General Electric: From Jack Welch to Jeffrey Immelt

The need for Jeffrey Immelt to develop into a level 5 leader is imperative for GE to continue to grow and prosper in the current economic conditions of global expansion and constant change. Immelt can also benefit GE by becoming a level 5 leader by focusing on developing and empowering employee values and intrinsic motivations rather than facilitating initiatives to carry out his own vision. By Immelt developing into a level 5 leader and creating an open and trusting environment, he will empower employees to rebuild GE’s infrastructure that can hold strong and prosper through the new and demanding global expansion.

Jack Welch led the way that was authentic to him and what economic conditions valued at the time. He was successful by giving the company of GE a clear vision and opening up opportunities for employees to efficiently carry out his objectives. He gave stability to shareholders at a time of economic worry and more than doubled GE’s market cap. Although his practices deemed profitable he did not build internal company infrastructure that would carry GE into the future. Instead he weakened internal relationships and did not empower employees to use their talents to embark on new and innovative projects.

Immelt is faced with the challenge of getting the GE employees to develop a trusting and open relationship that can grow GE into new markets and hold stable in a time of constant change. His humility and professional will create a new environment for GE that will be profitable from long-term investments, social responsibility, and employee empowerment. Immelt is already leading in his own authentic way by being people-oriented and concentrating on effectiveness rather than efficiency. If he can continue to stay true to his authentic values while developing them further into a level 5 leader, GE will manage to stay competitive in the new economic market. _________________________________________________________________________________________________

Although authentic in his actions, Jack Welch had uprooted the GE internal infrastructure to become a number generating, cash focused conglomerate that did not serve the intrinsic needs of GE’s talented employees. GE seemed to be thriving under Welch’s reign with stock prices continually rising and it’s market cap growing from $18 million to $500 billion. However there are more factors to a company that tell about its “success” than its cash generating enterprises. Many of the employees at GE felt worn down and stretched too far with their expectations being forced to drive success from extrinsic motivators and short-term returns.

After thorough evaluation of the movement of CEOS from Jack Welch to Jeffrey Immelt, lays the fundamental management problem of a change of company values led by a previous level 4 leader, Welch, to a level 5 leader, Immelt. The GE company needs to recognize and be led to the different values that Jeffrey Immelt believes in order to drive success under a new environment. Immelt is focused more on long term strategic investments that will require invested energy and cooperation from his employees to finally reach the high numbers and stock price returns that come along with the change to a strong infrastructure.

While Welch was CEO he inspired the GE company by providing them with the vision that GE was meant for big returns, rapid expansion, and continually expanding market caps. He proved he was a level 4 leader by being focused on efficiency, and committing to a clear vision that “stimulated higher performance standards”. Everyone was aware of Welch’s vision: to act fast, push bureaucracy out of the way, and to generate numbers and cash. People who did not meet the results-delivered mindset were let go and ideas that did not deliver immediate results were abandoned.

This level 4 leadership did not allow for the employees of GE to develop and grow the intrinsic values of the company and themselves because they were too nervous and focused on delivering results from small-risk projects. Welch did not focus on developing people; instead he focused on developing numbers. For example, his “vitality curve program” cut the “bottom 10% of employees” and rewarded the “top 20%”.

The Vitality Curve organized people into three categories based on their past performance and deliverables. Although Welch implemented a number of “leadership development” programs, they ironically did not focus on molding leaders but molding opportunities for profit-centered growth.

The underlying problem was that the employees of GE were expected to carry out Welch’s vision and return high profits to stockholders. It wasn’t that Welch wasn’t clear on his objectives or ways to complete objectives; it was the fact that employees were focused on completing work to produce Welch’s vision instead of using their own talents and ideas to grow the company’s infrastructure that could endure future economic conditions. By Welch being a level 4 leader he facilitated employees to meet expectations in an efficient and demanding manner, which crushed innovation and employee self- fulfillment.

According to Fortune Magazine “Welch conducts meetings so aggressively that people tremble.” Although this type of tough leadership produced high profits, it left employee satisfaction and infrastructure stability wounded. Welch was constantly implementing new projects and workshops that supported his vision and gave employees clearer objectives of his vision that produced results. Each time he implemented a new project GE stock prices rose; but this was at a time where the environment GE was competing in was domestic and results driven, which didn’t demand long term company infrastructure but rather thrived on short term high profits.

Welch led the way the economy demanded, which led him to success and high numbers. Welch’s methodology was based upon cost cutting, efficiency, and deal making which would deliver high, reliable profits. Welch led at a time of an economic recession with high unemployment, high interest rates, and domestic competition.

The idea of developing society and GE employees was put aside to develop high profits, which gave stockholders a sense of dependability and stability in a time of unknown and economic turmoil. This focus worked at the time, but would not continue to work in the current economy that holds new values and expectations. It is crucial that Immelt become a level 5 leader that invests in long term, strong infrastructure tocontinue to be able grow, expand, and stay profitable.

For Immelt to become a level 5 leader he must discard the idea that “leaders must be the ones providing the direction or vision” and instead enable the implementation of additional drivers, such as employees or opportunities, that will take GE from good to great. Immelt is leading at a time of economic global slowdown and increased global competition, which demands an infrastructure that can endure a change of markets and compete at a global level. Immelt’s responsibility isn’t to have one vision that the entire company follows, but to inspire GE employees to evaluate their own visions that correspond to their intrinsic values and allow them to act upon them with trust and resources.

To enable and inspire employees to re-create the GE infrastructure Immelt needs to pave the way for employees to re-build their trust with GE and himself by increasing their motivation through a more open environment.

Immelt can act upon becoming a level 5 leader and making GE into a growth engine for the future by investing in leadership programs that focus on developing employees as leaders and allowing them to create their own vision through their own intrinsic values. Welch’s leadership development programs focused on trimming the company’s edges instead of developing them to pave the way for number growing opportunities and profit based endeavors. Immelt can have leadership programs that ask employees to evaluate what values they have for their work and what are areas that can be improved to help them reach their goals.

Immelt can also share his inspiration to facilitate external growth by moving markets into developing countries through risk taking, sophisticated marketing, and innovation.

He can prove to employees that he wants them to embark on meaningful, long-term projects by notifying them that rotations will be removed to allow for specialists that are the most knowledgeable in their field, and therefore have the ability to produce the most effective long-term projects and returns. Immelt can teach the employees of GE of his values and leadership practices through company wide meetings, emails, or letters. He then needs to be mindful to follow through with his values to foster an open and trusting environment.

Jeffery Immelt is leading as CEO in a time of worldwide growth and expansion that demands a different type of leadership style than the efficiency based style of Jack Welch in order for GE to stay profitable, and continue to be a leader in the business market. In addition to changing leadership styles in order to keep GE growing profits, Immelt has the opportunity to make GE employee’s jobs more meaningful and fulfilling by creating an open and trusting environment that will enable them to use their talents to carry out visions of their own that resonate with their intrinsic values. It is imperative that Immelt become a level 5 leader that will force GE to move from being a cash generator to a growth engine that will thrive in the current global expansion.

ReferencesKreitner, R., & Kinicki, A. (2009). Leadership. Organizational Behavior (pp. 26-28). Arizona State University: McGraw-Hill Education.

Mark, K. (2008). General Electric: From Jack Welch to Jeffrey Immelt. Richard Ivey School of Business, A, 33-42.

Paduru, A. (n.d.). Welch vs. immelt.Upload & Share PowerPoint presentations, documents, infographics. Retrieved October 14, 2013, from http://www.slideshare.net/AnudeepPaduru/welch-vs-immelt