Jack Welch's Leadership Impact on GE's Growth: A Detailed Analysis

This report analyzes the impact of Jack Welch's leadership on General Electric (GE) during his tenure as CEO, starting in 1981. Facing economic recession, Welch implemented significant changes to address declining revenue, investor discouragement, and other challenges. His initiatives focused on improving employee performance, increasing revenue and profit, and restructuring the company. The report highlights Welch's strategies, including cost reduction, organizational restructuring, downsizing, and cultural change. These strategies contributed to substantial increases in GE's revenue and profit between 1981 and 1985. The report also evaluates Welch's leadership approach, identifying his use of communication, collaboration, and commitment (3C) to drive change and achieve success even during challenging economic times. The analysis is supported by references to relevant academic sources.

Running Head: IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
Name of the Student
Name of the University
Author Note

1IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
Answer to Question: 1
Welch became the CEO of GE in April 1981. At that that the economy of
United States was facing recession, unemployment, strong dollar low levels of
exchange rate. At that time the CEO Welch had to fight with the problems like-
a decline in revenue, decline in manufacturer’s stock price, slumping the
dividends. All these discouraged the investors as well as shareholders. Thus
leading a business organization and carrying on business activities became a
challenge to him. In this scenario the most difficult challenge in front of the
CEO was to retain the performance of GE so that the company can make up for
the losses which it has incurred already. This is the reason why the CEO
challenged each of the employees to be “better than the best” (Bartlett Ghoshal
and Birkinshaw 1995).
Answer to Question: 2
Welch’s objective behind the series of initiatives taken by him were to retain
the good performances of the employees as it was before the recessionary
situation; so that the revenue of the company can be increased along with the
profit levels. Because Welch knew that an increased level of profit will attract
shareholders, investors will be encouraged to invest. This will be helpful to

2IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
meet one of the priorities set by Welch-“reinvestigating in the productivity and
quality”. Welch consolidated all these objectives into one, popularly known a s
# 1 or # 2 objectives (Bartlett Ghoshal and Birkinshaw 1995).
Answer to Question: 3
Welch’s initiative has added value to the growth of GE leading to a drastic
change in the structure and in the performance of the employees (Bartlett Ghoshal
and Birkinshaw 1995).
Welch’s has taken initiatives for reducing cost of production, simplifying the
complexities of multilayered structure of the organization, downsizing , destaffing
and delayering, reducing the labor expense 59,920 salaried as well as 64,160
hourly positioned between 1981 and 1988. He also fostered divestiture which again
eliminated additional 122,700. These are the parts of the cost reduction strategies
by Welch has also taken Software initiatives which has brought pace in the work
procedure of the organization. In short, it can be said that, Welch boosted
productivity of the company through restructuring, eliminating bureaucracy and
downsizing. Moreover, he has also emphasized on cultural change, for the
sustainability of the company. As a result between 1981 to 1985, the revenue of
GE increased to $29.2 billion from $ 27.2 billion leading to a substantial increase

3IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
in the profit level from $ 1.6 billion to $2.4 billion. This is the way how Welch’s
initiative added values (Bartlett Ghoshal and Birkinshaw 1995).
Answer to Question: 4
By evaluating Welch’s approach to leading change, it can be said that,
Welch has followed 3C of change leadership communicate, collaborate and
commit. This approach was very essential for the success of GE, as it helped GE to
perform better and increase revenue, profit even during the period of recession
(Bartlett Ghoshal and Birkinshaw 1995).

4IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH

5IMPACT OF JACK WELCH’S LEADERSHIP ON GE’S GROWTH
References:
Bartlett, C.A., Ghoshal, S. and Birkinshaw, J., 1995. Transnational management:
Text, cases, and readings in cross-border management.