1

Running head: Leading change

The Leadership of Jack Welch: Leading change Comelamore Williams Brenau University

When Jack Welch became the Chief Executive Officer or CEO of General Electric or GE In April, 1981 many knew what to expect from this outstanding leader. Jack Welch did not disappoint; he was assessed as a live wire (Bartlett & Wozny, 1999), because of his cut throat tactics in business. Welchs acquisition came during a time that the economy was in a downturn, and in order to make GE World Class and better than the best (Bartlett & Wozny, 1999), Welch knew he would have to lead a drastic change for such a broad and large company. He started with reviewing GEs businesses as a whole, then salaried and hourly staff positions, next he developed initiatives that would set the standards for GEs success, future and his successor. Jack Welch developed a lead in change that will forever be noted in the history of leadership. Mr. Welchs approach to leading change began when he restructured the company, this would span for a five year period. Welch wanted GE to be the perfect company that was WORLD CLASS, and noted as such to say the least. The first action he set in motion was to examine each business that GE operated; there were many subsidiary industries and Welch wanted to define each of those companies worth to GE. He set up a criterion that would determine if the company should continue. If the company could be salvaged he wanted to keep it, if the company was worth more by selling than keeping, then that is what became of that company, if the company could not be salvaged and wasnt worth selling then he closed that company. This would take some great work. Bartlett and Woznys (1999) study found: Between 1981 and 1990, GE freed up over $11 Billion of capital by selling off more than 200 businesses, which had accounted for 25% of 1980 sales. In that same time frame, the company made over 370 acquisitions, investing more than $21 Billion in such major purchases as Westinghouses lighting business, Employers Reinsurance, RCA, Kidder Peabody, and Thomson/CGR, the French medical imaging company.

The next action Jack Welch took was cleaning house internally and the first to go was the whole strategic planning staff, which was developed by his predecessor Reg Jones. Welch believed that the planning staff would eliminate employees who could hinder his process and how he was trying to restructure GE. He then eliminated the sector level; there would be no more middle men Welch ensured that all businesses reported directly to him (Bartlett & Wozny, 1999). He continued by removing the old way of doing things. He replaced it with real time planning built around a five-page strategy playbook, which Welch and his 14 key business heads discussed in shirtsleeves sessions unencumbered by staff (Bartlett & Wozny, 1999). As each of the businesses reviewed their individual processes, Jack Welchs restructuring continued to move forward with radically redefining the budgeting process. He continued downsizing, destaffing and delayering. He also replaced 12 of his initial 14 key business heads in just that short time (Bartlett & Wozny, 1999). Jack Welch was on fire, he was committed to a successful change for GE and his bold actions would convey just that. Welchs series of initiatives he launched in the late 1980s and early 1990s was what he called the Software initiatives. This included his ingenuities of Work-Out and Best Practices, Developing leaders, and Boundaryless Behavior, Achieving the Impossible, and Service Businesses. His objective was to shift his focus more in empowering his employees, he wanted his employees to feel that they were valued; he also wanted to eliminate job titles. Everyone everywhere mattered regardless to what their title was. What Welch was trying to achieve in the round of changes he put in motion in that period was to discontinue the old GE culture and expand on a management style that was more transformational (Bartlett & Wozny, 1999). In the text book, Industrial Organizational Psychology: Understanding the Workplace by Paul E. Levy (2010) explains in detail the various theories of Leadership; his discussion

consisted of Traits Theories, Behavior Theories, Contingency Theories, Path-Goal Theory, and Contemporary Theories (p. 355-371) . He starts with Trait Theories in which effective leaders were studied to determine if there were some individual characteristics that made them an effective leader. Traits such as gender, intellect, appearance, physical energy, need for power, and need for achievement (Levy, 2010, p.355). The Behavior Theories Levy (2010) discussed were three types of leadership styles: authoritarian, democratic, and laissez-faire (p. 357). The results from behavior theory revealed that most subordinates prefer democratic leaders (Levy, 2010, p. 357). Also discussed in behavior theories was the dimensions used to identify leaders actions; initiating structure or task-oriented and consideration or relationship-oriented. Initiating structure or task-oriented, which describes the leader who defines which subordinates role will achieve the groups goals. Consideration or relationship- oriented leaders are supportive and concerned about their subordinates (Levy, 2010). Contingency Theories Paul E. Levy (2010) offers how Contingency theories differ from both trait and behavioral theories by formally taking into account situational or contextual variables (p.360). What this means is the leadership used will depend on the context or situation. The best known contingency theories: Fiedlers Contingency and Path-Goal theory. In short, Fiedlers Contingency theory argued that taskoriented leaders are best suited for some situations and relationship oriented leaders are best suited for others (Levy, 2010, p. 360). Fiedler maintains that task oriented leaders perform best in situations of high and low control, whereas relationship-oriented leaders perform best in situations of moderate control (Levy, 2010, p. 362). Contemporary Theories is the last theory Levy details, it is a newer leadership theory developed in the past 30 years. Here Levy talks about three: leader-member exchange theory, implicit leadership, and transformational leadership theory (Levy, 2010, p. 364).

Leader-Member Exchange Theory is a different focus of leadership, since it deals with the relationship between the leader and its subordinates rather than solely on the leader. Implicit Leadership is a very different approach to leadership, in that it emphasizes how the subordinate believes their leader should be (Levy, 2010). The word prototype is sometimes used to refer to ones mental representation of a leader. Transformational leadership is the best known of this group (Levy, 2010, p. 367), Levys (2010) study found: Because this leadership theory has 4 common characteristics: (1.) Leaders take organizations to the next level. (2.) Leaders are able to achieve extraordinary levels of motivation, commitment, dedication, and so on. (3). Leaders stress emotionally appealing behaviors such as empowering, developing a vision, and role modeling for their subordinates; and (4) they encourage increased follower self-esteem and satisfaction, as well as identification with the leaders values and vision (p. 369) . Transformational Theory allows leaders and follower to reach new heights together as a team effort, rather than achieving company goals individually. Transactional leadership is used in comparison with transformational leadership, with transactional leadership for instance, is more dictatorship than leadership except there is a reward if the expectations are met. Finally, in studying the Leadership of Jack Welch, his leadership styles are duly noted with comparison to the textbook Industrial Organizational Psychology: Understanding the Workplace by Paul E. Levy (2010), as transformational and transactional, but more transformational. Welch was a transactional leader in the beginning of his tenure with GE, the way he came in and completely restructured the company with little to no input from subordinates. As time went on Jack Welch realized that in order to be a great leader, listening to

the subordinates and their ideas could greatly contribute to GE. In the end Jack Welchs transformational leadership with GE has led him to be the most recognized leader of a decade and his leadership shall live on in the GE culture long after his tenure. Jack Welch is important to GEs success by continuing to come up with initiatives that will keep the company moving in a direction that keeps them two steps above the rest globally. By implementing more initiatives GE has a chance to be the world leader in products, sales, diversity, management and leadership. The implications for his replacement will be a tough act to follow, but most importantly carrying on Jack Welchs leadership. The new challenges GE faces are with GEs e- business as technology becomes more prevalent and ever changing, GE will have to become creative since they started late with the internet market. Jack Welch has produced such a solid foundation with GEs management that his successor should not only be challenged to become innovative, but also manifest off of what Welch has left behind.

References Bartlett, C. A., & Wozny, M. (1999). GE's Two-Decade Transformation: Jack Welch's Leadership. Retrieved from http:// cb.hbsp.harvard.edu/cb/library/allMaterials Levy, P.E. (2010). Industrial Organizational Psychology Understanding the Workplace (3rd ed.). New York: Worth Publishers.