11.03.

2024

Class: Critical Thinking

Assignment: Project Leadership

Jasa Erzen – A01760271

What happened? (Background, brief description of events, specific leadership actions)

Jack Welch became the CEO of General Electric (GE) in 1981 and served until 2001. Under
his leadership, GE underwent significant organizational changes and growth, becoming one of
the world's most valuable and diversified companies. Welch implemented a series of radical
management innovations, such as the "Rank and Yank" policy where the bottom 10% of
performers were let go annually, and the push for each GE business to be number one or
number two in its market.

Welch emphasized the importance of company culture, employee engagement, and continuous
improvement. He championed the concepts of "boundaryless organization" to remove barriers
between different parts of the company, and "work-out" sessions to encourage open
communication and problem-solving.

What were the results? (Real or potential. Try to include both positive and negative
possibilities. Even if the event seemed clearly good or bad, consider unintended
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consequences.)

Positive Results:

 GE's market value increased from $12 billion in 1981 to $410 billion by 2001, making
it one of the most valuable and largest companies in the world.

 The company became more efficient, competitive, and profitable, with a diversified
portfolio that could withstand economic fluctuations.

 Employee empowerment and the breaking down of silos fostered innovation and
responsiveness to market changes.

Negative Possibilities:

 The "Rank and Yank" policy could have led to a cutthroat culture, undermining
teamwork and morale.

 Intense pressure to perform might have led to short-term thinking and unethical
behavior in some instances.

 The aggressive focus on market leadership could have sidelined important but less
immediately lucrative ventures or innovations.

Why did this happen? (Consider all possible factors, including the people and the
situation)

Welch's leadership style was transformational but also carried elements of authoritarian
leadership, especially in his early years. His belief in meritocracy and competition drove the
company's performance culture. The business environment of the 1980s and 1990s,
characterized by rapid globalization and technological changes, also necessitated bold actions
to keep GE competitive. Welch's personality, his strategic vision for GE, and his ability to
implement sweeping changes played crucial roles.

What class concepts are relevant to this situation? (Mention at least one concept from
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class and how they can be used to interpret the situation.)

Hygiene factors and motivation: Welch’s emphasis on removing organizational barriers and
improving communication can be linked to Herzberg’s hygiene factors, as it aimed to
eliminate job dissatisfaction. His strategies for engagement and meritocracy touch on
motivational factors, seeking to foster job satisfaction and high performance.

Leadership and commitment: Welch’s approach underlines the importance of transformational

leadership in building organizational commitment. His actions exemplified how leaders could
inspire a shared vision and engage employees beyond transactional exchanges.

What did you learn from this? (Broader lessons that might apply to other situations or
problems.)

 Leadership requires adapting to the needs of the time and the organization, balancing
between transformative visions and the practicalities of implementation.

 Employee motivation and satisfaction are complex, requiring more than just fear of
failure; they thrive on recognition, empowerment, and a sense of belonging.

 The effectiveness of leadership styles can depend heavily on the context and culture of
the organization, as well as the broader economic environment.

 While aggressive strategies can lead to significant short-term gains, they must be
balanced with ethical considerations and the long-term health of the organization’s
culture.

 Learning from leaders like Welch, it’s evident that leadership impact extends beyond
immediate business results, shaping corporate culture, employee engagement, and
even industry standards.