Sustainable Growth:

Institutional Excellence

Case Study:  General Electric (GE)

Creating an Extraordinary Organization

The Need for Change

The revolutionary massive changes introduced by Jack Welch worked. By the mid-1990s GE had become the strongest company in the United States and the most valuable company in the world, as measured in market capitalization. Today, General Electric succeeds in dozens of diverse businesses, and is continuously at the vanguard of change. Some years ago however, in locations throughout GE, local managers were operating in an insulated environment with walls separating them, both horizontally and vertically, from other departments and their workforce. Employee questions, initiatives, and feedback were discouraged.

In the new knowledge-driven economy, Jack Welch, the then CEO, General Electric, "viewed this as anathema. He believed in creating an open collaborative workplace where everyone's opinion was welcome."¹ He wrote in a letter to shareholders: "If you want to get the benefit of everything employees have, you've got to free them - make everybody a participant. Everybody has to know everything, so they can make the right decisions by themselves."¹

Improving Connectivity: Creating a Seamless Link between Strategy, Management, and Employees

Determined to harness the collective power of GE employees, create a free flow of ideas, and redefine relationships between boss and subordinates, Welch developed Work-Out: a series of town hall meetings conducted by GE management and designed to encourage employee feedback, cross-pollination of ideas, and employee empowerment. "In the Welch-led GE culture, traditional barriers dividing employees, co-workers, and management give way to tethers of interdisciplinary and interdepartmental cooperation".¹

Change Acceleration Program (CAP)

CAP was implemented by Jack Welch to help drive change throughout the organization. "Although he started with senior managers, he also provided other managers with the tools and training the needed to engineer and drive change throughout the company."⁴

GE Values

GE's values are so important to the company, that Jack Welch had them inscribed and distributed to all GE employees, at every level of the company. But before the cards were furnished to the staff, GE had come to consensus on which core values it wanted to cultivate in its employees. Many hours were spent at GE's Leadership Institute and elsewhere deciding on exactly what those values should be.

Reassessing Performance and Benchmarking Employees Continuously

Jack Welch does a good job of illustrating the need for proactive change management and constant reassessment when he says, "If the rate of change inside an organization is less that the rate of change outside... their end is in sight". One of the tools used by Welch to ensure constant reassessment and benchmarking is the annual review undertaken by every GE executive and staff member. Once a year, every employee's performance evaluated and awarded a numerical ranking of between 1 and 5. "The implicit understanding is that both the individual and his or her score are moving up or it's time to leave the company."²