Jack Welch’s Leadership and Organizational Development

Organizational development and leadership are broad concepts that have been studied since ancient times. Change management, as a part of the organizational development process, deals with the shifts undertaken by firms to remain competitive. Both concepts have different benchmarks and measurements. Excessive leadership and management have some adverse effects. Organizations must ensure that the leaders and managers work in moderation. Successful firms have illustrated the ideal combination of solid management and clever leadership (Zaccaro and Klimoski, 2001). The research paper aims to investigate and analyze the leadership style of Jack Welch, his leadership approach to the organization, unique communication techniques, and ethical values.

Leadership Concept and Organizational Development

The concept of leaders is often subjected to several debates. Schools of thought on leadership have emerged to further specify the definition of leadership. Several theorists consider leadership in the forms of Transactional, Transformational, and Laissez-faire (Boehnke and Bontis, 2003). Leadership is the critical ingredient that drives success or failure. Hence the importance being provided to this concept is highly evident. (Topping, 2002) stated that transformational leaders have moral values that include honesty, responsibility, fairness, and honoring commitments. Organizational development seems to be an inevitable thing that any organization is supposed to live through. There can be various reasons for organizational change, and all of them have to be carefully taken into account to make the organization productive and help it survive in the competitive world of business (Cunningham and Hyman,1995). The OD theories used in the analysis will be scientific management by F.W. Taylor, change management theories, and leadership theories.

Biographical Information

Jack Welch is one of the top managers who introduced a unique style of leadership and change models to General Electrics. Jack Welch became the CEO of GE in 1981, and since that time the company experienced a new wave of growth and development. Jack Welch completed his doctorate and took a job at GE Plastics in 1960. In two decades, he was appointed chairman and chief executive of the General Electric Corporation. To restructure the corporation; Welch introduced changes to the structure, the business, and the culture of GE. As the most important, Jack Welch eliminated layers of bureaucracy and decreases personnel, created a new company culture and a unique philosophy of management. A personal example of Jack Welch shows that leaders tend to focus on process; leaders are inclined to concentrate on imaginative ideas. Leaders dream up ideas and stimulate and drive other people to work hard and create reality out of ideas Karaman, 2006).

Organizational Development and Change Management: Comparison and Contrast

Organizational development theory relates to change management and organizational transformations. The main theories working in this direction are Rosch (2002), Tannenbaum & Hanna (1985), Richard Beckhard (1967). The stages of change, introduced by Jack Welch, start with pre-contemplation. In this stage, the supposed change has yet to gain the awareness of involved entities. Contemplation is a stage that shows that the employees are aware of the change. But the focus of the personnel is on different concerns. Then, the employees are prepared for the implementation of changes. In addition, the employees are tasked to perform the modification and provided with maintenance programs. “From the beginning of reorganization work in 1980 to starting total quality practices in mid-1990, Welch had continuously transformed GE” (Karaman, 2006, p. 3). The cycle starts with the raising of consciousness among the employees. In addition, employees are given with proper tools to handle the change. This is more than just compliments but actual benefits in the growth of the personnel. Moreover, employees are given opportunities to let go of their emotional contentions. This is usually done when the change starts to take effect within an organization. The employees are then subjected to further evaluation (Armandi et al 2003; Martin et al 2006).

Following organizational development theory, there are two approaches to change implementation within an organization, and they are bottom-up and top-down. Understandably, top-down change is implemented by managers at a high level. In this case, radical restructuring and reengineering are conducted (Cole, 2005). Often, there is much resistance to this kind of change on the side of employees. When a bottom-up approach to change is viewed, it is far more democratic for it is usually implemented on the part of employees. All levels of organization appear involved in the change process, and thus there is much less resistance to this kind of change. The abovementioned characteristics of change types include and imply their pros and cons. The advantages of the top-down approach lie in its implementation by the administration of the company (Mabey and Salaman, 2003). This means that the change is going to be conducted professionally, with the use of management and change theory, and thus be more effective for the company. The disadvantage for this type of change is the lack of participation of average executives and thus a more serious probability of resistance. As for the bottom-up approach, the advantages are the participation of all levels of organization in this changing development as well as little resistance to this change. On the other hand, a longer time of change implementation and its management by those average employees may appear serious hindrances to effective work and the company’s further development (Bartlett and Wozny 2005).

Welch followed the traditional organizational development theory of change, which can be compared with Lewin’s model of change. Stages of organizational development in GE are described as Waves of Revolution. They involve 1981, first wave (when a new vision and strategy was developed); 1985, the second wave (when GE gained the strengths of a big company); and 1996, “third wave (when GE developed an integrated, boundaryless, stretched, total quality company with A-players” (Karaman, 2006, p. 4). Applied to OD theory of change, this is more of a comparison of behavior before and after the change. Since the problems are identified, the management needs to eliminate the stressful components of change. It means that negative stimuli stalling good behavior will be removed. GE also needs to emphasize the commitment of the employees to change. This is like a renewed assurance to accept change. The last phase of the process involves finding the proper behavior for expected changes. This also includes the elimination of bad behaviors that were observed (Wong and Pang, 2003; Conger, 2002).

Similar to other organizational development theories (action research theory, role conflict theory, organizational self-renewal theory), Jack Welch recognizes that when resistance to change is lower than the mentioned justification, then there needs to change. It is also important to understand that the absence of any of the three components will make resistance higher. “Welch’s main goal at GE Company was, “Working productively like the most productive competitors” (Karaman, 2006, p. 3). For instance, dissatisfaction alone will not merit change. The company needs to provide the value of change and how this value is achieved. Notions are stating that resistance also means the cost of change. This definition is harder to overcome (Bolman and Deal, 2003). Similar to the action research theory of OD, strategic thinking is critical in implementing change at GE. The vision is crucial in defining the future actions for change. Moreover, GE has to recognize the existing dissatisfaction within the organization. This can be done by consulting the entities involved with the firms. Suggestions on how to make the shift are important inputs for the companies. There are certain mathematical processes included to accommodate change with monetary considerations (Charan et al 2001).

Scientific Management and Organizational Development in GE

Developed and introduced by Taylor, scientific management states that labor productivity is at the heart of a successful business. These techniques include education and communication, participation and empowerment, facilitation, bargaining and negotiation, manipulation, and finally, coercion. Education and communication will allow offering information about the change to employees for them to understand the reasons and need for it. As a result, employees will be able to see the logic in the change process and understand that there is nothing terrible in it. Compared to Jack Welch, scientific management shows that participation and empowerment will allow engaging employees in the process of change – as a result, they will become part of it, and will not be able or eager to resist it. If employees are unable to adjust to the new conditions, they tend to resist the change (Papadopoulou et al 1995). In contrast to scientific management theory, Welch’s support is a good way out for the – employees to get rid of their anxiety and will feel comfortable in new conditions. If employees fail in new conditions, they can be offered incentives to live through change. If other tactics do now work, manipulation for the sake of the company’s success may be a good way out. In contrast to scientific management theory, the resistant individual at GE are offered a place in a change management planning group to participate in change rather than resist it In contrast scientific management, coercion at GE is the latest resort – when nothing else helps to persuade employees that change is a positive step for the company. Employees as a result will be forced into accepting change through coercion – the threat of job loss, transfers, or lack of promotion (Higson and Wilson, 1995).

Leadership Philosophy of Jack Welch Compared to Organizational Development Theories

The leadership styles discussed in this section are the functional leadership style, the transformational style, and the autocratic style. These styles will be compared to a theory of administrative management, contingency control theory, organizational culture theory, and teamwork. The functional leadership style by Welch maintains leadership as a collection of behaviors that allows a group to perform a task, meet their goals, and sustained realized success. Jack Welch is seen to encourage functional behaviors and eliminate dysfunctional attributes. Jack Welch is supposed to pave the way to success by constantly motivating subordinates through visible and intangible reinforcements. Aside from the set leadership qualities, some theorists provide suggestions on how effective leadership is accessed. Various personality traits have to be possessed to ensure that leadership among individuals will evolve continuously. Although there are several qualities involved, the universal thought states that both tangible and intangible attributes are necessary. The level of technical skills is important as well as the charisma exuded by leaders. Applied to the contingency control theory, the effective leadership of Welch is often related to the traits being observed among individuals. Certain personal traits are expected to drive leads to success. As Welch’s case evolves, his leadership skill sets are being enhanced by experiences (Karaman, 2006). Training is also a viable tool that will ensure that such traits are used effectively. In contrast to the administrative management theory of OD, the cycle introduced by Welch involves the identification of individuals with such qualities. Then the process of elimination begins until the right personnel is identified for the training to commence (Segriovanni and Glickman, 2006). Other studies on effective leadership lead to highlighting situations and circumstances. The basic assumption in this notion is that different approaches to leadership are guided by situational realities (Brown, 1974; Smith, 1982).

In terms of organizational development theory of contingency control, the leadership traits of Jack Welch are described as desirable, trans-situational goals that vary in importance and depend on situations. The level of values has been used to explain the differences in the results observed in institutions. These tools have constantly evolved to satisfy the changing perceptions and dynamics of leadership and other related concepts. Self-enhancement equated versus self-transcendence appears to influence leadership decisions to affect the different stakeholders of a firm. In addition, the notion has founded the studies focused on the transformational leadership behavior of managers in organizations. As observed, the value orientations emphasize, the goal of leaders in realizing success (Carlopio et al 2005). There are leadership studies that compare the stand of corporate managers in balancing personal and holistic gains. As the autocratic leader, Welch is pleased with his victory over the other companies. This observation has been evident in modern history where leaders have risen to protect their communities and states (Schermerhorn et al 2004).

It is known that organizational culture theory and teamwork theory of OD support the top-down approach to the change implementation within any company. For instance, Ronald Lippitt (cited Price 2004) believed in whole system transformation in the development of OD. “ Response to the data that the system came to know about was rapid. As soon as the whole system shared the data change began to occur.” (Rothwell, et al, p 444 cited Price 2004, p. 55). This caused simultaneous change within the entire organization. The change theory developed by Lippitt consisted of seven stages and was an expansion of Kurt Lewin’s model. The latter model includes three stages which are unfreezing the present level of performance, moving to a new level, and freezing group life at a new level (Price 2004). As a result, Lippitt’s model became more extensive but meant the same steps of organizational change. Similar to these theories of change, the first step of developing the need for a change introduced by Welch corresponds with Lewin’s unfreezing step. Then, a changing relationship establishes between the client in need of help and the change agent. And finally, the sixth and seventh stages by Lippitt lie in stabilizing change and termination of client-consultant relationship – a refreezing stage by Lewin. It is evident that all these abovementioned models of change are top-down, and as far as theoretically and practically grounded, are more acceptable for Furesa S.A. for there is the need for serious and well-grounded change in this company. One more model of change is the Burke-Litwin change model, which has been created to control organizational change and performance (Price 2004). It offers a connection between an evaluation of the wider institutional context and the nature and change within an organization. As a result, management practices and company structure tend to change. These changes influence the motivation of employees who start operating according to changed conditions.

As a transformational leader, Jack Welch is known to be sensitive to the needs of their members. In particular, these leaders are aware of change phases being undergone by entities of organizations. Such recognition is critical in building a strong bond within groups and teams (Lagone and Rohs, 2003). Although these leaders are mainly timid about issues, their manner of addressing problems is considered meticulous. These are the leaders that rarely panic and value pressure-packed situations. Despite the insufficient aggression, some of these leaders have managed to establish strong organizations. Business leaders have to be true to their words and value the contribution of the employees (Kouzes and Posner, 1995).

Organizational Development Process

Organizational Culture and Teamwork Theory

The culture being followed in the GE act is a consolidator of the beliefs, goals, assumptions, and values of the members. These outcomes are critical in ensuring the existence of firms in competitive industries and markets. The superior performance of firms described with strong cultures has been developed through socialisations and other communication techniques. Similar to OD of culture and teamwork, the knowledge shared by GE employees is critical to the success of the organization. The process of socialization attempts to allow individuals to accept the values necessary in building strong organizations. Leaders reinforce these values through the promotion of behavioral norms and other important aspects (Greenleaf, 1982; Barker, 2001). Welch supposed that: “middle managers have to be team members and coaches. “They have to facilitate more than control. They should be able to excite and praise people and know when to celebrate” (Karaman 2006, p. 6). Employees are believed to demonstrate a higher level of commitment in organizations that exude strong cultures. Some personnel equates their values to the values maintained by firms before setting the commitment. Employees with inconsistent views compared with the companies are expected to leave before their first year (“WYPS cuts stress-related illness” 2008).

The case of GE and Jack Welch suggests that organizational development and change are inevitable occurrences in organizations. Hence the role of leaders in times of change is provided with utmost importance. In analyzing the study, two concepts needed to be defined. The first aspect involves leadership, which is broadly described and subjective to the views of theorists and observers. Despite the similarity, the perceptions of organizational entities vary (Karaman, 2006). Middle managers are operating in between and perform both selective decision-making and personnel functions. Given the difference in positions, the study investigated such concepts with leadership and change. The results indicate that the position has indeed an impact on the views of individuals when it comes to the effectiveness of leadership in change. Only self-understanding and accountability were considered as the general trait of leaders in change management. Thus, it is vital to make employees believe in positive outcomes of change and help the management in implementing what has been planed. These techniques can be used by the invited consultant to make employees not aliens but parts of the organization working for its and their benefit. To avoid their resistance to new conditions, employees have to be trained, educated, and communicated with, which will guarantee positive outcomes of change even conducted top-down on the initiative of the management.

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