Leadership: Jack Welch, CEO of GE (1981-2001)

Résumé du document

The last decade has witnessed the rise of some very charismatic leaders. One of them, Jack Welch, CEO of General Electric (GE) from 1981 to 2001, was among the most admired and respected leaders. Named in 1999 by the Fortune magazine as ‘Manager of the century', Jack Welch was more than a good manager with impeccable knowledge and skills; he was also considered as a great leader. He had vision and a real passion to achieve his goals, but more importantly, he had the ‘ability' to lead his team. All this allowed Jack Welch to succeed in his profession by injecting enthusiasm and energy into his team.
In this paper, we'll analyze the different management and leadership theories. We'll try to highlight the main differences and characteristics of a transformational leader in comparison to a transactional one. Furthermore, we'll apply such theories to Jack Welch's leadership and try to analyze his leadership style and determine his approach towards General Electric.

Extraits

[...] He encouraged his managers to invest in acquisition or real estates during the economy downturn in some European and South American countries such as Mexico. The high intensity acquisitions were Welch's strategy to lead GE into globalization in a long- term plan. Welch turned the GE business to a high quality service business. The combination of quality and management tools increased business service and reduced losses caused by inefficient practices (Dess, Lumpkin, Eisner, 2006). GE invested heavily to make the service business successful with less people but with more technology. [...]

[...] Lots of authors such as Weber, Bass, Burns, and Bennis had tried to define those leadership models even if none of these styles could be the perfect one as it depends on different factors linked to the company's culture, history and market. Transformational leadership One of the main characteristics of transformational leaders is that they are often charismatic people with a great vision of the future. They have a view of the future and put all their effort and energy to make people follow them. A transformational leader makes people follow his/her vision in order to create a solid team that will work for the vision of the leader. [...]

[...] Managers were expected to look everywhere for ideas. Welch transferred the best practices of business, in order to make knowledge useful to everyone within GE. Welch's Great Vision Welch knew how to spread enthusiasm throughout the company. He put in his entire energy to implement his vision. Welch admitted that his main talent was in developing people's talents. He focused on developing talented managers; emphasized on ideas and made the operating procedures as simple as possible. Welch made the maximum use of the ‘Workout' approach to solve the problems of his team. [...]

[...] On the other hand, managers were required to make decisions. In that kind of open environment, GE was able to correct many of its problems very quickly, and it also enhanced the manager's capabilities. The ‘Workout' method was implemented during the training of managers to achieve maximum benefits. Welch also introduced the Degree Feedback' to encourage employees to evaluate each other; employees received feedback from their manager and their peers. All these management techniques were tools that forced employees to push themselves to overcome their limits and to achieve their goals. [...]

[...] The different steps in delegation are presented in the chart below. According to Andrew DuBrin, a well-known author of leadership and management books, “Flat structure with only one or two levels of management emphasizes a decentralized approach to management that encourages high employee involvement in decision making process. The purpose of this structure is to create independent small businesses or enterprises that can rapidly respond to customers' needs or changes in the business environment.” (DuBrin, J., Andrew, 2006) In contrast, bureaucratic organizations are driven by a well-established level of management. [...]