The Jack Welch Era at General Electric

Abstract John Francis “Jack” Welch Jr. was Chairman and Chief Executive Officer of General Electric Company between 1981 and 2001. He was responsible for building a tremendous reputation for his company and the leadership that helped him achieve that. With combination of ruthless focus and contradictory commitment to staff involvement, Welsh delivered the growth figures that could only be dreamed of by smaller companies. Under his leadership, General Electric thrived like never before and he took the world as he found it, by following basic rules, broking a few and in those terms performed to his utmost.

Within those twenty years he accomplished things no other CEO had in GE’s history; he fulfilled the company’s primary economic responsibilities to society and communities around the world by turning it into an exceptionally profitable conglomerate. Social Responsibility at General Electric Jack Welch’s tenure at General Electric is often used as a model for corporate social responsibility.

“Corporate Social Responsibility (CSR) refers to operating a business in a manner that accounts for the social and environmental impact created by the business. ” [1] In Welch’s era, GE fulfilled its responsibilities to society by serving customers worldwide and stimulating the economy. His popularity was shared with opposing views.

There were those who despised him because of the jobs lost and those who shared his vision because they became rich off of it. There are many aspects in the way he restructured the company that would play to the social responsibility tactics. “Welch has gone on record as saying that he believes the time has passed when making a profit and paying taxes was all that a company had to worry about. ” [2] He stood by his vision and in turn made General Electric a very successful company.

According to Milton Friedman, the social responsibility of business is to make profits. “That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. ” [3] Both Welch and Friedman shared the vision to make money, but their views on social responsibility were similar. Friedman believed in obeying the law while making profits and Welch believed in the financial success of the company.

Welch’s vision was that every GE business would be the best in their industry. For that reason, it’s apparent that GE under Welch does illustrate a narrower view of corporate social responsibility closer to Friedman’s views. Under Welch’s management, General Electric failed to comply with the General Principles of Corporate Social Responsibility. Companies should always be honest, ethical an devoted to the well being of their environment and the public they serve. While his motto was to make a profit, he did so by doing some questionable things. Welch’s years as CEO have not

been free of controversy and criticism. With so many acquisitions and divestitures, GE became what Welch set out to make of it, a powerful conglomerate. Ranking shareholders over employees and other stakeholders can have both pros and cons. There are several strengths when it comes to ranking shareholders higher than employees and other stakeholders. Shareholders have to be invested in the company because they have part ownership and it’s beneficial to them that they work harder to be successful.

The only beneficial thing to an employee and stakeholders is the job they posses which pays them their salaries and incentives so it is not really important that the company does well. Shareholders also hold some weaknesses because they have more control and power and therefore can suffer if profits in the company start going sour. Employees are costs of production because they are assets to a company and are the largest production expense a company has. If a company can produce more quality product with less people it will increase its profitability. While many did not agree with what Welch did, there is no denying that his tactics were efficient.

As long as General Electric was holding up to its competitive status and making huge profits there is no sense in changing its priorities. Summary While Serving as Chairman and CEO of General Electric Jack Welch accomplished what he set out for. His vision and leadership of the company made great profits and operated globally. His use of corporate social responsibility has been questionable because some frowned upon his tactics. He closed many plants and cut jobs of those who were underperforming. He pushed and encouraged his managers to be more productive. If they met his expectations they were rewarded and if they failed they were fired.

He had the right mind set, motivation, and by such those managers and Welch’s leadership made General Electric the giant that now dominates the world. Works Cited [1] As You Sow Foundation. Corporate Social Responsibility. Retrieved from: http://www. asyousow. org/csr/) [2]Corporate Social Responsibility. Arguments against social corporate responsibility. Retrieved from: http://www. mallenbaker. net/csr/against. php [3]Friedman, Milton. (1970) The Social Responsibility of Business is to increase its Profits. Retrieved from: http://www. colorado. edu/studentgroups/libertarians/issues/friedman-soc-resp-business. html