We’re going to take a look at the man responsible for General Electric’s growth, even though it was a financially sound company at the time. It was a pioneering company that has transformed the industry and is now a major innovator. John Welch is the leader. His methods and insights are unique today. Yet, he managed to transform GE into a formidable 400 billion dollar enterprise in just 13 years. He retired in 2001 as GE’s most accomplished CEO.
It was humble beginnings. John Welch obtained his M.S. chemical engineering degree from the University of Massachusetts, 1957. He continued on to obtain his Ph.D. in that field from the University of Illinois, 1960. He had no formal training in business management and his only exposure to it was through his work with GE. After 20 years, he was able to take it to a $410 billion industry. He ignored the traditional way of doing business and he added to it. One thing that made him stand out was his inability to accept any bureaucratic nonsense his predecessors might have experienced. He was the 8th CEO and assumed control in 1981. It is believed that he managed the company like a small group of independent companies or cells. They could adjust their business to meet market changes at will. This is a good way to go. His philosophy seemed to be to adapt to the changing needs of consumers. He was able to see that this approach worked. First, he wanted to get rid of all the rigors. General Electric was involved almost in every aspect. They were still making money but they had to distribute their aid in areas that didn’t have a guaranteed payback. Because the company could not make enough revenue, he decided to simplify the task and concentrate on the things that matter to it. The goal was to not eliminate any one area, but just to concentrate on certain areas. The company was told bluntly that it was impossible to concentrate on all areas and that objectivity is essential. Any other task will result in the company losing money. He made it a point to recognize business acumen as a reward for management. He believed that they were responsible for their own management, without the interference of GE or those below them. They were to follow the code and conduct he established for them.
This short speech highlights the importance of respecting and loving your employees. They are there to help you. They make your company and you money. Although one cannot be certain that they have made the right decision, it is better to let them grow or wail than ignore them. You have to be consistent with your choice. He is a man to be praised for his ability to handle the hiring problems.
Empowering employees. For smaller businesses and those who are not entrepreneurs, empowerment is more important than the employee. As resources that can easily be lost or spent, the employee is viewed. It is incorrect. His business model focuses on empowering employees and encouraging creativity and not focusing on what can cause a company to fall apart. His main concern was how much negativity they can cause as they take control and put others under their thumbs. To have a productive business, employees must feel like they are part of it. You don’t have to be a member of the company. Making them feel part of the company is key. Everyone has a place in the company. They should all feel respected and valued on a personal level. They should not be judged by their contribution to the company.
His methods seem to be in line with several management theories, one of which is the Path-Goal Theory. His main focus was on employees. He empowered them to make the right choices while maintaining contact with them from afar. He would assess their character and determine where they were best suited to the company. He would then allow them to interact and support each other until he sees a fault in their judgment.
I think a little of the Vroom-Yeaton Model. He would include all employees within the business, but not all workers could make decisions about what the company should do. This was encouraged in the various divisions and cells of the enterprise to take decisions. This method is slower, but it involves everyone in decision-making. He took a riskier step and removed himself from the equation, ensuring that the employees he supervised made the decisions in the best interests of the company.
The Leader-Member exchange Theory appears to be a bit in there. Although he did not prefer any employee to another, if they didn’t produce results they were corrected. He didn’t want to destroy the employees beneath his feet. It is safe to assume that there were a lot more workers in the in-group than the out-group. This perspective was derived from data that was not available to him. It is hard to imagine if there was a better way of leading this man and the company. This tiny company has grown to be a formidable force in its current state.
As an aside, it was not financially failing prior to 1981. In fact, Reginald H. Jones (7th chairman) was considered a great businessman by GE. John Welch’s accomplishments may have been greater than his, but he was still a key player in the U.S. economic system. Although his ability to empower employees was not what he had in mind, this company was certainly not a failure.
This man’s achievements and study show that we should not assume everything is possible. Each employee should be treated as a person and respected accordingly. They are the backbone of the company. Their hard work will be rewarded if others in the same position do the same. It is not uncommon for people to make mistakes in hiring. It’s important to be focused. Don’t try and do everything. Make certain that your managers are focusing only on the projects that you need. You and the company should make it a policy to empower your employees, so they feel like they are part in something great. John Welch is a great example of how to avoid getting bogged down by bureaucratic headaches when running a company.
