Nowadays GE is one of the leading company not only in the US but in the whole world. Remarkably, the company operates in different industries and practically in any industry GE is the leader or at least among the leaders. Currently the company operates worldwide and is considered to be very perspective due to a wise strategic development, good corporate culture and wide implementation of innovation in the management as well as in the production.
Naturally, such a success would be impossible without a carefully planned strategy of the company development worked out and realized by the CEO of GE Jack Welch who has been heading the company since 1981. In fact, since the beginning of his work he faced two major problems he had to solve. On the one hand, it was necessary to change a large organizational structure of the corporation, on the other hand, it was necessary to efficiently motivate employees who lost momentum to change.
Reorganization: faster and more efficiently
One of the most important problems the GE faced in the early 1980s was the problem of its reorganization into a new, larger and more efficiently operating company. In this respect, it is worthy to note that at that epoch American economy was characterized by a profound recession this is why any reorganization was quite dangerous since it could undermine the position of the company in the market. On the other hand, it was clear for the company administration, including its CEO Jack Welch, that the reorganization is essential for the further progress of the company, otherwise, GE would simply gradually degrade and loose its positions.
In such a situation, the only possible solution of the existing problems of the company was the reorganization but it was vitally important that the reorganization of GE was fast and its efficiency as high as possible. It should be pointed out that the administration of GE realized the basic problems of the reorganization and in order to solve them there was developed an efficient strategy that included several steps.
First of all, one of the major tasks of the company’s administration before starting the reorganization was to clearly define its vision and mission. Basically, since the beginning of his work in GE Jack Welch targeted at the leadership of his company. As a result, his vision of the future of GE was to make the company the leader of the industry, whatever industry the company operated in. Than, it was necessary to find out the means to achieve goal, and consequently, to define the mission of the company, which was to digitalize GE system to get more efficiency and accurate.
On realizing his strategic vision, Jack Welch eliminated all the units of the company which operated in different industries but were not among leader. As a result, the company operated only in the industries where it was number one or two, i.e. it was the leader of the industries. At the same time, in order to compensate the losses the company entered new markets and new industries and it was one of the strategies of the company reorganization. In fact it was the result of the globalization which forced the company to operate worldwide that led to GE entering, firstly, European market and than, in late 1990s, Asian markets which were in economic crisis in that period of time.
Furthermore, one of the basic conditions of fast and efficient reorganization of GE was the rapid increase of efficiency of productivity that was to a significant extent the result of high motivation of employees that would be discussed a bit further but it is worthy to note that it was very important to solve the problem of bureaucracy which retarded the reorganization. This struggle with the bureaucracy was one of the constituent parts of the strategy of cultural change within the company that led to the destruction of the nine-level management hierarchy and brought the sense of informality to the company.
Finally, the technological reorganization was extremely important and in this respect the digitalization and computerization of the company as one of the key conditions of the efficient and fast reorganization. At the same time, the improvement of communication systems within the company was also important. As a result, such technological changes led to faster processing of operations and the efficiency of decision making process increased dramatically.
The motivation of employees
However, on solving purely technological problems of the reorganization, GE faced another serious problem – the problem of the motivation of employees who simply lost momentum to change. In such a situation the change of corporate culture turned to be very efficient since it made employees feel that they work in the company which is the leader in its industry, or in all industry the company actually operated. It was an important psychological moment that increased employees’ motivation to remain in the top company.
Furthermore, the administration of GE managed to closely linked the problem of the company survival with the motivation of employees since the company survival was actually the main condition of the job security. This is why employees were motivated to the reorganization and changes since they realized that it brought not only progress to the company but also made their job secure and more stable.
Also, it should be said that in order to motivate employees GE’s administration provided incentive which made the work in the company more attractive for the employees since they had got an opportunity to receive professional awards, instant bonuses, stock options and participate in promotion programs. In this respect, it is worthy to note that a particular attention was paid to training and educating of the company’s staff that naturally increased employees’ motivation as well as their productivity and efficiency of their work.
In addition the mentor program was developed which contributed to the professional development of employees but at the same time this program was volunteer. In such a way employees were free in their choices. At the same time, it created a positive and motivating ambiance within the company since employees felt free from the pressure from the part of the administration and naturally that decreased the tension in interpersonal relations within the company.
Naturally, it is worthy to remind the elimination of bureaucracy which contributed not only to high efficiency and productivity but also motivated employees because they had not to constantly struggle with a complex nine-layer manager hierarchy that naturally discouraged their work.
In such a way, the combination of psychological and financial stimuli along with the professional growth and liberalization of interpersonal relations within the company contributed to the solution of the problem of the low motivation of employees who lost momentum to change.
Thus, taking into account all above mentioned, it is possible to conclude that GE successfully realized the reorganization plan that carefully worked out and was strategically correct. It is necessary to underline that the company and its leaders managed to cope with the problem of the reorganization making it really fast and efficient basically due to structural changes within the company, change of the corporate culture and psychology, as well as purely technological changes which led to the implementation of the latest technological achievements. On the other hand, it is necessary to remember about efficient human resource management. GE employees were highly motivated and what is more important they clearly realized that their own job security directly depended on the success of the reorganization and changes initiated in GE.
Bartlett, C.A. and Clinska, M. “GE’s Digital Revolution: Redefining the E in GE”, Harvard Business School, May 3, 2005.
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