Jack Welch Ge Case Study
1.) How difficult a challenge did Welch face in 1981? How effectively did he take charge?
When Jack Welch accepted the position of CEO of GE in 1981 he faced a number of looming challenges which firstly included taking the reins of the company following a complete reorganization by a strong, successful predecessor. The second major challenge he faced was the new globalized marketplace in which GE had to compete. Welch had to act fast before GE's territory was taken over by global growth from foreign companies. The third challenge was the beginning symptoms of a contracting economy which, by 1982, would become a deep recession.
Jack Welch approached the first challenge of taking over from a successful predecessor by deciding that keeping
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All new initiatives had well developed programs with detailed plans for their implementation, and comprehensive metrics to measure success. For example, leaders were evaluated on a 360 degree feedback process by their managers, peers, and subordinates to identify those managers that “smiled up and kicked down”. Leaders that did not share the new company values regardless of whether they delivered on commitments or not, were moved out. As long as you shared the company values, you would receive additional training and were given a second chance to make your numbers. This program eventually evolved into what Welch expressed as “A-Players with 4 Es”. An “A-Player” was characterized as having Energy, Edge, and Execution. Welch urged top management to take care of their best by rewarding them, promoting them, and paying them well. Time was not wasted developing “C-Players” into “B-Players”. They were moved out early (“vitality curve”). Welch made it clear when he exclaimed, “You got to be rigorous in your appraisal system. The biggest cowards are managers who don't let people know where they stand”. 3.) How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch’s various initiatives added value? If so, how?
Welch addressed this question from critics head-on in GE’s 1995 Annual Report by emphasizing the company