MOTIVATION

 

Executive Summary

            This is an essay that tackles the vital concepts of organizational change and development, and leadership. The first part of the paper provides a thorough discussion of the numerous concepts involved in both terms, such as the goals, approaches and models in organizational change and development, as well as the theories, traits, and effects of efficient leadership in organizations.

            To concretize the mentioned ideas, a comprehensive case study on General Electric (GE) is likewise included herein. More specifically, this paper tackles the conditions on why GE had to undergo transformations, and how the effective leadership of former CEO, Jack Welch , played a vital role in the changes and development that occurred in mentioned corporation.

 

Introduction

The business environment today is characterized as dynamic and fast-paced; wherever anyone turns, a wide array of changes could be observed in the international market place. These changes are brought about by different factors, such as technological advancements, societal and behavioral transformations, and the like. Consequently, organizations that exist in such a dynamic setting should adapt accordingly, so as to remain in the business industry, and to eventually climb up the zenith of success.

            Changes and development in the organization may be shown through various manners. And usually, these transformation and growth are initiated and enacted by the leaders of the organization, with the participation of the company’s human resources. Hence, the inevitable occurrence of organizational change and development goes hand in hand with corporate leaders that possess the necessary qualities for effective leadership.

            This paper would therefore focus on these two vital concepts in organizations—leadership and organizational change and development.

 

Organizational Change and Development

According to  and  (1995), organizational change is “a transformation of an organization between two points in time… on the basis of content, major changes consist of transformations that involve many elements of structure or those that entail radical shifts in a single element of structure (as cited in  and  1998, ). More specifically, these changes could happen in the company’s size, decision-making approaches, and hierarchy of control. Changes could likewise occur in the company’s corporate effectiveness, division of labor, goal succession, and ability to adapt to innovation ( and  1998, ). In a nutshell, change and development take place when deeply established organizational formations are accordingly transformed to adjust the identity of the company.

            Normally, organizations undergo changes in order to achieve two major goals. The first of these goals is for the company to effectively adapt to its environment; and the second is to generate the necessary internal behavioral patterns of the company’s human resources, for them to have the ability to adapt to change and development.

            As was earlier mentioned, organizations encounter changes in its external environment. These transformations may either be advantageous or disadvantageous to the company, but regardless of whether it would benefit the organization or not, it is necessary to introduce internal corporate changes that would permit the company to effectively deal with new challenges. Specific examples of such challenges are technological improvements, new government policies, critical social demands, and intensified competition ( and  1970, ).

            The second objective of organizational change and development is triggered if the company could not competently adapt to its environment, unless most of its human resources behave differently with regard to their relationships with other employees and to their work responsibilities ( and  1970,  ).

It is a known fact that companies are not sustained merely through computers; they operate through people that perform organizational tasks and make corporate decisions. The attitudes of these individuals may be derived from formal and informal ground regulations in the company, that determine how an efficient manager or employee should behave when they relate with others, when they perform their responsibilities, and when they make decisions ( and  1970, ).

            Hence, any changes or development in the organization, whether generated through a new organizational structure or through a training program, should try to get employees to acquire new patterns of behavior and ground regulations for interacting with colleagues, performing their work tasks, and generating decisions.

 

Approaches to Organizational Change and Development

            There are various approaches to organizational change and development and these may be utilized individually or may be combined, in order to produce valuable results. Furthermore, some of these approaches focus on the content of what has to be changed, whereas others focus on the processes to be employed to generate the change.

            For instance,  (1964) presented three categories of organizational change, namely structure, technology, and people (as cited in  and  1970, ). The structural approach gives emphasis on formal rules and processes such as restructuring of the organizational chart and introducing new budgeting methods. The technological approach initiates change through reorganization of the work flow, which may be achieved through job standards, work descriptions, and physical layouts. Lastly, the people-oriented approach promotes changes in the behaviors, motivation, and attitudes of the employees, obtained through performance assessment schemes, new training programs, and selection practices ( and , 1970, ).

            Another theorist that presented his ideas on organizational change and development is . According to him, there are seven of these approaches that are mostly utilized by corporate managers, which he categorized into three—unilateral power, shared power, and delegated power ( and  1970,  ).

            Under the unilateral power are the following: decree approach, the replacement approach, and the structural approach. In the first approach, change originates from individuals that have high formal authority, which he or she passes on to those in the subordinate levels. In the replacement approach, employees in one or more major corporate positions are replaced by other people, since the basic assumption in this method is that organizational change is the function of a key man’s competence ( and  1970, ). For the third approach, supervisors change the necessary relationships of subordinates who work in the situation ( and  1970, ). Such a restructuring of organizational relationships eventually affect the organizational behavior.

            Under shared power are the group decision approach and the group problem solving approach. In the group decision approach, group members participate in the selection of numerous alternative solutions that are initially specified by superiors. On the other hand, in the group problem solving approach, group discussions occur so as to identify the organizational problems and to eventually solve these challenges ( and  1970, ).

            Lastly, under the delegated power are the data discussion approach and the sensitivity training approach. In the first one, organizational employees are asked to develop their own evaluations of the given data, which they would eventually present. Feedback with regard to the data would then be given by the client system, through a change catalyst or by change agents in the organization ( and  1970, . ). As for sensitivity training, supervisors are trained through small discussion teams, for them to be more sensitive to the underlying procedures of individual and group attitudes.

            It could be noted that ’s and ’s approaches are helpful for organizations, as long as they are not taken too simplistically. This could happen if managers perceive structural approaches as impersonal and formal, while they recognize people approaches as humanistic and democratic ( and  1970, ); however, this is not always the case.

            For example, changes in the organizational structure could still have a strong people-oriented focus, as long as these encourage partnership among managers and subordinate workers. On the other hand, a people approach, if improperly utilized, could turn out to be coercive and oppressive to individual independence and ingenuity ( and 1970,).

            Additionally, more than one approach may be utilized to introduce changes and resultant development in the organization. For instance, a people approach put into practice through training programs that would teach new attitudinal skills may be unsuccessful if new organizational arrangements fail to support the application of these acquired work skills.

 

The Adaptation Model of Organizational Change and Development

            The adaptation model of organizational change and development assumes that companies have the ability to restructure themselves as well as their task environment to assure that they would be able to achieve their objectives and to survive the business environment ( and  1998, ). To do so, key corporate human resources can and will generate strategies that would be enacted to lessen costs, protect the image of the company, and to warrant sufficient flow of resources.

            Basically, implemented corporate strategies have a number of characteristics, first of which is that these methods can be positioned in the purpose of consolidation or so as to achieve development. Second, strategies could either be implemented either internally or externally, which means that corporate strategies could affect the organization itself or its environment. Lastly, the organization’s management could concentrate on the improvement and effective marketing of its goods and services, or it can focus on its political or institutional situations ( and  1998, ).

 

Managerial Tactics

There are a number of approaches that company leaders could utilize in order to be more competitive in the aspects of product, labor markets, and capital ( and  1998, ). Managerial tactics can be categorized into two types. The first aims to alter the conditions inside the company and to strengthen the technical foundations of corporations ( and  1998, ). Concrete examples of such tactics are schemes that would eliminate redundancy, assure quality, institute tighter controls, and make the company more effective.

            On the other hand, the other type of managerial tactics aims to cope with the circumstances in the business environment, through the use of external methods. To concretely do so, organizations could do more research, be more aggressive in the marketing of their products and services, obtain competitors, compete on price, or co-opt threats in its environment ( and  1998, ).

            In a nutshell, the goal of managerial approaches is for the organization to benefit and have more business advantage, through accumulation of more profit and lessened labor, production and transaction costs.

 

Retrenchment Tactics

Based from the adaptation theory, companies sometimes have to cut back its human resources so that it would be more capable to adjust to changes in the environment ( and  1998, ). Through strategic downsizing, organizations would be able to more effectively compete with other corporations; hence, consolidation through downsizing is not necessarily a negative issue, since it gives companies a competitive advantage.

            Specific examples of internal retrenchment tactics are staff furlough, lessened work week for paid employees, freezed benefits and salaries, cut back training, postponed capital improvements, and the like. On the other hand, examples of external retrenchment tactics are liquidated assets, divesting businesses, and the merging of organizations ( and  1998, ).

 

Leadership

            As was earlier mentioned, the global environment has been subject to changes that are brought about by different factors. Consequently, international organizations are faced with the challenge to make the necessary adjustments so as to adapt to these inevitable transformations; a challenge that is primarily faced by individuals who have the capacity to understand and embody the leadership qualities that are needed to succeed in a dynamic global economy.

            It is initially important to first take note of the difference between leaders and managers. Organizational members may have already taken for granted the distinction between these two terms; in fact, most people use them interchangeably. However, according to , , and  (2001), leaders and managers have a number of contrasting characteristics ().

            For instance, leaders make every effort possible to overcome the unpredictable, unstable, and ambiguous business environment that seem to conspire and suffocate organizations (,  &  2001, ). On the other hand, managers do not adjust; they simply surrender to it.

            The following are other distinctions between a leader and a manager: 1) a manager administers whereas a leader innovates; 2) a manager is a copy whereas a leader is original; 3) a manager maintains whereas a leader develops; 4) a manager focuses on organizational structures and systems whereas a leader focuses on human resources; 5) a manager depends on control whereas a leader instigates trust; 6) a manager possesses a short-range perspective whereas a leader retain a long-range view; 6) a manager inquires how and when whereas a leader inquires what and why; 7) a manager has his or her eye on the bottom line whereas a leader sees the horizon; 8) a manager gives in to the status quo whereas a leader challenges it; 9) a manager is a traditional good soldier whereas a leader is his or her own person; and lastly, 10) a manager does things right whereas a leader does the right thing (,  &  2001, ).

 

Likert’s Leadership Theory

            According to  and   at the Institute of for Social Research at the University of Michigan, most leadership styles can be categorized into four systems ( 2002, ).
            In System I, leaders have no confidence and trust on human resources; accordingly, there is an atmosphere of punishment, intimidation, distress, and occasional reward throughout the whole company. As for communication, a downward method is exercised, subordinates distrust these messages, and any upward communication is likely to be inaccurate ( 2002, ).

            Evidently, all decision making processes are performed by managers without consultation of other employees. Hence, an informal organization is formed, wherein goals are generally diverse from those of the management ( 2002, ).

            As for System 2, managers arrogantly put their trust and confidence on the subordinates; such relationship is similar to the connection between a master and a slave ( 2002, ). Most decisions are still created by top managers but some of such processes and other goal setting decisions are made at certain lower levels of the company.

            Information flow is still downward, and if ever upward communication exists, the pieces of information that emanate are usually those which managers want to hear .

            Next, leaders may have substantial trust and confidence towards their employees in System 3 and interaction may already occur between the two parties ( 2002, ). Communication may flow upward and downward in the company, and workers may view downward communication with less suspicion. As for decision-making, broad regulations are still produced by managers, but specific decisions are created at the lower levels of the company.

            Finally, in System 4, leaders already have complete trust and confidence towards the human resources. Much interaction occurs between leaders and employees because communication flows upward, downward, and across the organization ( 2002, ). Additionally, downward communication is willingly accepted by workers, and when it is not, open interaction exists between the two parties.

            Moreover, upward communication is essentially accurate, and the leaders show sincere efforts to supervise employee feedback. Decisions are created by individuals in the organization, regardless of their position or status; thus human resources are motivated because of participation in decision-making, appraisal, and goal setting ( 2002, ).

 

Essential Leadership Traits

            According to a study by  (2000), wherein he studied the behavior of ninety leaders in successful private and public organizations, there are four common themes associated to effective leadership—management of attention through vision, management of meaning through communication, management of trust through constancy, and management of self.

            Essentially, management of attention occurs when leaders create a captivating vision that would transport other people into places they have not been before (,  &  2001, ). This vision usually entails changes in the organization, based on the present circumstances that the company experiences.

            Additionally, management of attention goes hand in hand with management of meaning since leaders should not only have the capacity to create the vision but also the ability to transform such vision into reality.

            Evidently, once leaders have generated an abstract vision, they should be able to concretely share it with other people, since a dream that is unknown to others is practically a vision that would never be enacted.

            In fact, according to , “a dream that is not understood remains a mere occurrence. Understood, it becomes a living experience (,  &  2001, ).” Leaders should then be able to effectively communicate their vision and capture the interest and enthusiasm of the organizational members so that others could understand and follow them.

            As for management of trust,  (2000) believes that the major determinant of trust is reliability or constancy (). According to recent studies, employees would rather comply with leaders that they trust and could count on, rather than individuals that they could agree with but who frequently shift positions (,  &  2001, ). Furthermore, leaders that are consistent with their behaviors, even to the point of being unrelentingly persistent, would enable their followers to understand and trust them. Leaders, no matter how authoritative or intimidating, would not be willingly obeyed by their subordinates if they are not perceived as individuals who could be trusted. 

            It is therefore important for leaders to build on a foundation of trust and constancy, so as to be able to enlist the ready participation of employees and eventually realize organizational change and development.

            Finally, management of self means that leaders know their own capabilities that are necessary towards the initiation of transformations in the organization (,  &  2001, ); whatever management style they possess, they could employ themselves to the organization because they have high regards of themselves.

            Additionally, once leaders have evaluated and assessed their strengths, they could already implement the appropriate skills in order to initiate change and growth in the corporation.

            On the other hand, leaders should not only be knowledgeable about their abilities, but also of their limitations. Once leaders have recognized what they lack, personal improvements could be made so that these weaknesses could be turned into assets.

 

Empowerment and Effective Leadership

            Efforts of efficient leaders could be felt in the whole organization and could positively contribute to organizational change and development. An example of such constructive effect is empowerment. In companies that have useful leaders, empowerment is most exemplified in four themes (,  &  2001, . ).

            First, effective leaders make the corporate employees feel significant. This occurs when every member of the organization feels that they could contribute something valuable towards the success of the company. These contributions may be small or truly significant; but regardless of the extent, when workers feel empowered, they know that everything they do for the organization are valued and appreciated (, &  2001, ).

            Effective leaders also give emphasis on the importance of learning and competence. Since they value learning and mastery, individuals who work for such leaders also give importance on these concepts (,  &  2001, ). Accordingly, every member of the organization, through thorough learning and training, has the necessary capabilities to lead the organization towards success.

            Next, efficient leaders make employees feel parts of the corporation. When leadership exists, teams, families, and unity exists likewise (,  &  2001, ). Accordingly, employees who feel that they are treated as members of a unified and personal organization, and not as mere machines, would enjoy work more and be more productive members of the corporation.

            Lastly, effective leaders make work exciting. Where there are leaders, work is thought-provoking, encouraging, enjoyable, and fascinating (,  &  2001, ). In connection to this, leaders should practice pulling, rather than pushing, people toward the organization’s goals. A pull approach of influence draws and invigorates employees to participate in the exciting vision of the future. Likewise, it motivates workers through affinity and rapport, not through compensations and punishments ( 2000, . ).

 

Leadership and Organizational Change and Development: The Case of General Electric

            General Electric (GE) is an organization that was co-founded by renowned inventor, Thomas Edison. The company is a major provider of a wide range of products such as home appliances, light bulbs, radar equipment and medical imaging, locomotive and aircraft engines, and so on ( 1998, . ).

            During the 1980s, GE became a victim of the transformation of its business environment—the organization’s diverse businesses were mostly domestic, profit margins declined for others, many operated at a loss, and other GE customers began to support other foreign competitors who were able to produce quality goods with cheaper prices ( 1998, ).

            , GE’s Chief Executive Officer (CEO) for twenty years, immediately recognized these warning indications. He realized that for the organization to survive the 1980s and emerge triumphant in the years to come, far-reaching changes were needed, a new corporate vision was necessary, and innovative business strategies had to be generated.

 

Jack Welch: An Introduction

  Jack Welch , born as John F. Welch, is GE’s youngest CEO and leader of one of the most successful companies in the world. After he obtained his Ph.D. in chemical at the University of Illinois, he entered the Plastics Division of GE; this informal and unrestrictive industry developed Welch’s entrepreneurial spirit and nurtured his distinctive management style ( 1998, ). 

            Because of his accomplishments, he immediately rose through the division’s management ranks, wherein he stayed for 17 years. In 1971, he was promoted as general manager of the Chemical and Metallurgical Division, while in 1977, he became Senior Vice President of the Consumer Products and Services Sector, as well as Vice Chairman of the GE Credit Corporation ( 1998, ).  In 1979, he became one of the three GE Corporate Vice Chairman, and in 1981, became GE’s CEO at the age of 45 (1998, ).

            As was earlier mentioned, Welch led GE though the extensive and ground-breaking changes that the organization had to undergo. However, one should first fully understand the reasons and circumstances behind GE’s organizational change and development.

 

GE’s Organizational Situation

Generally, when Welch became CEO, GE was characterized by a slow-moving internal bureaucracy ( 1998, ). This means that there was rigid hierarchy in the company and that its human resources were not valued and appreciated as they deserved to be. Accordingly, this was one reason why the company was not able to efficiently compete with other organizations, when it comes to production of quality goods and products. With such a situation, it was therefore necessary to create the necessary internal behavior patterns with regard to GE’s overall employees.

Moreover, GE’s business setting was also mostly non-global, meaning it was not able to maximize its capacity in the international business setting ( 1998, ). Furthermore, the organization only made use of a modest and outmoded technology in most of its businesses, which means that it did not take advantage of the society’s industrial advancements at that time. These are concrete situations that show that it is necessary for GE to adapt to the dynamic environment wherein it exists, for it to survive and eventually succeed.

Furthermore, the main obstacles faced by GE during the 1980s could likewise be categorized into two, namely hard and soft ( 1998, ). It could be observed that the hard problems are mostly economic, while the soft hindrances are mostly political.

Specific examples of the hard problems encountered by GE are the following: 1) low cash flow because of high capital expenses and working-capital development, 2) minimal or average growth of profits, 3) its slowly developing core industry, electrical manufacturing, still comprise more than 50% of GE, 4) the operating margins of 7% to 9% were insufficient for growth, and 5) productivity development was only 1% to 2% annually ( 1998, ).

On the other hand, examples of soft problems are: 1) the lack of technological innovation, 2) internal “turf” struggles, 3) inwardly focused industries, and 4) slow decision making by the management ( 1998, ). 

These situations further reiterated the fact that it was necessary for GE to transform its organization due to both internal and external factors. To do so, some of Leavitt’s and Greiner’s ideas on organizational change and development could be applied. For instance,  discussed the categories of organizational change namely structure, technology, and people.

With regard to the first, GE could restructure its hierarchy since the abovementioned problems—slow decision making in the management level, the internal “turf” struggles, and the like—could be traced to the weakness of the company’s organizational processes and structure. Additionally, the rigid hierarchy in the company only alienated its human resources, which is why the employees were not motivated to give their best efforts to produce quality products for the organization.

In connection to this, the people in the concerned organization, based from Leavitt’s second category of change, should also be dealt with in the given situation at GE. To answer the need for motivation of employees and the eradication of behavior and attitudes that negatively affect efficient and quality production at GE, a necessary and suitable people-oriented approach may be generated by the company.

As for the last category, it is stated above that GE also had problems with the changing technology in its business environment. Amidst the technological innovations that the company could utilize to its advantage, GE refused to adapt to such changes which is also a reason why the organization encountered numerous problems. Hence, technology is another category for organizational change that the corporation had to deal with in order to achieve development.

As for Greiner, some of his beliefs could also be utilized in GE’s situation. For instance, under the unilateral power is the decree approach which means that change would come from people in the organization that have high formal authority and would eventually be passed on to those in the subordinate levels. With regard to GE’s condition, Jack Welch was the leader who generated change in the company; in order to do so, he had to enlist the help of his other associates and employees in the organization.

In connection to this, Greiner’s shared power is also applied in GE’s circumstances. Since Welch needed the assistance of the other human resources in the company, discussions that would determine the problems in the organization and its corresponding solutions are performed in the organization. Moreover, GE’s human resources also participated in the selection of alternative solutions, initially chosen by the key officials at GE, which would deal with the problems and obstacles that the corporation faced.

Lastly, based from the adaptation model of organizational change and development, discussed in the earlier parts of this paper, corporations have the ability to restructure themselves and the environment so that it would be able to survive and achieve its goals. Key human resources and leaders are therefore vital in such companies because they are the ones who should generate the strategies that should be enacted, based on the organization’s economic, political, and social circumstances.

 

The Role of Jack Welch in GE’s Change and Development

            However difficult the mentioned circumstances were for GE, Jack Welch was not intimidated. In fact, he instantly realized that the organization had to undergo major changes, greater in extent than any ever embarked on by a key US corporation ( 1998, ).

            The very day that Welch became GE’s CEO, he immediately made it his starting goal to make GE the most competitive company in the world. As a matter of fact, on the day that he was appointed as the organization’s leader, he addressed GE’s Board of Directors with the following declaration: “A decade from now we would like General Electric to be perceived as a unique, high-spirited, entrepreneurial enterprise… a company known around the world for its unmatched level of excellence. We want General to be the most profitable, highly diversified company on earth, with world-quality leadership in every one of its product lines ( 1998, ).” Such is Jack Welch’s vision for GE.

Based from ’ research previously discussed in this paper, one essential leadership trait is the management of attention. This occurs when a leader has the capacity to create a captivating vision that would capture the attention of the corporate employees and would encourage them to generate the needed change in the organization. It is quite evident that Welch is a leader equipped with awe-inspiring visions for the success of GE.

Additionally, he is also a compelling leader that is capable of conveying his dreams to GE’s Board of Directors as well as to the other employees of the organization; the few strong words stated above are only a taste of how he could effectively express what he wants for the growth and development of GE. The capability to generate impressive visions as well as the competence to express these dreams to other people are important because Welch could not enact his visions on his own; he needs to encourage and capture the interest of his colleagues because they are likewise important for the realization of the leader’s dreams. Hence, Welch once again embodies the second of ’ essential leadership trait which is management of attention.

 

The Six Basic Rules Jack Welch Lives By

            For Welch, in today’s dynamic business setting, there are no textbook answers on how leaders should administer corporate change; leaders are the ones responsible to create their own books. Furthermore, he believes that the key to remain competitive in the present business world is “the capability of leadership to create a learning environment that is capable of creating intellectual capital comprising ideas and innovation ( 1998, ).”

            The following are the six leadership ideas of Welch which he utilized to change GE into one of the world’s most successful international companies.

Control your destiny, or someone else will. Welch believes that for GE to undergo dramatic and essential changes, it is best to pass on authority to human resources, and let them be in charge of their own destiny ( 1998, ).

            Because GE formerly applied a rigid hierarchical structure, officials at the top of the organizational chart usually instructed the employees on the lower levels of the structure on what they should do. And that is exactly what these employees did. As a result, they were not fully appreciated and their capabilities are not maximized to the fullest extent.

            Based from the earlier discussion on empowerment and effective leadership, such a rule led to the empowerment of GE’s human resources, and consequently, the whole organization itself. For one, Welch, as the leader of the organization, knows the value of every employee in the company, for they are the ones who contribute to the effective operations of GE. Accordingly, their contributions are respected and esteemed; hence, they are not treated as mere machines but as persons who are part of the corporation’s success and growth.

 

Face reality as it is, not as it was or as you with it were. Welch believes that a leader should have the ability to face reality for them to be able to make rational and appropriate decisions ( 1998, ). To do this, one should deal with failure, dangers, and even personal shortcomings. This is likewise an application of what was previously discussed in this paper, which is for leaders to be aware of their own capabilities and shortcomings.

            Jack Welch as the CEO of an acclaimed organization is aware of his own skills as a leader. He knows that he is determined and he has competence to bring GE towards its survival and triumph. More than that, Welch is also aware of the capabilities of the human resources in his own organization. He knows that every employee under him can handle themselves, which is also why he gives them the right to make work-related judgments without constant assistance from GE’s high officials. Because of this awareness, Welch is able to utilize his personal expertise, as well as the competence of his colleagues, to enact his visions and dreams for GE.

Same goes with his personal shortcomings and the weaknesses of his associates in the company. Welch is aware that nobody in GE is perfect; anybody, even himself, could make mistakes and these could affect the performance and image of the corporation. Because of this awareness, Welch is able to make the necessary improvements for him and for his co-employees to assure that they would be able to uphold quality production and services for the consumers.

 

Be candid with everyone. As an organizational leader, Welch always makes sure that he is in constant contact with his employees. He strived to create an atmosphere wherein subordinates could converse with somebody “in authority” who could do something about their problems with their work ( 1998, ). As a result, Welch is able to hear the positive and negative feedbacks of his colleagues, so that he could accordingly make the necessary improvements on the negative aspects of his company, and retain the positive characteristics of GE.

            Based from the previous discussions on empowerment and efficient leadership, a candid relationship of the employees at GE resulted to an encouraging and fascinating work environment. Instead of dreading their jobs, the human resources at the corporation enjoy their work, because they know and actually feel that there is no rigid hierarchy in their company. They are aware that they could easily interact with people who have higher positions than theirs, without feeling inferior compared to them.

            Consequently, the human resources are pulled, rather than pushed, towards the company’s goals. This means that they are drawn and invigorated to participate in Welch’s vision for the future of the organization, because they are motivated through affinity and positive rapport among colleagues.

 

Don’t manage, lead. For Jack Welch, the traditional role of a manager should not be practiced in the organization; instead, he should serve as a leader who, instead of practicing strict and rigid authority, has the capability to liberate and empower the human resources ( 1998, ). According to  (1995), leaders should encourage a clear and shared vision for the future, and this dream should be accompanied by the strategies that would produce corporate changes that would lead to the fulfillment of the leader’s goals (as cited in  1998, ).

This is a clear indication of ’ differentiation between a leader and a manager. Jack Welch could be considered as an ideal leader that would guide GE towards success, because he evidently, possesses the traits that differentiate a leader from a mere manager. For instance, Welch has a long-range perspective of the situation of GE; instead of seeing GE’s condition in a short-range view, Welch knows that he could turn the present problems faced by GE into success. Thus, instead of giving in to the present challenges, he managed to create a long-range perspective—that GE would be transformed into one of the highly-acclaimed institutions in the world.

 

Change before you have to. This means that it is better for a leader to change early the aspects that have to be changed for it to remain competitive, than create changes later when it is already adversely affected by internal and external business changes. Welch has little patience over people who stubbornly cling to GE’s traditional methods which were evidently contributing to the company’s previous decline.

            For example, during the 1980s, GE was quite reluctant to adapt itself to the technological innovations that were already abundant during that time. As a result, the company was not able to fully utilize such an important tool, which is a major factor for the growth of the corporation. Such unwillingness is one of the many aspects that Jack Welch focused on and successfully transformed.

            ’ (1997) few words encompassed the vital leadership role exemplified by this fifth rule, “nothing serves an organization better—especially during these times of agonizing doubts and paralyzing ambiguities—than leadership that knows what it wants, communicates those intentions accurately, empowers others and know how to stay the course and when to change (as cited in  1998, ).” These, and more, are exactly what Jack Welch was able to accomplish.

 

If you don’t have a competitive advantage, don’t compete. Welch was aware that inflation would be rampant in the 1980s which would result to slow worldwide development ( 1998, ). In response to this, GE abandoned the outmoded industries that were no longer contributing to the success of the organization. To replace these businesses, the corporation bought new competitive industries that possessed higher profit margins.

Because of this, downsizing inevitably occurred, which resulted to lower morale of employees who remained behind. But sacrifices had to be made for the future of the organization and the welfare of the majority of the workers, consumers, and stakeholders.

            This is a concrete example of both managerial and retrenchment tactics under the adaptation model of organizational change and development. First, through the purchase of new businesses with higher profit margins, changes in the internal workings of the company are affected, so as to strengthen technical foundations of GE. Moreover, changes in external business environment of GE also caused the internal transformations that happened in the mentioned company.

            As for retrenchment tactics, some of the human resources at GE had to be dismissed, for the corporation to be able to adjust to the changes to its environment. Since GE had to let go of some of its less successful industries, the employees that worked there had to be discharged. As a result of such strategic downsizing, GE was enabled to be more competitive with other more profitable companies.

 

The Restructuring of GE: Boundarylessness and Work-Out

            To apply the six basic rules of Jack Welch, he made necessary transformations with regard to the existing structure at GE. To do so, he applied the concepts of boundarylessness and work-out.

            In a boundaryless company, barriers between company functions are removed, barriers between organizational levels are eradicated, and barriers between company locations are eliminated. As a result, the organization reaches out to significant suppliers and makes them part of a sole procedure ( 1998, ).

            More concretely, Welch de-layered the hierarchy of GE through the removal of unnecessary levels of management, widened the company’s gain sharing incentive structures to include all workers, and lessened perks for executives; consequently, ceilings of hierarchy and vertical boundaries between organizational levels are eradicated ( 1998, ).

            Furthermore, Welch also introduced project teams, cross-functional groups, and partnerships, so as to eliminate internal boundaries or horizontal barriers between different corporate functions and locations. Additionally, he measured consumer fulfillment, generated strategic alliances, and built teams with GE suppliers and consumers, so as to remove the external barriers between the suppliers, consumers, and external stakeholders of GE ( 1998, ).

            Next, to enact the concept of work-out, the human resources of GE would hold meetings for three days to frankly discuss both positive and negative issues and opinions ( 1998, ). The employees included in these meetings are senior and junior managers as well as subordinate workers.

            In the work-out sessions, it is necessary for the managers to answer all the questions of the subordinate employees ( 1998, ). Moreover, there could be exchange of ideas among employees, as well as healthy discussions and debates about any matter that concerns their work at GE.

            In essence, the objective of Work-Out is to empower the human resources of the company, lessen unnecessary work, spread the new GE culture, and to develop mutual trust between subordinates and GE’s leaders ( 1998, ).

Work-out is therefore a concrete response to ’ essential leadership trait, which is management of trust. Welch believes that it is vital to have constancy and trust among the employees at GE because subordinates who do not trust their leaders would only follow their instructions out of fear and not out of respect and esteem. On the other hand, if corporate leaders do not trust their colleagues, they would not be able to believe in their capabilities to perform organizational tasks and responsibilities.

            Additionally, one could observe that Likert’s System 4 is the foundation of GE’s concept of a boundaryless company. Through Welch’s efforts, the horizontal, vertical, and external boundaries or barriers were eradicated in GE, which resulted to a more personal relationship among human resources. Moreover, substantial interaction occurs between leaders and employees because communication barriers no longer exist. In fact, communication flows upward, downward, and across the company; consequently, feedback could likewise easily flow among human resources.

 

Recommendations

            It is apparent that General Electric is able to cover almost all the aspects involved in the concepts of organizational change and development, and leadership. It seems as if Jack Welch is indeed the ideal leader that is able fully concretize the useful ideas presented by various theorists, in terms of the concepts mentioned above.

            However, there are a few areas that were not given much focus by the leader of GE. One example of which is the decision-making process that occurs in the organization. It is true that interaction among the subordinates and leaders of the company should constantly occur; strict hierarchy and barriers should therefore not exist within the organization. However, it is likewise essential to give importance on the opinions and beliefs of employees with regard to making decisions in the organization, because these decisions also affect them. 

            Additionally, with regard to the implementation of the approaches to organizational change and development, leaders should remember that a single approach is not an effective method to apply in a company. Instead of focusing on just a structural approach or a decree approach, leaders could utilize a combination of these methods, based on the circumstances the organization is in.

            Lastly, it is also recommended that vigilance should be practiced within the organization. Leaders and subordinate workers alike should not take for granted the situation they are presently in. They should see to it that the corporate leaders are constantly doing their responsibilities in the organization, with regard to generating change and initiating development in the company.

            On the other hand, leaders should also be constantly aware of the attitudes and behaviors of the employees, and see to it that they are not taking advantage of the benefits they get because of the personal or human relationship that exists between them and their leaders.

           

Conclusion

            One should take note of the fact that the changes enacted by Jack Welch, guided by his famous six basic rules, did not happen overnight. In fact, the restructuring of GE took more than ten years and is still presently happening. This is because if a company’s leader decides to undertake immense and remarkable changes to the organization, the process never really ends; even if General Electric already has undergone remarkable development throughout its more than a hundred years of existence.

            With the above discussions about organizational change and development and leadership, one could observe that General Electric, under the effective leadership of Jack Welch, was able to respond to its dynamic business environment. This is why General Electric, from its difficult situation in the 1980s, was able to surpass and triumph over its challenges, making it one of the world’s most valuable corporations based on its profits, assets, revenues, and market value.

 

 

 

 

 

 

 

 

 

 

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