Mr Welch Has Proved Himself A Master Painter Commerce Essay


If Leadership is an art, then surely Mr. Welch has proved him a master painter, most recognized leader of all time in the history books of leadership. He was born in America November 19 1935 in Peabody, Massachusetts he was the only child. He was a sport enthusiast, the first lessons he learnt in scrappy place called the pit. He started his education in University of Massachusetts-Amherst, BS, 1957; University of Illinois-Champaign, MA, 1958; PhD, 1960. He joined the plastic division of GE in Pittsfield Massachusetts. This is the place where he discovered his leadership ideas. In the beginning there were two employees which prompted Welch to liken his part of GE to a corner grocery store. Welch knew the customers names and their buying habits. Welch believes the confidence thrives in an informal area. The youngest CEO and chairman of General Electric Company(1981-2001) starting from entry-level junior engineer(1960-1968) , few of his achievements in his career was Junior Achievement National Business Hall of Fame, 1997; Manager of the 20th Century, Fortune, 1999; 400 Richest Americans, Forbes, 2001-2004. Alfred Sloan of General Motors and Jack Welch the two greatest corporate leaders of this century says Noel Tichy, a longtime GE observer and University of Michigan manager professor. Welch would be the greater of the two because he set a new, contemporary paradigm for the corporation that is the model for the 21st century.'' Kouzes and Posner (1995) believe that when leaders are at their best they challenge the process, inspire a shared vision, enable others to act, model the way, and also encourage the heart. These are actions and strategies that are associated directly with Welch during his tenure at GE.

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A strategy that has improved growth with the increasing extraordinary growth of the market value of GE from just $12 billion in 1981 to about $280 billion today. None of the top Companies in the world are able to achieve such a mile stone not even Microsoft's (MSFT) William H. Gates III or Intel's (INTC) Andrew S. Grove, not Walt Disney's (DIS) Michael D. Eisner or Berkshire Hathaway's (BKR.A) Warren E. Buffett, not even the late Coca-Cola (KO) chieftain Roberto C. Goizueta or the late Wal-Mart (WMT) founder Sam Walton has created more shareholder value than Jack Welch. According to some analyst in Wall Street says the prospect of GE when Welch leaves at the end of the year 2000, GE's stock could trade at $150 to $200 a share, up from $82 now, and the company could be worth $490 billion to $650 billion. More than 600 acquisitions have reshaped the company and also were able to look abroad into newly emerging markets Source (Krames, 2002) (Welch, et al., 2002).


Jack Welch says the leaders comprises of five leadership traits which are very essential. The essential traits, by the way, do not include integrity, which is important requirement in any leadership position, or intelligence, which is similar to a ticket to a gram in complex global marketplace; they do not include emotional maturity.

The big question still remains whether leaders are born or made, for a good classroom or dinner party debate. But for individuals who are in front-line positions to hire, promote, and fire, the question, "Who has the right stuff to lead?" definitely has more urgency. The organization's culture and performance can go to new levels by getting the answer right, however if getting it wrong can too -- downwards.

They were six leading contenders for GE's top job in 1981. Jack Welch was not considered a leading contender for GE's top job. Due to his performance and earnings record ultimately won him the position. Even though he had no formal master plan for GE's reorganization, he did have a vision of what he wanted the company to be. Dismantling of bureaucracy was the first step in realizing that vision of Jack Welch. The administration of GE was building around three hundred separate business at the start of Welch's tenure a recipe for inefficiency. By mid 1980s the corporate structure was tore into convention pattern with a vengeance and had overseen nearly 120,000 layoffs and earned the nickname "Neutron Jack."

Through sales and layoffs billions of dollars has been saved, Welch reinvested those billions of dollars and considered possible takeover targets in 1985. He eventually settled on RCA, originally a GE startup but at the time of the merger a top competitor in the high-tech and defense industries. An American manufacturing unit which was against Japanese competition which consolidated the manufacturing unit in defense industries. This was the largest merger of its kind in the history of American business, with RCA selling for nearly $6.3 billion. The half of RCA's premerger workforce was gone within three years, and most of its business including the radio network, which had been in operation virtually since radio was born. By the late 1980s only the National Broadcasting Corporation (NBC) television network and RCA's defense businesses remained.

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Mr. Welch in 1990s instituted the Six Sigma program at GE. Initially implemented at Motorola and Allied-Signal, this program was developed to minimize the production of defective units and maximize the efficiency of manufacturing products. General Electric then adopted this method and became the largest quality-control measure ever adopted in corporate America. Huge investment in training and development was required by this program but finally led to great gains in profit and productivity. Development of electronic-business programs by the end of the century, another of Welch's initiatives, the suppliers and customers were tied by this electronic system by the company. One of the aspects of Welch was e-business which could dub the "boundary less company," a company without administrative walls between separate business units and where knowledge applied to one area could be applied companywide. The boundary less company coming to existence was Welch vision at the time of his retirement Source (BYRNE, 1998) (Jack Welch, 2008).


Rewards for the top performer was Jack Welch firmly believed in, an attitude he had retained since his first job at GE. He organized an action plan for the performance to identify the top 20 percent of employees, who were eligible for bonuses, as well as the bottom 10 percent, the "lemons," who were typically fired and replaced. Distribution of wealth was supported by Welch as far as possible throughout the company and understood when considering bonuses that life-changing fortunes were sometimes at stake. Value of surprise was better understood by Welch, there were unexpected visits every week to plants and offices, hurriedly scheduled luncheons with managers several layers below him, he also used to handwritten notes to anyone in the company who he felt deserved personal communication, whether to motivate, correct, or congratulate, from top management to laborers, this was only meant to lead, guide, and influence the behavior of a complex organization. This shows his ability to get best of the people by giving more of them because of who he is. He lives the American dream. He wasn't born with a silver spoon in his mouth. He got himself out of the pile. He didn't just show up.''

Raw numbers measuring efficiency and profits besides this more personal aspect also characterized Welch's leadership. He understood that customer satisfaction and positive relationship with both customer and employees has made a successful business this made the company a little different in practice from a small local market. Welch likes to call General Electric the ''grocery store.'' This helps Welch to mentally roll up his sleeves, slip into an apron, and get behind the counter. There, he can get to know every employee and serve every customer, whether the product for sale was turbines or apples, the customer would determine the success of the enterprise, by doing this he was able to cultivate relationships with suppliers, customers, and employees alike. The productivity was having a huge impact since he was able to interact with his employees, all the workers knew that at any moment they could receive a note or a visit from the boss since Welch used to have a good communication with them. Welch says ''If the customer isn't satisfied, if the stuff is getting stale, if the shelf isn't right, or if the offerings aren't right, it's the same thing, it would be managed like a small organization. By his efforts at communication, senses of value and pride in employees, and personal abilities everyone knew Welch simply as "Jack." The story about GE that hasn't been told is the value of an informal place,'' says Welch. ''I think it's a big thought. I don't think people have ever figured out that being informal is a big deal.' This type of informality was perhaps most critical among GE's top leadership, this encouraged the company executives to openly praise or criticize each other-or even Welch himself Source (Byrne, 1998)


Laxity, kindness for weakness could have been mistaken for being informality, this was much to do with Welch's charisma as it has to do with the less visible rhythms of the company--its meetings and review sessions--and how he uses them to great advantage. In the formal annual presentation through subsequent year GE leadership had delineated management concepts designed to guide the company, as part of his sustained war against entrenched bureaucracy. More continual general guidance was dispensed with this system entirely by Welch also formal meetings and deliberative committees were no longer needed in order to implement change under Welch leadership. Lower-echelon leadership was given more authority and entrusted them since they were more familiar with immediate problems and possible solutions than were distant senior executives. This was the opportunity given to the mangers to respond swiftly in order to meet rapidly changing conditions by the new system. Welch felt that he was back in the vacant lot of his youth where he and his neighbor-hood friends often played their games, with the system of fast-moving goals and changing tactics, the future GE chief executive first learned both to lead and to follow and also was able to apply sports metaphors to his thinking and in his relations with managers. By picking the best players for GE and drawing the most out them he considered himself a team captain, before engaging in discussion with the boss he consistently forced executives to argue in meetings, often heatedly, the idea being to force management to know their businesses, processes, and issues thoroughly.

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In such conditions a manager's level of commitment or enthusiasm for a project or policy by noting the extent to which he was willing to argue could be determined by Welch. Welch has little patience for half measures and was similarly combative in performance-review meetings, in which company leaders would discuss the employees within their respective divisions. With the limited knowledge Welch was able to make quick judgments, but he trusted his management to tell him when he was wrong Source (Byrne, 1998) (Anon, 1999).

"The Boundary less Company"

As CEO of GE jack Welch's passion was to create a boundary less culture (introduced at the company's 1990 annual meeting) which will be able to remove the barriers among many functions at the company engineering, manufacturing, marketing and the rest. This would help in having no distinctions between "domestic" and "foreign" operations. It would easy in making the customers and the suppliers' part of a single process, which will knock down external walls. This would help the teams go ahead of the individual ego. The people with good ideas will be rewarded and recognized. Each employee and leader at GE would come to work every day with the goal of "Finding a Better Way Every Day".

In order to devise solutions to business problems they were thousands of students attending training at Ortonville, implementation of the lessons taken there remained unenthusiastic. Characteristically, bureaucracy was blamed by Welch since his vision-in this case managerial holdouts from the previous years were not sharing, by his broader vision for the company. The managers were not pleased by Crotonville alumni as Welch was; due to this he applied the "Pit" experience across the entire company. Welch wanted forums for the same types of exchanges of ideas that he deemed so valuable at Crotonville not large, formal classrooms and management. "Work-Outs" was the name given for the gatherings; it was the traditional New England-style town meeting. The twist was that management would be excused from the discussion. Facilitators hired from academia to lead discussion helped workers develop solutions to ongoing problems within the business. Managers were given the results of the discussion at the ends of the meetings. The managers had to decide to weather to implement the arrived-at solutions or not, if unable to execute them immediately, construct a action plan for doing so. Welch was able to see good ideas implementing the "Work-Out" plans by spreading throughout GE.

Welch envisioned a system where not only the inventor of a good idea but all the others who recognized and developed that idea would be rewarded. Knowledge referred not only to factual information but to methods of improving profitability needed to be shared across all lines of business was the primary goal, which in turn necessitated more sharing of the employees themselves across different businesses, this is to recognize problems, and experience in correcting past problems. Lessons and ideal practices learned in one division could be applied to any other division only by maximum communication, if he wants his massages to have the correct impact he had to disseminate them himself , he was able consider that it was impossible to develop personal relationship with every employee in the company. The institution of a means of communication was achieved through his corporate-education initiatives and his pursuit of the boundary less company. Welch's messages and visions were learned and reinforced first at Crotonville, and later it saw shared to the employees across businesses and in ongoing meetings, finally these concepts helped the employee promotion and retention. Welch trusted managers to relay leadership messages throughout the company, but he did not rely solely on them to do so Source (Welch, et al., 2002) (Robert, 1998).

World's Greatest CEO

Welch has been a master of acquisitions and due to this he was known as "Trader Jack,". Welch transformed his image as GE's fortunes improved. Later he was became the best CEO in the world. The company had always been heavily watched by business analysts for the latest management trends, but under Welch's tenure, GE came to define successful business management. GE's Management Development Institute corporate training program was the part of Welch's improving image. The Pit which is the center at Croton-on-Hudson (Crotonville), was a showcase for Welch. Training and Education at crotonville spend about $500 million every year. He has worked with 15,000 GE managers and executives and he has appeared at the center more than 250 times over 17 years. "The students see all of Jack here," wrote Byrne of Business Week. "The management theorist, strategic thinker, business teacher, and corporate icon who made it to the top despite his working class background." .Welch has recently paid a lot of attention to people issues and worked to create informality at the company, by doing this he has allowed communications to open across layers and fostered a sense of entrepreneurship at the world's largest corporation. Throughout the year, Welch met with managers across several levels of leadership. As Byrne wrote, the meetings also allowed Welch "to make his formidable presence and opinions known to all."Since taking over in 1981, Welch has used the company's economic diversity as a tool to move into other industries with fast-growing profits. By acquiring more than 500 companies worth $53.2 billion Welch has reshaped GE. In the mid-to late 1980s Welch was instrumental for movement among American companies to get leaner, tougher, and globally competitive. GE's non-U.S. sales grew to 45 percent in 1994, up from 22 percent in 1986. Forbes writer James R. Norman wrote, "Nearly every one of its (GE's) major products has become a growth business with the stepped-up development overseas" Source (James R Norman, 1999).

The Future of GE

"Six Sigma" the newest strategy by was a quality program that generates less than 3.4 defects per million operations in a manufacturing or service process. Welch believes that by training and development of Six Sigma program which is a huge investment for thousands of employees will save GE billions. In 1995, Welch launched the program with 200 projects, but the next year it grew to 3,000 and then 6,000 in 1997. The productivity gains and profit of $320 million exceeded Welch's expectations. Welch was not a cult personality he was a revered and feared within GE because he knew his leadership qualities, Welch was as synonymous with GE as Thomas Edison. In 1997, Welch was named to the National Business Hall of Fame in Cincinnati. The company with employs between 240,000 and 260,000 people in more than 100 countries has been led by Welch since 1981. Throughout Welch's tenure the shareholders have been rewarded. After Welch has taken over there has been a $100 dollar investment in GE every day, now this would have been worth over $2,000 in 1998. He also achieved his goal of making GE the company with the highest market value in the world. In 1997, GE's stock value eclipsed $200 billion. It very hard to say how exactly Welch has achieved all the huge goals set year in and year out at GE, this may be simply the fact that Welch may be the hardest working CEO ever.

Welch was also able to find time to know by sight the names and responsibilities of the top one thousand people in spite of leading a company worth more than $200 billion, In fact, the CEO met and interacted with several thousand employees each year. Welch retired in 2000 when he hits GE's mandatory retirement age of 65. Do not, however, think Welch will fade into the sunset or even slow down. He may play much more golf (one of his lifelong passions), but Welch will also remain an important figure in corporate America. Nearly akin to an ex-president, like Jimmy Carter, Welch's retirement will allow him to redefine the way an ex-CEO operates Source (Lowe, 1998).