discussion of how they face the difficulties that the change caused to their departments. Thus, getting inspired by this honest and interactive communication approach between his key people, he inspired GE to have a "small company" culture, where everyone feels the need to interact and that he is important for the company. Thus, Welch together with corporation's Management Development direction, James Baughman, ended up to a new initiative approach namely "work-out". This approach aimed to reduce the bureaucracy and bring new communication techniques between the company's employees and their managers. Furthermore, the lately shows the charismatic aspect of Welch's character. He was able to recognize the needs of the forthcoming business situation before the other leaders do. His charisma also is enhanced by the numerous innovative approaches that he brought to the corporation during service, such as the "fix, Sell or Close" and "Best Practice".
Jack Welch confident aspect of his character is shown from his priority to fundamentally restructure the company just after recruiting as the CEO of the company, where the American economy was recessing. He was confident enough to leave the widely known GE's "model organization" and proceed to his new strategy, knowing that it will be painful. His claimed that "GE had to change or risk becoming irrelevant" showing that he was confident that his proposed restructuring of the company will make it more competitive. Additionally, as the company was restructuring he was feeling more confident for more daringly actions.
The main desire of Jack Welch was to develop GE as much as possible. The initiative approaches that he introduced to the company drove the company to his desire. He was a proactive person since he managed to change the entire hierarchical structure of the company and to eliminate the bureaucracy within the company. Additionally, he diversified the company into new markets such as "services". It seems that he was perfectionists since he introduced the "extraordinary" model which aimed to the establishment of extraordinary targets.
The integrity of his character is obvious since his values remained unchanged throughout his two decades service as the GE's CEO. One of his strong principles that remained unchanged was that there is no space for the supporters of the old culture within the company. He was claiming that "if you are centralised to yourself, if you are not searching and you are not sharing your ideas with your co-workers, you do not belong here". He was very honest with his employees showing them exactly how he wanted them to perform. He even change the bonus determination is order to enhance his principles and to motivate his employees. His integrity inspired confidence to his people.
Moreover his integrity is also observable form the fact that he was constantly argue that there was a need for more changes even though the intensive restructure of the company cause him the nickname of "Neutral Jack" which he didn't like.
Jack Welch's sociability can be confirmed by his good interpersonal skills and good cooperative relationship that he had with his followers. He was visiting once a year each GE's business in order to evaluate the 3000 management employees progress. In additions he had a direct contact his top 500 management employees where they have been appointed to their positions after his personal approval.
2. The Leadership Style Approach
It can be said that Jack Welch is a high task oriented personality. He started to implement the restructuring of the company just after his acquisition as a CEO and he was continuously bringing new approached to the company for two decades until he retired. He showed form the early beginning that he had a clear vision for the company and that he knew the path that he should follow in order to implement his strategy: "Within a decade, I would like GE to be a unique corporation, that will be distinguished for high moral and strong entrepreneurshipâ€¦ the most profitable and diversified company in the world that will perform exquisite quality of leadership for each of its product lines". Additionally, he believed that the key asset of the company that will bring the change was his people. Thus he implement his restructuring plan by urge them to concentrate on the change. In fact, he changed accordingly the bonus distribution criteria so that to motivate the company's employees to achieve the change and further his goals. Moreover, according to the time period, Welch was aware of what it should be done in order to keep and enhance the company's high productivity and competitiveness. For example, in 1994 he proposed that GE should start getting independent from the specialized industrial product and to incorporate "services" into their business. Finally, in 1995, Welch have been hospitalized for a treble bypass. Although his hospitalization he didn't show any indications of low energy but he came back with more initiative proposals such as the introduction of the "six sigma" in the organization. This is an indication of the hard working aspect of his personality.
When Welch started restructuring the company, one of the main changes that he made was to significantly reduce the personnel of the company. In fact, during the years of 1981 to 1988, GE disposed of 59290 salaries and 64160 wages. Taking into consideration that during that period the American economy was under recession with a high level of unemployment, someone can say that Welch is a low relationship oriented person since he broke the "silent contract" that GE had with its employees, i.e. the lifetime employment. However, he is high relationship oriented person. As mentioned above, Welch is aware that his personnel is the intellectual capital of the company. The practices that he adopted, such as "work-out", are highly correlated with the relationship between the company's employees and his participative leadership style. Additionally he was focusing in the alignment of his personnel to the new culture of his strategy. As he supported, it was a challenge for him to redefine the "silent contract" to "the new psychological contract.. is that the work vacancies in GE are the best in the world for people that they are willing to compete". Moreover he invested in the development of his employees and he introduced a "succession plan" to the company that promoted his best people. His high initiating structure drove him to invest to the reconstruction of the Crotonville Development Centre of the company. In the mid 80's he invested approximately 45 bill dollars for new buildings and recruitment of well known professors. Thus the Crotoville became the centre for the alignment of the new managers with the new vision and culture of the GE. In addition, Welch used to travel twice a month to the centre in order to teach the new generation of management. Thus he was clearly defined his role as well his subordinates roles within the company. Also, by teaching them showed his consideration about his subordinates. Furthermore, as mentioned earlier, he was yearly visiting the GE's businesses in order to evaluate the progress and to have a direct contact with the top 500 management employees. He wanted the magazines in the future to state that "GE is a place that people are free to be creativeâ€¦ an open and fair place that people has the feeling that what they do is important and the feeling of achievement is compensated".
Thus, we can conclude that Welch is a team manager since he is both high task and relationship oriented.
3. Transformational or Charismatic Leadership Approach
Based on the new leadership approaches, Jack Welch can be characterized as a transformational leader since he was clearly communicating his vision for GE to his subordinates. His contribution to the Crotonville Development Centre can partly explain the above characteristic. Furthermore, in the early 90's he introduce the "extraordinary" term which inspired the company to extraordinary preformed. With the introduction of this term, Welch targeted to the change of the way which the company set its goals and evaluates its performance. For example, under this new approach managers should based their goals on the current market situation and not based on last years targets. They should also set higher goals for their departments and they were not responsible for the accomplishment of those targets. Thus the people that would accomplish them would get rewarded accordingly. By the beginning of 1996, Welch declared that GE accomplished the two out of the four "extraordinary" targets that they set. He also claimed that "stressing for these extraordinary targets, we learn do things faster".
4. Level-5 Leadership Framework
Jack Welch had a clear view of his vision for GE. He used his knowledge, his good interpersonal skills and his hard work in order to contribute to the implementation of his strategy. Throughout the reconstruction of the Crotonville, he aligned and organized the company's intellectual capital with his new strategy. In addition, he was committed of what he was doing during his entire service of two decades as the CEO of GE since he was initiating until his retirement. Moreover, through the "extraordinary term that he introduced to the company, he achieved to stimulate his people high performance standards. He showed that he had a professional will but not personal humility. Finally, he was very confident about the new approaches and changes that he brought to the company.
Therefore, taking into consideration all the above and the traits discussed on the first section of this assignment, it can be concluded that Jack Welch stands on the 4th level of the five-level leadership framework. He is an effective leader.
All together we can conclude that Jack Welch is a great leader of his kind. He opened new strategic options for the future of GE by restructuring the company and introducing approaches that helped the company to diversify and expand its operations into foreign markets. Additionally, throughout the restructure that he performed in the corporation, he achieved to "promote the right organizational climate and processes that lead to commitment and motivation". Furthermore, his strategy mainly incorporated the long term development of the corporation. A clear indication of this is the fact that he never gave up searching for new opportunities that tend to be profitable for the company, eg he incorporated the "service aspect" in GE's businesses. Another example is his suggestion of taking internet as an opportunity for the future, just before his retirement. Overall, his leadership in GE orchestrates the strategic alignment of the company's environment. Thus GE gained a sustainable competitive advantage that led to high performance.