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Case Report of General Electric Under Jack Welch

Essay by   •  August 6, 2012  •  Case Study  •  1,101 Words (5 Pages)  •  2,153 Views

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Jack Welch was the CEO of General Electric (GE) for 20 years from 1981 to 2001. Mr. Welch transformed GE, taking a solidly profitable manufacturing company and turning it into an exceptionally profitable conglomerate dominated by service business. Although in most of the business reviews, GE was ranked as one of the top performance company in the United States history, it did not obtain respects from societies. According to the text, corporate social responsibility is the corporate duty to create wealth by using means that to avoid harm to, protect, or enhance societal assets. GE became the most profitable company under Jack Welch's hand without any dispute. GE in the Welch era did not fulfill this duty and it just did well on its economic responsibilities to society. GE paid taxes--5.7 billion in 2000. Taxes can be considered as the major income of government. When the government has enough money, the government can improve the basic needs of our society. Everyone could get benefit from it. Since GE paid a lot taxes, it made contribute to our society. However, there were some things that GE has been done which were not fulfilling social responsibilities as following: job elimination within the United States through layoffs, subcontracting, and outsourcing to other countries. Removing the working opportunities within the United States, a big bunch of people were dismissed when Jack Welch was in charge as the chief executive officer in general electric. There were 404,000 GE employees before he took over the top management position, but only 313,000 left when he retired. A defective evaluation system hurt the morale of employees who were not on top. Using the vitality curve to evaluate employees' performance in Jack Welch era changed its ranking from five to three, and created the vitality curve system. This system categorized the top 20% performers as As, the middle 70% as Bs and the bottom 10% as Cs. This evaluation system did not only discourage teamwork by pitting people against each other, but also promoted back-stabbing behaviors. The system was also defective because of its inflexibility to contribute unfair results when high and low performing units must classify managers at the same way. In fact, GE cruelly ranked the bottom 10% as inefficient workers and fired them whenever necessary. The vitality curve created a high-performance management team, but it failed to create diversity at GE. Since Welch was the management icon at the period, many other corporations tried to copy the ideas for raising the performance, and the whole society became viciously competitive under the introduction of this unfair evaluation system. GE had a lot of pollution in the Hudson Rivers. According to the text, for 35 years, several GE manufacturing plants in New York released polychlorinated biphenyls (PCBs) into the Hudson River. Since PCBs is toxic to humans and animals, and is the cancer agent in test animals and humans; it was outlawed in 1977. In 1983, the Environmental Protection Agency made the river a Superfund site because of the heavy released of PCBs by GE. After realizing they refused to clean up that became a disgrace in its history and a consideration of unethical, irresponsible to the corporate social responsibility. What's more, unfair pension fund GE announced to increase on employees' pension fund from



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