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As described by Richard L. Daft and Andrew Pirola-Merlo, (Pirola-Merlo, 2009), transformational leadership focuses on intangible qualities such as vision and is based on the personal values and qualities of the leader rather than on exchange processes between leaders and followers.
Transformational leaders set goals that push followers to perform to the desired outcome of the goal. However, instantaneously, it provides each follower with an opportunity for personal and professional growth. Not only that, but as a transformational leader, it can shoot for determined goals and achieve rapid success as well as teamwork to accomplish change for the better.
Jack Welch implemented on this type of leadership prominently.
With Jack Welch’s mentioned philosophy, “If a company should not be #1 or #2, then might as well leave it”, he interpreted on the yank-and-rank policy within the company (a performance management practice that calls for ranking co-workers against their own co-worker). This was his vision for GE.
With that, Welch would fire the bottom ranked 10% of his managers regardless of their effort and rewarded the top 20% of his managers.
With this, it motivated GE managers to perform well in their jobs and more than that, they develop on their personal and professional growth. For instance, their skills in recognizing their mistakes and by recognizing this it helps them perform better. Welch also pioneered a policy of informality in the workplace allowing all employees to have at least a small experience in a large corporation.
Welch placed a highly determined goal where it seemed impossible to achieve.
As he sought to streamline GE and backed up by his speech mentioned, “Growing fast in a slow-growth economy”, his goals were achieved with rapid success at that. He reduced unsuccessful basic research and either shut down or sold off businesses that were underperforming. This act resulted in achieving Welch’s determined goal not to mention the profits earned.
Moreover, Welch, as a transformational leader, he focused on teamwork between the leaders and employees for accomplishing change. As a transformational leader, it is one of its characteristics to focus on innovation and the change for the better. Jack Welch believes that teamwork is the only effective method to achieve this new change for the better. It proves this in his writings mentioned (Critelli, 2016) stating ,
“The individual is the fountainhead of creativity and innovation, and we are struggling to get all of our people to accept the countercultural truth that often the best way to manage people is just to get out of their way. Only by releasing the energy and fire of our employees can we achieve the decisive, continuous productivity advantages that will give us the freedom to compete and win in any business anywhere on the globe.”
During Jack Welch’s tenure, he implemented a radical change within General Electric’s operations and performances. Radical changes are changes made which makes a huge difference to the already existing tasks that are currently operating.
From the minute Welch became the youngest CEO and chairperson he intended to streamline GE as mentioned in the article and surely, he did. He started reorganizing from the level of top management to the staff and finally making a huge difference to the profit earned.
From reorganizing at management level, he completely dismantled the earlier management put together by the last CEO, Reginald H. Jones in 1982. (Wikipedia, 2012)Not only that but for the staffing, he would fire 10% of the bottom ranked managers and rewarded the top 20% of managers.
As for the rest of the employees, there was a huge difference during his tenure in the office. Before his tenure, there were 411,000 employees by the end of the year 1980. By the end of 1985, the employee number came down to 299,000 only. (Wikipedia, 2012)Furthermore, because of these changes, it resulted in a huge difference in the market capital of GE. Under his leadership, GE’s market value increased from the value of $12 billion in 1981 to $280 billion. He also made 600 acquisitions while moving into the emerging market.
Jack Welch chose to put this into practice because he knew from experience that he was once uncomfortable with the management before which almost made him quit or leave General Electric. And also not only did he see potential in his workers but also he wanted the best employees to perform on his vision for General Electric to be either number one or number two in the whole industry.
Jack Welch knew that the employees upheld his changes but he was not satisfied. He usually took surprised visits to offices and plants to check on their performance efforts. He became successful in doing so because all these changes were the result of him being pungent to his work and to the vision holds for General Electric.
Jack Welch sure was a change leader. Leaders, which recognized as a change leader, have key characteristics that are able to identify them clearly. Discussed further, John Welch demonstrated on the key characteristic of being courageous, believing in employees’ capacity to assume responsibility and finally he is able to manage complexity, ambiguity and uncertainty. Not only, that but he defines himself as a change leader instead of a leader that wants to maintain the status quo.
Jack Welch has always been courageous. From the case study and in general, he had always portrayed courage from the moment he became the CEO and chairperson in GE. For instance, he completely dismantled the previous management strategy that the organization was familiar with and did not think twice if his decision would affect any of the operation currently in action.
Yet, his target was to change these management strategies as soon as he possibly can for the better. Above all, he did not care for the criticisms that were ahead of him.
Furthermore, he believed on employee’s capability to assume responsibilities. Jack Welch believed in his employees. For instance, the case study mentions that Welch pioneered a policy of informality at the workplace allowing all employees to have a small business experience at a large cooperation. In other words, he allowed opportunities for the employees to experience outcomes of their own skills. He wanted them to improve on their skills alone. Learning from their mistakes and improving it for the future.
Moreover, he was able to manage well complexity, ambiguity and uncertainty. Changing an organization is not an easy thing to do and manage. Especially when you have to deal with the organization, try to align its operation with how you like it and most importantly focusing on the vision of the organization.
Last but not the least; he has always defined himself as a change leader instead of a leader that wants to maintain the status quo. Obviously stating from the case study, it mentions that Jack Welch sought to streamline GE and he outstandingly did.
When Jack Welch became the CEO and chairperson for GE, it was clear that he would implement change. “…Welch sought to streamline GE.” CITATION Wik12 l 5129 (Wikipedia, 2012). Stated by HR Management, (Management, 2016), change is an unceasing process in an organization but the number one opponent to the change are the employees. There are various reasons why employees resist change but the major reason is of bad management.
Jack Welch was able to implement his ideas of change for GE as he used measures such as applying the change in several ways, communicating the changes effectively and finally he resolved conflicts quickly and effectively.
Welch knew that his changes would have to be precise in order to be true to the vision and philosophy mentioned. Therefore, he implemented change in every aspect of the organization. He started by completely pulling apart (changing) the management process prior to his tenure “By 1980, Welch dismantled much of the earlier management put together by Jones…” (Wikipedia, 2012) to repositioning the general employees in the departments. “Welch states that Ge had 411,000 employees at the end of 1980 and 299,000 by the end of 1985.” (Wikipedia, 2012). This is because Welch worked hard to eradicate perceived inefficiency… (Wikipedia, 2012).
Moreover, he communicated the changes effectively not only internally to the employees but to public as well. In 1981, he publicly gave a speech that added to his popularity up to this time which is “Growing fast in a slow-growing economy” held in New York. With this speech, he detailed the context of his plans and his reasons for doing so. He even mentioned that change is good and that it creates opportunities not crisis (Suseno, 2010). With this being said, it is obvious for the listeners that Welch is determined to implement on the changes he had in mind.
Furthermore, he resolves conflicts quickly and effectively. For a leader to implement change within the organization, they should be first in line to settle the arising oppositions. Jack Welch handled this effortlessly. Making such a radical change for the organization will only result as costly especially when he must put GE in either first or second place. This was challenging because his tenure was when the US was undergoing recession in their economy. As Welch worked hard to eradicate inefficiency and battling with the crisis of recession, “he either closed or sold off factories and/or businesses that were underperforming.” (Wikipedia, 2012).
Jack Welch’s approach to overcome resistance has proven to be worth it. Under his leadership, he made a huge difference in GE finances of $268 billion. Not only, that but he made 600 acquisitions while shifting into emerging markets simultaneously, (Wikipedia, 2012). With all the other changes made, it proved successful but obviously, his employees played a huge a part in the GE success. This only proves that his implementation of his measures to overcome resistance proved to be worth it and lasted.
Leaders should be aware of the changes they should be undergoing and its importance when they are leading a major change project. (Pirola-Merlo, 2009). Leaders who are aware of this ensures that their change strategy is realistic and their time and resources invested in this change is fully utilized.
Jack Welch understands the importance of these change strategies otherwise, how else would he go far with his changes. Each stage requires effort and action as a leader and that is exactly what Jack Welch put into action.
Kotter’s first stage (stage #1) requires the leader to have a sense of urgency. This stage means that changes should happen for a reason. The leader does a thorough review of the business externally and internally to identify aspects which needs to be improvised. As Jack Welch’s tenure was during the recession he recognized the need to change for the better because if not, GE would have to face cost cuts where it is the only common method that organizations use to survive in a recession crisis. Jack Welch saw it as an opportunity.
Thus giving his speech in New York in the year 1981 of “Growing fast in a slow-growth economy.” (Wikipedia, 2012)Coming to the next stage, (stage #2) it requires establishing coalition. For the change to proceed, there must be commitment between the leaders and the employees which is also known as teamwork.
With the power Jack Welch had linked with his great leadership skills, it was enough to guide the process and surely instilled a sense of teamwork but allowing his managers as his first coalition was a great move he establishes. “Welch made a varsity team where he wanted managers who were ready to accept change, have a strong commitment towards values and willing to break with old cultures and most of all ready to take lead and bring changes.” (Jennifer, n.d.)
The next stage (stage #3) requires the leader to develop a vision and strategy. It is the leader’s responsibility to form a vision that will guide followers to the desired outcome of the change. Jack Welch did just that. His visions created a bigger picture for the employees to know his plans for change. He put his visions into action allowing motivation to take place in the workplace for the bigger picture. Change for the Better. “…one of his primary leadership directives was that Ge had to be number one or number two in its industries.” (Pirola-Merlo, 2009).
Welch himself backs up this stage in an interview with Harvard Business Review in 1981, saying, “Good business leaders create a vision, articulate the vision and relentlessly pursue this goal till its completion.” (Charan, 1989) On the next stage, (stage #4) Communicating the vision and strategy widely. With the varsity team he set up, (Jennifer, n.d.), Welch knew that as he is the leader of the whole corporation, they are the managers in their businesses.
They will set examples as Jack Welch wants them to. As they are the varsity team, they should be there to be models of the change implemented. And just to keep them aligned, “Welch valued surprises and often made unannounced visits to the plants.” (Wikipedia, 2012).
The next stage, (stage #5), requires the leaders to empower employees throughout the organization in other words, eliminating obstacles to change. This primarily refers to the structures or measures that leaders use to overcome resistance to change. Welch was a leader and a powerful one at that but he also was a man of virtue and candor which most employees adored of him.
He empowered employees not only through his morale and visions but also his desire to advance employees knowledge. “Welch pioneered a policy of informality at the work place, allowing all employees to have a small business experience at a large corporation.” (Wikipedia, 2012).
Furthermore to the next stage, (stage #6), leaders generate short term wins. To implement change, especially a radical change, we need to see improvements at least short-term wins. With that, employees will use these short-term wins as a stepping stone for more accomplishments.
This is then the responsibilities of a leader to empower motivation with this stepping stone that comes in various forms. Jack Welch used rewards and it proves beneficial both for GE and employees. “Welch would fire the lower 10% managers regardless of their performances…and rewarded those in the top 20% with bonuses and stock options…”(Wikipedia, 2012).
Through these rewards, it builds on the credibility achieved on the previous short-term wins the next stage, (stage #7). Consolidates improvements, tackle bigger problems and create greater change. These are the benefits that drives Jack Welch to implement on his changes. “…in return, GE increased its market capital tremendously.” (Wikipedia, 2012).
Finally to the last stage, (stage #8), it involves institutionalizing the new approaches in the organizational culture. This is the stage where the proposed changes are being established replacing the old values, habits, and cultures. Jack Welch wished to streamline GE when he first became CEO and chairperson, “through the 1980’s, Welch sought to streamline GE (Wikipedia, 2012) and in overall, he did. “Under Welch’s leadership, GE increased market value from $12 billion in 1981 to $280 billion, making 600 acquisitions while shifting into emerging markets.” (Wikipedia, 2012).
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