Organizational Behaviour: a Look at Ge

In the history of corporations few companies have demonstrated the staying power and tenacity as General Electric (GE. ). Of the companies that originally appeared when the Dow Jones Industrial Average was rolled out in 1896 only GE is still doing business today. (General Electric, 2007) GE’s 125 year run has not been spotless. GE, like any long lasting organization, has had many ups and downs. GE’s past has at times been glorious and at other times has been dark and manipulative. “GE traces its beginnings to Thomas A.

Edison, who established Edison Electric Light Company in 1878. In 1892, a merger of Edison General Electric Company and Thomson-Huston Electric Company created General Electric Company. ” (General Electric, 2007) Since the invention of the light bulb, GE has been a power house of industry; continually pushing the world of technology forward. Innovation has been one of the driving forces behind GE’s incredible success. As companies and organizations go, GE has been not only on the cutting edge of innovation, but has in many cases defined the cutting edge.

In the past 20 years GE has not only used innovation in terms of research and development of products, GE has also used innovation to recreate the entire corporate climate. In terms of organizational behavior, GE has established themselves as a global model innovating themselves from a company mired in bureaucracy to a dynamic company that is fast on its feet. General Electric has set the stage for how a successful company can use organizational culture, team dynamics, and communication to lead a behavioral revolution. Organizational Culture In the minds of many individuals, big companies equal big bureaucracies.

Huge conglomerates often have the reputation of being slow cumbersome machines that crank out boring and drab products. Big companies also tend to have a reputation for being out of touch with both customers and employees. The corporate culture at GE could not be farther from that traditional stereo type. As part of GE’s efforts to innovate corporate culture, GE has learned to embrace its size. GE has learned that size can work to their advantage. As part of GE’s corporate culture, GE has taken it upon itself to publish an annual Citizenship Report.

In essence, the report reflects the goals that GE has placed for itself to not only continue to grow as a company, but to do so while taking care of the people who work for them, the countries where they do business, and the customers they wish to supply. GE is working hard to create a company culture that is open, ethical and caring. This commitment is reflected by the title of the 2006 GE Citizenship report, “Solving BIG needs. ” (2006) In an open letter, penned by Jeffery R. Immelt, Chairman of the Board and CEO of GE, included in the GE 2006 Citizenship Report, Mr.

Immelt states: Making an impact on big problems takes two qualities. We must be a great company [,] with the capability, reach and resources to make a difference. But we must also be a good company [,] because true impact means defining success in ways that go well beyond the bottom line. (2006) Jeffery Immelt continues by writing, “We believe a company must perform with integrity in its interactions with customers, employees, regulators and communities. A good company leads by example, not words. ”(2006) The basic cultural message heard throughout GE is simple: Lead by openness, innovation and integrity.

Team Dynamics When Jack Welch took the helm as CEO of GE in the early 1980s the company was bloated, slow and out-of-touch with employees and customers. The daunting task faced by Jack Welch and senior leadership was to bring GE back to profitability and reinvigorate the company’s brand image. The effects of the restructuring were felt by the late 1980s by corporate downsizing. As claimed in a report published in Leader to Leader, the workforce had been cut by 25% and that, “Employees and managers were overwhelmed and overloaded.

” (Ashkenas, 2002) The work load was taking a gruesome toll on morale and efficiency. The fundamental problem could have been summed up by the idea of trying to squeeze orange juice from the rind. Individual employees and managers could not keep up and the company was quickly digging a deeper hole. By 1988 the problem could no longer be ignored. Jim Baughman, the head of GE’s management development center was charged with the task of correcting the problem. “In a memorable conversation, Welch and Baughman said to each other, ‘Let’s find a way to get work out of the system.

’” (Ashkenas, 2002) The innovative system seemed clear: Teams. Teams would help to reduce the individual work load and get work through the system. The new team approach was aptly named, “Work-Out. ” The “Work-Out” team approach created by Welch and Baughman utilizes small cross-functional teams that investigate problems. The teams generate ideas and solutions that are presented to the decision makers in an informal “town meeting” The informal nature of Welch and Baughman’s team approach was created with the clever notion that GE should be run not like a huge conglomerate, but rather like a small company.

The vision (which is still being pursued by GE today) was to create a team environment that was not restricted by departments, business units or company leadership. By the mid-1990s it was clear that the “Work-Out” system was having a profound positive impact on GE. Teams, innovating and working without traditional limitations was saving the company. However, there was a major road block that continually hindered the new system: Senior Leadership. Time and again, senior leaders were holding to old values and sapping the momentum generated by team creativity.

Faced with this dilemma Jack Welch decided to act on the issue and stated: The problem was that some of our leaders were unwilling, or unable, to abandon big-company, big-shot autocracy and embrace the values we were trying to grow. So we defined our management styles, or ‘types,’ and how they furthered or blocked our values. And then we acted. (Ashkenas, 2002) Figure One: GE Leadership Types Type I“Type I not only delivers on performance commitments, but believes in and furthers GE’s small-company values. ” Type II“Type II does not meet commitments, nor share our values- nor last long at GE.

” Type III“Type III believes in the values but sometimes misses commitments. We encourage taking swings, and Type III is typically given another chance. ” Type IV“Type IVs deliver short-term results. But Type IVs do so without regard to values and, in fact, often diminish them by grinding people down, squeezing them [and] stifling them. ” (Welch, 1995) The new culture of team driven boundaryless work groups needed to succeed. In a bold move Jack Welch sent a message throughout the organization dramatically displaying the commitment to the “Work-Out” team approach.

Type IV managers, although very successful in a traditional sense did not belong at the new GE. In an unprecedented move Jack Welch began to eliminate senior leaders that did not “get-it. ” This tremendous display of commitment to the new team ideal, “shifted the leadership model from an ‘either or debate’ to a clear requirement to both achieve results and live the values. ” (Ashkenas, 2002) By the end of the 1990s the new team approach at GE was displaying the desired results. Boundaryless teams were taking on incredible amounts of work with fantastic measurable results.

These results were exemplified in a snapshot of the GE plant in Durham, North Carolina as depicted in the article Engines of Democracy. As highlighted in the article, the Durham plant which manufactures aircraft engines is wholly run by teams: The jet engines are produced by nine teams of people- – teams that are given just one basic directive: the day their next engine must be loaded on the truck. All other decisions- – who does what work; how to balance training, vacations, overtime against work flow; how to make the manufacturing process more efficient; how to handle teammates that slack off- – all of that stays within the team.

(Fishman, 1999) Each self managed team takes ownership of the jet engine that the team scheduled to build. Not only are these self managed teams responsible for building the jet engines they are also responsible for an unsurpassed commitment to quality and workmanship. The GE Durham facility has maintained a level of quality that is literally second to none. A full three quarters of the engines built in Durham are 100 percent free from defects; the remaining quarter may have simple cosmetic defects such as scratches on the external housing of the engine.

(Fishman, 1999) The Durham facility is just one example of GE’s dedication to team driven excellence. GE’s team centric management system has evolved over the years to become commonly known as the “GE Way. ” The GE Way embodies the team ideal with an emphasis on sharing knowledge, skills and abilities throughout the organization. Even though an individual may work for a specific business division, that persons’ knowledge, skills and abilities can be readily tapped by other business units.

As described in the article, Integrating Global Organizations Through Performance Measurement Systems, “The GE Way of managing its business relies on creating a common corporate culture to align the strategy of the many and diverse businesses that comprise the GE global organization. ” (Busco, 2006) Communication Although teams form the backbone of leadership, productivity and innovation at GE, teams would be useless without an infrastructure that supported leadership by direct communication.

When it comes to communication at GE, a simple concept has paved the way for this huge conglomerate to function on a small-company scale. That simple concept is taking the idea of an “open door” policy to the next level by removing the walls. The communication ideal that GE is striving to perfect is characterized by the boundaryless culture ideal. When it comes to boundaryless communication at GE, the ideal goes so far as to eliminate secrecy and the desire to white-wash mistakes. Boundaryless communication as practiced by GE strives to get everything; the good the bad, and the ugly, onto the table.

In a 2004 interview conducted by Anna Torrance, Jack Welch commented: Whenever we had bad examples (and in 350,000 people you are not going to have the perfect 350,000) we did not hide it. We didn’t say they left because they were sick of it or they were going home to their parents, we publicized it. We publicized the incident and made sure that everyone knew the violations were reprehensible. ” (2004) This attitude of open communication has permeated the entire organization and has proven to be a sustainable foundation that will help to propel GE into the future.

The current era of open communication at GE was exemplified in 2006 by the record number of employee surveys returned. Out of approximately 127,000 employees who participated in the survey, 95% shared their views openly with the company. (General Electric, 2006) Figure Two: (General Electric, 2006) As part of GE’s commitment to boundaryless communication, training and employee development have become an integral part of the program. In 2006 alone, GE invested over one billion dollars in employee education with GE employees completing 2.

9 million online classes. (General Electric, 2006) Conclusion GE has come a very long way. The road has at times been rocky and uncertain. However, one theme has carried through from the very beginning: Innovation. GE has not only practiced innovation in regard to product development; GE has also practiced innovation in its application of organizational behavior. There is little doubt that GE has been and will continue to be on the cutting edge of corporate culture, team dynamics and corporate communication.

Paula Sims, former plant manager for the GE Durham facility, when asked to characterize the driving principles behind GE’s success replied, “There are four. One, we have a layer-less organization. Two, people are paid according to their skills. Three, everyone [in the plant] comes highly skilled. And four, this is a team environment that requires a highly involved workforce. ” (Fishman, 1999) References Ashkenas, R. , Kerr, S. , Ulrich, D. (2002). General Electric’s leadership “Work-Out. ” Leader to Leader. 2002(24), 44-50. Retrieved June 16, 2007, from Business Source Complete database.

Busco, C. , Frigo, M. L. , Giovannoni, E. , Riccaboni, A. , Scapens, R. W. , (2006). Integrating global organizations through performance measurement systems. Strategic Finance, 87(7), 30-35. Retrieved June 14, 2007, from ABI/INFORM Global database. (Document ID: 983634561). General Electric (2007). GE: Fact Sheet. Author. Retrieved on June 10, 2007 from http://www. ge. com/company/businesses/factsheets/corporate. html General Electric (2006). Solving big needs. GE 2006 Citizenship Report. Author. Retrieved on June 8, 2007 from http://www. ge.

com/files/usa/citizenship/pdf/GE_2006_citizen_06rep. pdf Fishman, C. (1999). Engines of Democracy. Fast Company. Issue 28. Retrieved on June 8, 2007 from http://www. fastcompany. com/online/28/ge_Printer_Friendly. html Torrance, A. (2004). Exclusive interview with Jack Welch. Strategic Direction, 20(3), 6-8. Retrieved June 14, 2007, from ABI/INFORM Global database. (Document ID: 644756301). Welch, J. (1995). GE: 1995 annual report. General Electric. As reprinted in Leader to Leader. 2002(24), 44-50. Retrieved June 16, 2007, from Business Source Complete database.