Saturday, March 17, 2012

Jack Welch Essay Paper

Jack Welch Essay Paper

Jack Welch was one of the most successful CEO of General Electric Co., who headed the company for twenty years. His work and his personality are highly controversial and evoke absolutely different feelings and emotions that vary from the total condemnation and contempt to admiration and great respect. In this respect, his policies in regard to the personnel of the company were particularly noteworthy since it was due to the change of the corporate culture and relationships between Jack Welch and the rest of the personnel as well as between all people working at the company General Electric Co had managed to make a considerable progress in its financial and market performance, though the costs of such a progress are still severely criticized by the opponents of Jack Welch, whose era at General Electric is viewed as a turning point in the history of the company.

In order to better understand the role of Jack Welch and his contribution to the development of the company, it is necessary to point out that he became the CEO at the period when the company had suffered from serious financial and economic problems. To put it more precisely, the major problems the new CEO had started to solve practically immediately after his appointment were the problem of bureaucracy and the low effectiveness of functioning of the company. It is worthy of mention the fact that Jack Welch almost lost his job at General Electric because of bureaucracy and rigidity of its structure.

As a result, when Jack Welch became the CEO he started his twenty year reign with the radical changes, which, to a significant extent, affected social policy of the company. In fact, his first steps as the CEO perfectly illustrate his attitude to the corporate social responsibilities. In this respect, it is necessary to emphasize that he started the radical changes within the company from a series of dramatic restructurings and layoffs. In terms of this policy, from 1981 to 1985, he cut 100,000 jobs (The Jack Welch Era at General Electric). This policy evoked a sharp criticism of his actions but, in spite of protests of workers and the growing dissatisfaction of ordinary employees as well as manager, Jack Welch continued his policy.

Basically, the consistent reduction of jobs contributed to the increasing effectiveness of the performance of the company, which focused on the market expansion. In terms of this strategy of the development of the company, General Electric acquired RCA in 1985 (The Jack Welch Era at General Electric). In such a way, the company started the realization of the strategy of Jack Welch which attempted to make the company the leader of any industry where it operated.

Nevertheless, the considerable reduction of the personnel was rather the corporate social irresponsibility than responsibility because many lost their jobs. Obviously, the reduction could be conducted in less radical way so that the number of jobs cut could be smaller or, at least, it was possible to prolong the period of job cuts making it not so abrupt and unexpected for employees. From the point of view of corporate social responsibilities such policy would be more employees friendly.

In addition, Jack Welch view on corporate social responsibility was basically limited by the focus on increasing profits. In this respect, it should be said that he expanded the broadness of the stock options program at General Electric from just top executives to nearly one third of all employees. In such a way, Jack Welch increased the motivation of employees to improve their productivity and effectiveness of their work. However, at this point, it is possible to argue that such an improvement of financial position or, to put it more precisely, new form of material motivation of employees, cost too much for thousands of other employees who lost their jobs. Anyway, this trend proves that high profits were the priority in Welch’s corporate social responsibility policy.

Nevertheless, it should be said that Jack Welch managed to meet the major goals of his corporate social responsibility strategy since, in spite of layoffs and significant redundancy, he improved the position of employees and managers whose performance constantly improved and whose contribution in the development of the company was significant. On the other hand, those who failed to progress or who were viewed as ineffective for the company would simply lost their jobs as the bottom 10% of managers did.

Thus, it is possible to conclude that the Jack Welch Era at General Electric Co. was extremely controversial. On the one hand, he managed to make the company the leader of all the industries the company operated in, he improved the position of a considerable part of employees and managers minimizing bureaucracy and including a large part of the personnel in the stock options program, while on the other hand, he was “Neutron” Jack for thousands of employees who lost their jobs.

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