The concept of organisational leadership is being very popular topic in this time and the main reason behind this is originations are facing many changes that never faced in previous time. Many authors and professionals personalities have written a lot of literatures about leadership. The content of this paper is sectioned in four parts, in first part some literatures on leadership and planning and implementation will be analysed which will be used as tools to analyse the leadership styles of Jack Welch. Second part is about Jack Welch’s contribution in GE and identification of leadership style and approaches for particular actions. In third part will be concussion about leadership style and approaches adopted by Welch during his era and forth will be recommendation for other organisations.
Roland Christensen at all (1987) has described different types and roles of leadership style. According to this research the managerial culture of any organisation expects skill and ability of effective utility of executive performance from their executive management staff. (CEO, Manager, Planner, Coordinator and controllers) and that is depends on individual perception, judgment and knowledge. There are three types of leadership of CEO 1) CEO as Organisation Leader. 2) CEO Personal Leader. 3) CEO as Chief Architect of Organisation. Detailed explanations of Leadership types have been given in Appendix A.
The Planning and implementation of strategy is one of crucial part of management. The entire organisation adopts their strategy according to their commodity portfolio. Bourgeois and David has explained some approaches like Commander approach, Organisational change approach, Collaborative approach, Cultural approach and Crescive approach on their document “Linking planning and implementation” that can be essential guideline to categorized the attitude of CEO during planning and implementation of strategy. The detailed explanations of different approaches have been given in Appendix B.
Leadership of Jack Welch
In 1981 Jack Welch took over the position of CEO from his predecessor Reg Jones. He was the first CEO in the history of GM who achieved the $100 billion revenue in 1998. He is being recognized for outstanding performance for transformational changes and improvement of the company. In 1981 The Wall Street Journal proclaimed that GE has “replaced a legend(Reg Jones) with a live Wire(Jack Welch)” and after two decade it is been proved true by Welch with his outstanding performance in GE.
The Leadership era of Jack Welch
From 1980 to 1990 there ware lot of changes in the business structure of GE undertaken the by Jack Welch. In time he sold almost 200 businesses and acquired 370 new businesses. In 1985, he deduced hierarchy level from nine to four (exhibition 4a and 4b) by eliminating the powerful centre of strategic control with 200 planning staff. He also reduced the labour force from 404000 to 292000 by 1989 and result was significant increment in revenue. And in 1986 he replaced 12 out of 14 his business heads and recruited new “Varsity Team” to change the old culture of GE. This all activities show that he worked as architect of organisation because he stared restructuring whole organisation according to his vision about future. For that he constantly tried to set up that kind of management system that allows the free environment for work and inspire employees to express their creativity but other hand there was close supervision and proper guideline to gives proper direction to their creativity.
The stage of Rocket (Late 1980s) Work out
In 1988 Welch introduced work out in which employee were able to interact with management about their ideas of forum to run the business more effectively and manager has to take decision on the spot in presentation.
Here Welch adopted commander approach but there was little sense of collaborative approach as wall because he passed out this system to their managers to implementation but he also involved the senior managers like Jams Baughman. Here Welch acted as personal leader to give the free environment to their employees to share their knowledge with organisation to improve productivity.
This is a supporting activity of work out. By analysing other success companies Welch formed the tanning programmes basically for managerial staff to integrate with agendas of work out. In this Welch performed as organisation leader because he tried to improve the capacity of company by training and integration of knowledge sharing activities But with these training he teach his manager to where concentrate and what to measure during the operation. Here he adopted collaborative approach because he consulted his business development manager to analyse other companies to prepare this training programmes.
GE took its first leap toward globalization in 1987; between 1989 to1995 Welch use economic downturn as opportunities of acquisition. This activity identify Welch`s concentration about future and selecting acquisition strategy according to appropriate time. Here he reacted as architect of organisation and use collaboration approach to make the strategy by appointing Paolo fresco as head of international operations.
Welch and his three senior executives made the review of company`s top 3000 manager`s progress report in month of April and May every year. With this he worked as organisational leader because by considering skills, intelligences and target achievement capacity of managers, he can make more effective integration and allocation of different resources. Welch always emphasis on cultural change in the organisation. He has vision to create such environment where every in the GE should be creative toward goal and create their own vision. he always make them aware about organisation`s activities for achieving these cultural changes. Here he worked as personal leader and implement organisational change approach because he gave freedom to his employee to think about organisation to contribute in the success. He implemented a compensation model though which bonus got increased according to performance of employees. He wanted to remove that old structure of GE in that employee had rigid job definition by inspiring to be creative. .
In to 1990s: the third wave Boundaryless behaviour
This initiative was to make more strong roots of best practice. In this Welch created similar environment for manager as work out for middle and bottom level employees. He inspired manager to share and find new ideas though observing different efficient techniques from outside which can add the value in the organisation. These attitudes identify Welch as organisational leader as well as personal leader because he gave more inspiration to learn something new from outside and be more creative.
Stretch: Achieving the impossible
In early 1990s Welch introduced “Stretch” in which, during the budgeting all the managers had to set higher stretched goal than basic goal, of course managers were not responsible to achieve this goal but if they would succeed then they were rewarded with high bonus. Here Welch performed as organisational leader because greediness for higher bonus will force or inspire almost all manager to contribute more in the business of GE which increase the revenue with sales and Welch would able to maintained or increase the earning per share level for shareholder.
With service sector Welch worked as architect of organisation because and organisational change approach because he was thinking service sectors is the only way to maintain future slowdown growth in demand of product. So by keeping the eye on the future market he started changing whole structure of their business line and strategies, which was more favourable to service initiative business then product initiative. With this concept he was expecting 75% revenue of GE will be form service sectors as explained in Exhibit 9 here he also discussed with his senior managers like Paplo Fresco and Lewis Edelheit during his annual strategic review. So this action also contained the element of collaboration approach.
Welch final chapter Six Sigma Quality Initiatives
In this initiative Welch performed as an organisational leader and used collaborative approach. In this process he found out where the company was going wrong with issues of satisfaction among the employees and about the quality of product and process, error rates during the operations and how it affects the productivity of company. by introducing six sigma quality initiative with help of Gary Reiner, VP of Business Development, and by analysing whole system with GE`s operation System (Exhibit 10). Six sigma quality was a plan with different trainings like Green Belt, Black Belt and Master Black Belt and through these trainings Welch was able to make effective integration amongst personnel, manufacturing process, technology, development and results were positive which are mentioned at last paragraph on page no 809 in the case study.
“A Payer” with “Four Es”
According to Bennies, Leader knows what they want and how they want. In the case of jack Welch he knows clearly what they want from their manager to add the value in for the organisation. He also describe the type of manager, means he analysing the behaviour of the people, he also describe the categories with 1s to 5s for the evaluating their employee and for own position as CEO of GE he know what quality a person should have to sit on his chair. The “Four Es” is the similar quality standard that he had formed at the time of his retirement. Here he reacted as organisational
leader because he knew that what quality needed to lead this organisation forward toward success and development.
Strength of jack Welch leadership style
Jack Welch provided free environment to work in the organisation. The different programmes like “Work Out” and “Best Practice” allowed employees and managers to share ideas and learn new things from outside world that can add values and increase productivities of organisation. He had also established effective communication system between management and lower level worker and he always tried solve even minor issues to increase the job satisfaction among the employees. He regularly reviews the performance of his managers and he formed the “Four E” theory to observe and categorised the managers and employees according to their behaviours in the business activities. With free environment he also kept the close supervision by reducing hierarchy in the organisation. He believed that all activities should directly supervised by him and he should be aware about each and every aspect of ongoing activities in organisation. He travelled to Crotonville twice in a month for interaction with employees and to attain the training session of Best Practice. This is one reason why he was able to identify the actual cause of draw backs of company and introduce that king of training programmes and initiative that worked as remedies for the organisation to change the culture of GE. Form the case study we can identify that jack Welch had set up performance standard for every activities and by intruding compensation model against performance
achievement. He always inspire managers to achieve higher goal, “stretch” initiative is the best example of this.
Weakness of jack Welch leadership style
Effective communication is good for the company but Welch had establish that kind of initiative like Work Out in which managers have to deal with lot of ideas or proposal from the employees and these can distract the their concentration from business activities and more over in this practice all the managers have to take on the spot decision that can put a lot of pressure on them and this is express by Armand Lauzon, a manager of GE Aircraft Engine factory in the case study that how they feel and what is that mental condition. The rapid decisions are create the advantage for company but on the spot decision can also create the many disturbances in the business unit. In 1983 Welch sated standard that #1 or #2, sell or close, with this standard many managers struggled to achieve and subsequent options were sell or close. According to this GE sold out some very well know brand that could do well business if they would be with GE group.
All the CEO and managerial staff have the qualities of all of all the leadership style and approaches but according to their personal Vision about future organisation ,skill,
understanding and capacity of integration of resources they applies this style and resources. Welch performed as architect of the organisation at the maximum level if his service in the EG he created the new culture by emphasising to improve their service sectors and by giving freedom and inspiration to personnel’s to be more creative toward goal and values of the company then personal leader. This attitude also was very important element of jack Welch leadership as personal leader. He always inspired their managers about high targeted goal and improving productivity by cost control and with other method like six sigma quality to improve the value of company by leading as organisational leader. The organisational change approach was used at highest level by Welch to acquire cultural and transformational changes in the organisation. He restructured the training process, recruited more committed managers for the values of company and restructured the reward system and introduced compensation model to inspire the employees.
The other organisation and CEO can learn a lot by the analysing the duration of jack Welch performance in the GE. Other regeneration also inspires their employee to be more creative then doing just job. The communication system is the back boon of any organisation; by interacting with employees not only managers but bottom level they can improve the productivity of company. The effective training just like Welch introduced for effective use of resources and understanding of different agendas with employees other organisation can also formatted training according to their need and
situation of the company. Self assessment as Welch applied with six sigma quality to find out the error in the operating system this kind of also can be used to improve the productivity.
Types of Leadership The CEO as Organisation Leader
In this role there are three principles that CEO has to consider. First is to achieve expected result regarding return on stockholder’s investment. Second is maintenance and development of capacity that make the achievement possible. And third the most important is integration of technical task in different areas of management like marketing, finance, research and personnel.
The CEO as Personal leader
In this role CEO gives the free environment to their managerial staff to contribute in the achievement of company’s objectives. To make this system effective CEO announce policy which give the proper guideline to follow. CEO spent more time to analyses the behaviour and emotions of their employees.
The CEO as Architect of the organisation Purpose
In this role CEO concentrates on other alternatives for organisation structure by keeping current internal organisation environment in his mind. Here president start thinking about future progress and goals. Like establishing goal setting and recourses
allocation process, and making choice among strategic alternatives. This depends on the president’s skill of understanding of current and future situation.
The different approaches of leadership
In this, CEO formulates the strategy or supervises the team of planers of strategy and once he satisfied with that strategy he order to their senior managers to implement that strategy, he don’t play the active role in implementation and activation of the strategy.
Organisational change approach
0In this approach CEO makes the strategy or supervises other team as similar as commander approach but with is he starts re-organized the whole system or where change is essential to support that new strategy. Some time he does this by recruiting new staff or introducing new scheme.
In this approach CEO Involves his senior managers and management staff during formation of new strategy. The main benefit of this approach is whole management staff will be analogous with new strategy.
This approach is basically extension of collaborative approach. In this CEO considers suggestions and ideas from middle and bottom level staff. In this CEO loss his flexibility about taking decision and decision process is being stretched due to disagreement between top management and bottom level staff.
This approach is almost upside down process than other approaches. In this whole process of formatting strategy and implementation depend on the suggestions and information transferred from middle and lower level personnel and CEO works as judge by evaluating proposals. After this, the procedure reaches to the formation of strategy. In this approach CEO give up a lot of control in strategy making process. But as the strategy is formulated than CEO personally leads into implementation of strategy. He constantly guides his managerial staffs to make them master of handling any situations and changes that need to face during the use of new strategy.
Bibliography L.J. Bourgeois and David Brodwin (1983), “Putting your Strategy into Action”, in strategic management planning.
Roland Christensen (1987), The CEO: Leadership in Organisation, Text and Cases, sixth Edition, Lrwin, Homewood. Warren Bennies (1998) mentioned by Doyle, M. E. and Smith, M. K. (2001) ‘Classical
leadership’, the encyclopaedia of informal education
http://www.infed.org/leadership/traditional_leadership.htm Carter McNamara, Leadership in Organisation http://managementhelp.org/ldrship/ldrship.htm