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Leadership and Productivity - Jack Welchs

Productivity Triumph

Mustafa Said Karaman

Mr, National Productivity Centre of Trkiye (MPM), [email protected]

Keywordsproductivity, leadership, Jack Welch,

performance

1 INTRODUCTIONProductivity is a term that its importance is increasing

everyday. Especially the developed countries attach aspecial importance to productivity owing to being a

development factor. Nowadays, being one of therequirements of becoming globally competitive in the trackof becoming productive is not out of fashion on thebusiness-world agenda.

In the 20th century, the greatest and unique success of themanagement science was; the labour productivity has beenincreased by fifty times in production. Likewise, themanagement science has to contribute to improving theknowledge workers productivity in the 21st century. Thus,productivity issues that aim to be better today thanyesterday will continue to keep its up-to-dateness.

In this study, the aim is to demonstrate whetherleadership effects productivity or not; by examining

productivity, leadership, and the relationship betweenleadership and productivity. Aiming to display the effectsof leadership on productivity concretely, the most emulatedbusiness leader Jack Welchs leadership practices wereexamined and assessed. For collection of required data;written articles and books about Welch, publishedinterviews with him, the web sites about him are allreviewed. These secondary sources about Welch aremeticulously examined, analysed and assessed.

Leaders play an important role in improvingproductivity. While the management of the modernbusiness functions are getting much more complicated, therole of the leader comes into prominence. General

Electrics CEO Jack Welch is a well-known leader who hasimproved both organizational and labor productivity bycreating a transformation in his company and he could betaken a bright case as playing an important role in thismatter.

Leaders could boost productivity by reorganizing thecompany, by creating organizational culture, by beingpioneer of continuous changes, by guiding, by motivating,by managing their performance, by empowering them, bysupporting the personal development, and by building up

teams.In solving the European Unions productivity problem,

transformational leadership approach may be one of thestarting points for not only businesses but alsoadministrative state organizations and NGOs.

2 THE MEANING OF LEADERSHIP

Leadership is a process by which one person influences

the thoughts, attitudes, and behaviours of others. Leadersset a direction for the subordinates; help them see what liesahead; help them visualize what they might achieve;encourage them and inspire them. Without leadership, agroup of human beings quickly degenerates into argumentand conflict, because the employees see things in differentways and lean toward different solutions. Leadership helpsto point them in the same direction and harness their efforts

jointly. Leadership is the ability to get other people to dosomething significant that they might not otherwise do. It isenergizing people toward a goal [1].

3 THE IMPORTANCE OF LEADERSHIPOne of the important issues, which the business

managers have to pay attention, is leadership. Owing to theaccountability of managers and the characteristics of theirrole, it is expected that the managers should lead and haveleadership competencies [2]. While the organizationsrequirements change, the concept of leadership developsand becomes more significant. In one of the study done inthis field that it is determined by 12 thousand trainers from70 countries all over the world at the meetings in 1999 inAtlanta and in 2000 in Dallas that one of the fivetendencies in the first 15 years of 21st century is therequirement for leadership attitude at every level [3].

Leadership that is basic concept of contemporarymanagement approaches comes into prominence graduallybecause of the recent changes in the business world. Thesechanges are [4]-[5]:

- Weakening of formal organization structures,- Predominance of knowledge worker,- Changes in the new labor force expectation,- Spreading of project, network group approaches in

organizations,

- Increased competition and more demandingcustomers, and

- Frequent crisis.
mailto:[email protected]:[email protected]


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4 THE EFFECTS OF LEADERSHIP ON PRODUCTIVITYNowadays, businesses discard the traditional

organization structures and reorganize according to newmanagement approaches. Intensive competitionenvironment and continuously improving technologybrings forth adopting flexible, dynamic and participativemanagement understanding for them. New dynamics of thebusiness world require organizational structures with fastdecision making and transmitting to every level, payingattention to productivity, making the employers morevoluntarily participative and empowering them, instead oforganizations having cumbersome, bureaucratic anddocumented structures [6].

Popular French management scientist Fayol aimed tofind organizational effectiveness and advocated the truththat businesses could only be efficient when they adapt theshifts in internal and external environmental conditions [7].He paid attention to the leaderships role in organizational

effectiveness while putting forward creating team soul isthe most important one in management principles [8].Pioneer of the total quality management Deming said

relating this matter the objective of leadership isimproving the performance of labor and machinery,enhancing quality, increasing the production, and gettingthe people to feel proud of their work at the same time [9].Also popular management philosopher Drucker mentionedthe relationship between leadership and productivity in thisway: one of the leaders roles is utilising inadequatesources continuously to the fields which bring the bestadvantages [10].

Management scientist Kraines says leaders are

accountable for the effectiveness of their subordinates andfor continually improving their capabilities [11], while theother management scientist Blanchard mentions leader hasto create the desired organization that is straightforward toproductivity [12].

Improving the productivity in businesses is primarily inthe accountability of managers. The success of productivityimprovement activities depends on managers attitudes andbehaviours, strategies that are developed and mostly on theimplementations [13].

Because of productivity is related with managementpractices and styles and also leadership is considered to besuperior to management in managerial science, the role of

leader in improving productivity has to be examinedinstantly. Powerful leadership contributes to productivityimprovement efforts [14] substantially. In this study, it isasserted that leadership could be more successful thanmanagement according to its transcendentness.

5 EVALUATING POPULAR BUSINESS LEADER JACKWELCHS LEADERSHIP PRACTICES IN THE VIEWPOINT OF

PRODUCTIVITY

5.1 Objectives and Importance of the StudyIn this study, aiming to demonstrate concretely whether

leadership effects productivity or not in businesses; the

most emulated leader of the business history Jack Welchsleadership practices were analysed and assessed.

Business leaders actually play an important role inbusiness life. This role is leadership but this is not definedas always a product of powerful and charismaticpersonality or inborn characteristic. Some people arenaturally apt to activate their subordinates but the leaders inbusiness life have to develop a clear direction and astrategy for their organizations. Furthermore, they make allof the systems of their companies obey this direction andthe organization has to be tied to the common objectives fora long time. Behavioural, transformational and practiceoriented leadership influences the subordinates positivelyand improves productivity entirely.

One of the many different methods aiming to improveproductivity is the leadership that is repeatedly mentionedin contemporary human resources systems. Due to this,leadership has to be examined in context of productivity tohelp the businesses in finding new practical ways ofboosting productivity.

5.2 Extent of the StudyThis study covers examination of the popular business

leader Jack Welchs leadership practices in context ofproductivity who was CEO of GE for 21 years between theyears 1981-2001.

5.3 Methodology and Examination of DataIn this study, in order to meet the above-mentioned

objectives, secondary data sources were studied forcollecting the required data. Written articles and booksabout Welch, published interviews with him, the web sitesabout him are all reviewed. These data sources about

Welch are meticulously examined, analysed and assessed.

5.4 Findings and EvaluationsLeaders play a significant part in meeting the objectives

and improving the productivity of their businesses. Thisshould be more fundamental due to the business world hasbeen getting more complicated. The findigs andevaluataions about the leadership practices of Welch whoimproved the productivity of his company and subordinatesby creating a change storm in his company are belowexplained.

5.4.1 The Profile of Popular Business Leader Welch

Jack Welch whose original name is John Frances WelchJr., was a legendary Chief Executive Officer (CEO) of oneof the worlds greatest companies namely General Electric(GE) (Appendix: The Brief Information about GeneralElectric Company) between the years 1981-2001. Mr.Welch, a native of Salem, Massachusetts, received his B.S.degree in chemical engineering from the University ofMassachusetts in 1957 and his M.S. and Ph.D. degrees inchemical engineering from the University of Illinois.He joined GE in 1960 and was elected Vice President in1972 and Vice Chairman in 1979. In 1981, he became the


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eighth Chairman and CEO. He retired in the fall of 2001[15].

For grabbing the the first row of annual the greatest,the most favorite, the best, and the most profitablelists for the giant world companies [16], GE was grateful toWelch. Besides GE is in the first row in the most admiredcompany list once again, for the sixth time in the lastdecade [17], the company is once again the Fortunes mostrespected company, as it has been in every one of the fiveyears that the Financial Times/PwC World's MostRespected Companies Survey has been published [18].

Welch who worked for GE for 20 years as a CEO andfor totally 41 years [19] has been chosen the most admiredbusiness leader in the same years by Financial Times [20].Fortune even announced Welch as a manager of thecentury in 1999 [19].

More than a dozen of books have been written aboutWelch and they have been mostly bestseller owing to thesuccess stories of Welch in business world [20]. BesidesWelch has beeen a transformational leader, he is also

charismatic. His success depends not just on his personalitybut his quality of thinking. Welch had developed aleadership style that took advantage of the development ofbright, disciplined and creative way of thinking [21].

General Electric saw great growth and expansion underJack Welch's leadership. Through streamlining operations,acquiring new businesses, and ensuring that each businessunder the GE umbrella was one of the best in its field thecompany was able expand dramatically from 1981 to 2001.[22].

Popular management guru Peter Drucker, who wasformer consultant of GE, was quite impressed from Welch[21]. Welch should be a candidate for being a fundamental

case on leadership matters for future generation. Over thepast 20 years, Welch, more than any other business leader,has changed the way people view the role of the CEO.There was no General Electric separate from Welch and noWelch separate from General Electric. Through his boldand sweeping reinvention of the company--thanks in nosmall part to the force of his personality-Welch created theCEO not just as public figure but as icon [20].

5.4.2 The Productivity Secrets of Welch

Welchs main goal at GE Company was, Workingproductively like the most productive competitors [21].The productivity secrets are listed below that Welch made

use of to create a boundaryless organization [23]:

-Flatten the organization and get rid of bureaucracy,-Instigate raising productivity by the three ideals of:

speed; simplicity and self-confidence,

-Adopt total quality methods to save costs, raiseproductivity, and delight customers,

-Behave like a small company,-Eliminate boundaries,-Understand the subordinates and energise them, and-Get good ideas from everywhere.

5.4.3 Welchs Doings as a Leader in ProductivityImprovement

Jack Welch had been a change pioneer at GE and startingfrom the first day of CEO mission; he reorganized all of thesystems for being more productive, disseminated modernbusiness approaches and exerted great effort for raisingproductivity.

Welch spurred the company to design a set of tools andprocesses that delivered 6% annual productivity gains in1986 [24] while this rate was below 2% in 1981. Thisnumber was equal to its Japanese direct competitors and abit low than Japans productivity rate in general. Even intheir standstill term, GE has succeeded to reach a ratebetween 4-5%. GEs profit before tax per one unit inproductivity gains has been 300 million dollars since acouple of years. One third of the revenues came from theproductivity improvement with Welchs calculation in 1991[21].

The leadership practices behind this conspicuousproductivity triumph by Jack Welch are unveiled below by

ten different headings:

i. Reorganized GEWhile Welch was appointed to CEO duty, it was seen

that enormous number of businesses in GE had beenlethargic and had focused on bureaucracy deeply. This wasperhaps true for those years, but time is going on very fast.To be attuned to rapid shifts, the reorganization work,which was started in the beginning of 1980, had embracedall the aspects of GE. 350 business segments of GE allcovered and all conducted to Welchs ReorganizationProgramme according to productivity principles.

From the beginning of reorganization work in 1980 to

starting total quality practices in mid-1990, Welch hadcontinuously transformed GE [25]. According to Welch, Ifa business becomes productive then it will control itsdestiny and he says about reorganization [21]:

If you deal with injury, you will come down to bottomlayer and after that you will see the results. If you hold ofproductivity again, business will return, you will besuccessful in the market and your profit share will increase.You have been hurt for a while of time but you feel goodafterwards.

ii. Reduced the Hierarchical LayersWhen Welch was appointed as a CEO, GEs

organizational structure was too much complicated thatthere were nine layers between the top management and thelower layer. Being too many layers in the middlemanagement level assured everybody feeling comfortableand thinking about rising to be so simple. Owing to beingpopular about training managers guaranteed that outsidersare not recruited for the unemployed positions [26].However, there was an entrenched mentality aboutpromotion; Welch had a thought of realizing theapproaches of being small and lean. He achieved this bybreaking hierarchies and the chain of command andcommunicating freely up and down.


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In due course, this great idea segued into Welchs early1990s principle of boundarylessness as the value thatunderlies GEs increasingly supple organizational style[21]. This principle emphasized informality and candour ina delayered organisation without organisational silos.Though linguistically clumsy, boundarylessness was,according to Welch the only way that GE would be able toachieve its productivity goals [27].

He says; Layers slow decision-making; blurresponsibility and create undoable jobs. Cut layers anddouble the span of control. In theory Strategic BusinessUnits make the unwieldy manageable yet the vices areoften fatal: businesses do not cooperate; focus becomesshort term and bureaucracy and control often reign.

Welch pointed out the hierarchies harm to thebusinesses by saying Every layer is a bad layer. The worldis moving such a pace that control has become a limitation.It slows you [28]. Besides, Welch believed that distendedhierarchical layers had brought in GE a very huge cost.Whereas he emphasized that he had required a trim and

aggressive GE, so this means more smaller GE.In the beginning of 1980s none of the Americanmanagers were ready to do Welchs doings. He was thepioneer of this matter: downsizing by reducing personnel[28]. As a matter of fact, this is one of the ways of gettingmore from the less input. Welch implemented thissuccessfully despite the perturbation and affliction of hissubordinates. Because he had known that the mostimportant thing was companys keeping on subsistence. Ifthere is no company, than all of the personnel will be

jobless eventually.

iii.Dismantled of the BureaucracyThe first step in realizing his vision was a dismantling of

the bureaucracy at GE. At the start of Welch's tenure, GEadministration was built around three hundred separatebusinesses, a recipe for inefficiency. Welch tore into theossified corporate structure with a vengeance and by themid-1980s had overseen nearly 120,000 layoffs and earnedthe nickname "Neutron Jack." The name was derived fromthe neutron bomb, a weapon designed to minimize heat andblast effect but maximize dispersal of lethal neutronradiation-in effect, eliminating people but leaving buildingsand equipment intact. Welch was never fond of the moniker[29].

Jack Welch ha always hated and fought bureaucracy

because it lowers productivity. To him, bureaucracy is theenemy. Bureaucracy means waste, slow decision making,unnecessary approvals, and all the other things that kill acompany's competitive spirit. He spent many years battlingbureaucracy, trying to rid GE of anything that would makeit less competitive [29]. He didn't simply strip away a littlebureaucracy. He reshaped the face of the company to rid itof anything that was getting in the way of being informal,ofbeing fast, ofbeing boundaryless.

Welch felt that ridding the company of wastefulbureaucracy was everyone's job. He urged all hisemployees to fight it. Disdaining bureaucracy became an

important part ofGE's shared values, the list of behaviorsthat were expected from all GE employees [29].

iv. Had Been the Pioneer of Continuous ChangesWelch is perhaps the most popular business leader whose

name had become identical with change. Moreover, he wasinside the radical transformations from the beginning of his

career not progressive years. In 1980s, when Welch was just appointed to CEO mission, he revealed the strongcharacteristic of this leadership style.

While there have been many revolutionary leaders inpolitics and business with clear vision and unbreakablemotivation to implement their vision, not many havesucceeded in maintaining the momentum for 20 years.Welch is unique in his successful implementation ofrevolutionary change in a company that was already amongthe most admired when he became CEO. How did Welchachieve this [30]?

Welchs 20-year revolution could be conceptualized asthree waves with the following starting dates and major

objectives [30]:- 1981, first wave:

Create a new vision and strategy to drivereorganization, mass dismissals, divestments andacquisitions.

- 1985, second wave:Revolutionize GE to gain the strengths of a bigcompany with the leanness and agility of a smallcompany.

- 1996, third wave:Develop an integrated, boundaryless, stretched,total quality company with A-players.

To summarize, during the first wave, Welch changed thephysical infrastructure of GE and what people did. Duringthe second wave, he changed the organization and howpeople operated. During the third wave, he changed theculture and both what and how people should think [30].

v. Created an Organizational Culture based on FreedomThe organizational culture that was created by Welch is

based on freedom and liberty. He explained this in thisway:

In order to be faster, more productive and morecompetitive; you have to free the energy, intellect andnaturalness of the American worker who is still the most

productive and talented one all over the world. The way ofactivating these peoples energy is protecting them notoppressing. Free managers to manage - and to rise, defeatbureaucracy and rigidity, generate and use new ideas andempower workers to flourish and grow [28].

In 1996s, Welch had to create new GE values, a newGE culture, and an emotional climate that would transcendhis personality as well as his strategic and organizationalreforms. These soft improvement included watchwords likespeed, simplicity and self-confidence, candor, openness,ownership, integrated diversity, and evenevangelizing.

One of the paces that carried GE to the productivity
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victory was the created democratic climate. Welch hasalways claimed, It is a necessity that creating atmospherenot only white-collar workers but also blue-collars talkfreely. He believed sincerely that the actual employees hadalways bright ideas about how the work would be donebetter. The climate that all the employees present their ideaswas created in his term.

vi. Captured Intellect from Every PersonThe only way to get more productivity is capturing

intellect from every person and obtaining people to beenthusiastic from their work [28] said Welch and couldnot endure noone entering in GE offices or plants whoperformed below 120%. At this point, Welch stated that hedid not mention about running hither and yon and drippingwith sweat but the importance of working faster and agile.He continuosly expressed that he had wanted to discussabout satisfied employees means productive humanresources [31].

Welch has warned managers about improving labour

productivity [32]:Do not be overwhelmed by charm of the great ideas byneglecting small ideas. Now we are getting regularly 6-7%productivity improvement by means of small ideas on alarge scale. An idea should not absolutely be a wonder ofbiotechnology. This understanding concludes in looking theideas incorrectly. Faultless invoicing system is an idea.Dealing with getting a work to be done in one day that wasdone in six days before is also an idea. Everybody couldcontribute to this. Ordinary people could too.

vii. Worked with the Best People and Motivated ThemAccording to Welch, the way of being a leader passes

through to excite subordinates. Nevertheless, he expressedthis: You should have a good team to excite and energize.Work with the best subordinates [16].

Welch by saying these words If you could not appendthe best people into you team, then you are in failure.Finding the right people for the right job is more importantthan developing a new strategy [16] underlined asignificant productivity reality. The present CEO of GEJeffrey Immelt has also attached importance to workingwith the best people and developing them to be leaders forglobal companies [33]. Spiritedness defines Welch well. Heis a reactor that creates energy. He perhaps uses his interiorstruggle as fuel. [21]. Welch motivated his subordinates by

his energy and got them more productive.Jack Welch of GE said: "Ten years from now, we want

magazines to write about GE as a place where people havethe freedom to be creative, a place that brings out the bestin everybody, an open, fair place where people have a sensethat what they do matters, and where that sense ofaccomplishment is rewarded in both the pocketbook andthe soul. That will be our report card [34]. So he spendedhis 60% of time fully to select and recruit people andenergize them. For the upper 500 managerial position, heinterviewed one by one with the potential candidates whosecareer seems to be improved in the future [19].

viii. He was a Leader not a ManagerJack Welch is all about leadership, not management.

Actually, he wanted to discard the term manageraltogether because it had come to mean someone whocontrols rather than facilitates, complicates rather thansimplifies, acts more like a governor than an accelerator.

Welch has give a great of thought to how to manageemployees effectively so that they are as productive aspossible. And he has come to a seemingly paradoxicalview. The less managing you do the better off yourcompany. Manage less to manage more. Welch continued[28]:

We are constantly amazed by how much people will dowhen they are not told what to do by management. In thenew knowledge-driven economy, people should make theirown decision. Managing less is managing better. Closesupervision, control and bureaucracy kill the competitivespirit of the company. Weak managers are the killers ofbusiness; they are the job killers. You could not manage

self-confidence into people.Welch decided that GE's leaders, who did too much

controlling and monitoring, had to change theirmanagement styles. Managers slow things down. Leadersspark the business to run smoothly, quickly. Managers talkto one another, write memos to one another. Leaders talkwith their employees, filling them with vision, getting themto perform at levels the employees themselves didn't thinkpossible. Then they simply get out of the way[28].

Indeed Slater quotes Welch as saying he detests the verynotion of management. According to Slater, Welch insiststhat most managers overmanage, with the result that theyall too often help to create the bureaucratic sloth andsluggishness that large companies should avoid [28].

That said, by differentiating management from leadership[28]: I do not mean to imply that one or the other beignored or is redundant. Rather I believe that byrecognizing the important differences between them, anindividual is better able to exercise them appropriately in agiven situation, and meld them seamlessly in theirorganizational behaviour.

Managers muddle - leaders inspire. Leaders are peoplewho inspire with clear vision of how things could be donebetter. What we are looking for are leaders at every levelwho could energize, excite and inspire rather than enervate,

depress, and control [28].

ix. Paid Attention to Performance ManagementAll the employees assessed their subordinates and

managers crisscross by 360-degree performancemanagement method systematically within the GECompany and the collected data are assessed to improve theoverall performance. This work also includes the customerside [28].

Welchs suggestions for the managers who wants toimprove productivity of their subordinates are listed below[20]:

- Apply performance appraisal to every layer because
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they want to know their performance is assessed andtook into consideration.

- Knowing the meaningfulness of the contributions ofthe employees is critical.

- Rewarding of their doings is also critical for theemployees.

In assessing the employees performance, Welchs 20-70-10 approached has been used at GE [35]. The 20%group performing the best leads the change at every layer.The worst 10% group encounters difficulty in realizing theobjectives. The others form the 70% medium group. Theupper 20% group gets 3-4 times more increase in payment.The lower 10% group even gets no increase and they haveto leave the company if they are in the lower performers forone after the other year successively.

20-70-10 approach had got performance discipline andincreased accountability sensation at GE. In order to applythis system successfully, the older organizational culturehas to be removed and aimed to bring forth a performanceoriented culture [36].

Jack Welch's goal was to make GE the world's mostcompetitive enterprise. We now know where productivity-real and limitless productivity- comes from. It comes fromchallenged, empowered, excited, rewarded teams ofpeople, he said. Welch knew that the current businessenvironment requires an energized, energizing leader:You've got to be live action all day. And you've got to beable to energize others. You could not be this thoughtful,in-the-corner-office guru. You could not be a moderate,balanced, thoughtful, careful articulator of policy. Youhave got to be on the lunatic fringe [16].

x. Attached Importance to CoachingAs far as Jack Welch, the legendary former CEO of GE,is concerned, middle managers have to be team membersand coaches. They have to facilitate more than control.They should be able to excite and praise people and knowwhen to celebrate. Managers should be energizers, notenervators [28]. In the company's 1993 Annual Report,Welch noted [38]: To be blunt, the two quickest ways topart company with GE are, one, to commit an integrityviolation, or, two, to be controlling, turf-defendingoppressive manager who can't change and who saps andsqueezes people rather than excites and draws out theirenergy and creativity.

The created coaching system in order to making use ofexperiences, not repeating the same faults, guiding the thenew employees has been using efficiently all over thecompany [28].

CONCLUSIONSIn todays business world, while the competition has

increasingly been keen, the core reference point isbecoming How to train leaders? aiming to utilize theresources effectively and meet the customers andshareholders expectations efficiently. While the speed ofchange increases, competition intensifies, and the newemployees expectations changes; the systematic

development of leadership competencies of every layer iscoming into prominence day by day.

In the literature so many publications have been issuedrelated with the term of leadership but there are a fewpublications relating the theme of the relationship betweenproductivity and leadership and the leaders role inproductivity improvement. In this study, the effects ofleaders role in business and labour productivity are givenas an important case study. Leaders could be successful inimproving the productivity by the best leadership practiceswithin the company.

The question Could a business leader absolutelyimprove the productivity of his or her company? finds itsresponse in the leadership practices of popular leader JackWelch of GE. Welch may be the most popular and widelyemulated leader in business history. He's used his ownuncanny instincts and unique leadership strategies to runGE, the most complex organization in the world, increasingits market value by more than $400 billion over twodecades.

In his two decades as CEO, Jack Welch's principles,strategies, and tenets transformed GE into one of mostdynamic and valuable corporations in the business history.As a result, executives in all industries are now eager tohear Welch's every pronouncement and implement hisstrategies in their own organizations.

To whom wants to improve productivity in businessworld, Welchs successful leadership practices should beinspiration source. The managers who leads instead ofmanages, makes his company more flexible and lean,captures intellectual ideas from his or her subordinates,motivates them and apply performance appraisal accordingto their competencies; so meet their objectives sooner.

ACKNOWLEDGEMENT

This study appeared originally in an expertise thesis ofthe author, defended in 2003 at National ProductivityCentre of Trkiye (MPM).

APPENDIXTHE BRIEF INFORMATION ABOUT GENERAL ELECTRIC

COMPANY

GE; is internationally in the business from jet engines topower generation, financial services to plastics, and

medical imaging to news and information. GE worldwideturns imaginative ideas into leading products and servicesthat help solve some of the world's toughest problems. Ithas 313.000 personnel worldwide and active in more than100 countries.

GE was founded by Thomas Edison who was inventor oflight bulb in 1878 [21]. By 1890, Edison had organized hisvarious businesses into the Edison General ElectricCompany. The Thomson-Houston Company and thevarious companies that had merged to form it were led byCharles A. Coffin, a former shoe manufacturer from Lynn,Massachusetts. These mergers with competitors and thepatent rights owned by each company put them into a
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dominant position in the electrical industry. As businessesexpanded, it had become increasingly difficult for eithercompany to produce complete electrical installationsrelying solely on their own technology. In 1892, these twomajor companies combined to form the General ElectricCompany.

Several of Edison's early business offerings are in factstill part of GE today, including lighting, transportation,industrial products, power transmission and medicalequipment. The first GE Appliances electric fans wereproduced at the Ft. Wayne electric works as early as the1890s, while a full line of heating and cooking deviceswere developed in 1907. GE Aircraft Engines, thedivision's name only since 1987, actually began its story in1917 when the U.S. government began its search for acompany to develop the first airplane engine "booster" forthe fledgling U.S. aviation industry. Thomas Edison'sexperiments with plastic filaments for light bulbs in 1893led to the first GE Plastics department, created in 1930.

GE's leaders through the years have built a diverse

portfolio of leading businesses; a stream of powerfulCompany-wide initiatives that drives growth and reducescost; financial strength and Controllership that allow it tocapitalize on opportunities through numerous cycles; and aset of common values that allows it to face anyenvironment with confidence [37].

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[1] Q. Mills,Leadership: How To Lead, How To Live, Waltham, Mass.:Mindedge Press, 2005, pp. 11-12.

[2] T. Kocel,Business Management, 8th Ed., Beta Publications: Istanbul,2001, pp. 465.

[3] A. Baltas, Teamwork and Leadership from the inside of Change tothe Future, 2

nd

Ed., Remzi Books: Istanbul, 2001.[4] H. Bergman, K.Hurson and D. Russ-Eft, Everyone a Leader, JohnWiley & Sons, Inc.: New York, 1999.

[5] P. F. Drucker, The Future of Management, Executive Excellence,May 2004, pp. 9.

[6] J. M. Difrancesco and S. J. Berman, Human Productivity: The NewAmerican Frontier, National Productivity Review, summer, vol. 19,no. 3, 2000, pp. 29-36.

[7] O. Dincer and Y. Fidan, Introduction to Business Management, IzPublications: Istanbul, 1995.

[8] G. Ataman, Business Management: Basic Concepts and NewApproaches, Turkmen Books: Istanbul, 2001.

[9] W. E. Deming, Out of the Crisis, Trans. Cem Akas, KalderPublications: Istanbul, 1998.

[10] P. F. Drucker, The Discipline of Innovation, in Leader to Leader,F. Hesselbein and P. M. Cohen, Ed., Trans. Salim Atay, Mess

Publications: Istanbul, 1999, pp. 57-60.[11] G. A. Kraines, Accountability Leadership: How to Strengthen

Productivity through Sound Leadership, Career Press: New Jersey,2001.

[12] K. Blanchard, Turning the Organizational Pyramid Upside Down,in The Leader of the Future, F. Hesselbein, M. Goldsmith and R.Beckhard, Ed., Trans. Hayrettin Tok, Form Publications: Istanbul,2000, pp. 121-126.

[13] J. Prokopenko, Productivity Management, Trans. O. Baykal, E.Fidan, N. Atalay, MPM Publications: Ankara, 1998.

[14] J. D. Batten, Tough-Minded Leadership, Amacom: New York, 1989.[15] http://www.twbookmark.com/features/straightfromthegut/index/inde

x.html.[16] Capital, Management Lessons from the Legendary CEO, Capital,

Oct. 2002, pp. 172-176.[17] G. Colvin, What Makes GE Great?, Fortune, 6 March, 2006.

[18] http://www.ge.com/en/company/news/ ft_story.htm[19] W. Bennis, Will the Legacy Live On, Harvard Business Review,

February 2002, vol. 80, no. 2, pp. 95-99.[20] H. Collingwood, and D. L. Coutu, Jack on Jack: The HBR

Interview,Harvard Business Review, February, vol. 80, no. 2, 2002,pp. 88-94.

[21] N. M. Tichy and S. Sherman, Control Your Destiny or Someone ElseWill, Trans. Y. Kaan Tuncbilek, Form Publications: Istanbul, 1996.

[22] http://en.chinabroadcast.cn/2600/2005-5-15/[email protected][23] R. Slater, 29 Leadership Secrets from Jack Welch, McGraw Hill

Book Company: New York, 2002.[24] T. A. Stewart and J. R. Immelt, Growth as a Process, Harvard

Business Review, vol. 84, no. 6, June, 2006, pp. 60-70.[25] http://www.ugurzel.com/liderlik/turkce/lider_web_file/welch_efsane

si.htm.[26] http://www.eylem.com/futurist/wgenelec.htm.[27] GE Annual Report, 1991, pp. 2-3.[28] R. Slater,Jack Welch and the GE Way, 4th ed., Trans. T. Arkan and

S. Ozkal, Literatur Publications: Istanbul, 2000.[29] J. A. Krames, The Welch Way: 24 Lessons From The World's

Greatest CEO, Mcgraw-Hill Book Company: New York, 2002.[30] P. A. Abetti, Case Study: Jack Welchs Creative Revolutionary

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http://www.implementstrategy.com/publications/chapter1.html.[32] A. Akdemir, The Transformation of Intellectual Capital Concept inBusiness Intelligence, Suleyman Demirel University IIBF Journal,no. 3, fall 1998, pp. 63-72.

[33] HBR, In Search of Global Leaders: Perspectives from StephenGreen, Fred Hassan, Jeffrey Immelt, Michael Marks and DanielMeiland, Harvard Business Review, August, vol. 81, no. 8, 2003,pp. 38-45.

[34] F. Hesselbein, Managing in a World that is Round, in Leader toLeader, F. Hesselbein and P. M. Cohen, Ed., Trans. S. Atay, MessPublications: Istanbul, 1999, pp. 10-14.

[35] J. Welch and J. A. Byrne, Jack: Straight from The Gut, WarnerBusiness Books: New York, 2001.

[36] W. Finnie and S. Early, Results-Based Leadership: An Interviewwith Dave Ulrich, Strategy and Leadership, vol. 30, no. 6, 2002, pp.23-29.

[37] http://www.ge.com/en/company/companyinfo/at_a_glance/history_story.htm[38] GE Annual Report, 1993.
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EPC2006

Mustafa S. KARAMAN

National Productivity Centre of Trkiye

(MPM)

Leadership and Productivity

OUTLINE

The Meaning and The Importance of Leadership

The Effects of Leadership on Productivity

Popular Business Leader Jack Welch and GE

Jack Welchs Leadership Practices in the viewpoint of

Productivity


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Leadership is a process by which one person influences

the thoughts, attitudes, and behaviors of others.

Leaders set a direction for their subordinates; help them

see what lies ahead; help them visualize what they might

achieve; encourage and inspire them to do.

Without leadership, a group of people quickly

degenerates into conflict, because the employees see

things in different ways and lean toward different solutions.

The Meaning of Leadership

What is effective leadership?

Is it someone who organizes people and

resources toward the effective and efficient

pursuit of predetermined objectives?

An effective leader catalyzes commitment and

rigorous pursuit of a clear and compelling

vision.


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Weakening of formal organization structures,

Predominance of knowledge worker,

Changes in the expectations of new labor force,

Spreading of project, network and group

approaches in organizations,

Increased competition and more demanding

customers, and

Frequent crisis.

Why is Leadership Becoming More

Important?

While the organizations requirements change, the

concept of leadership develops and becomes more

significant.

In one of the study done in this field that it is

determined by 12.000 trainers from 70 countries all over

the world at the meetings in 1999 in Atlanta and in 2000 in

Dallas that one of the five tendencies in the first 15 years

of the 21st century is:

the requirement for leadership attitude at every layer

of organizations

The Importance of Leadership


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Common Leadership Styles

1) Dictator: Do what I say

2) Team Builder: Come with me

3) Relater: People come first

4) Democrat: Lets decide together

5) Coach: Try this

6) Analyzer: Lets evaluate all options

Which one is the most productivity booster?

Popular French management scientist Fayol -who aimed to

find organizational effectiveness- paid attention to the

leaderships role in organizational effectiveness while

putting forward creating team soul is the most important

one in management principles.

Pioneer of the total quality management Deming said the

objectives of leadership are improving the performance of

labor and machinery, enhancing quality, increasing the

production, and getting the people to feel proud of their

work at the same time.

The Effects of Leadership onProductivity


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Popular management philosopher Drucker mentioned

the relationship between leadership and productivity

in this way:

one of the leaders roles is utilizing inadequate

sources continuously to the fields which bring the

best advantages.

The Effects of Leadership on

Productivity

John Frances Welch Jr.

CEO of General Electric from

1981 to 2001

worked for GE for 20 years as a CEOand for totally 41 years

GE sales rose from 25 billion to 130 billion dollars in

his term

Welch has been a transformational leader and he is

also charismatic.

The Profile of Popular Business LeaderWelch


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is internationally in the business from jet engines to power

generation, financial services to plastics, and medical imaging

to news and information

has 313.000 personnel worldwide and active in more than 100

countries

GE was founded by Thomas Edison

who was the inventor of light bulbin 1878

GE is in the first row in the most

admired company list once again,

for the sixth time in the last decade

General Electric (GE)

Organizational Strategy at GE

Small company management system

Ongoing restructuring: Plants & people

Fewer layers, smaller corporate staffs

- Staff more important: From checkers to

facilitators- Emphasis on boundary-spanning

Highly-connected decentralization

- Contrast with traditional conglomerates


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Welchs Vision (1981)

A decade from now, I would like GeneralElectric to be perceived as a unique, high-spirited, entrepreneurial enterprise themost profitable, highly diversifiedcompany on earth, with world qualityleadership in every one of its productlines.

The Productivity Secrets of Welch

Flatten the organization and get rid ofbureaucracy,

Instigate raising productivity by the ideals of 3S:speed; simplicity and self-confidence,

Adopt total quality methods to save costs, to raiseproductivity, and to delight customers,

Behave like a small company,

Eliminate boundaries,

Understand the subordinates and energize them,and

Get good ideas from everywhere.


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Welchs Doings as a Leader in

Productivity Improvement

Jack Welch had been a change pioneer at GE and

starting from the first day of his CEO task; he

reorganized all of the systems for being more

productive, disseminated modern business

approaches and exerted great effort for raising

productivity



Welch spurred the company to design a set of tools andprocesses that delivered 6% annual productivity gainsin 1986 while this rate was below 2% in 1981.

This number was equal to its Japanese direct

competitors and a bit lower than Japans productivityrate in general.

Even in their standstill term, GE has succeeded toreach a rate between 4-5%. GEs profit before tax perone unit in productivity gains has been 300 milliondollars. One third of the revenues came from theproductivity improvement with Welchs calculation in1991.


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1. Reorganized GE

2. Reduced the Hierarchical Layers

3. Dismantled of the Bureaucracy

4. Had Been the Pioneer of Continuous

Changes

5. Created an Organizational Culture basedon Freedom



6. Captured Intellect from Every Person

7. Worked with the Best People and Motivated

Them

8. He acted like a Leader not a Manager

9. Paid Attention to Performance Management

10.Attached Importance to Coaching


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From Jack Welch

Do not be overwhelmed by charm of the great ideas

by neglecting small ideas. Now we are getting

regularly 6% productivity improvement by means of

small ideas on a large scale. An idea should not

absolutely be a wonder of biotechnology.

The former understanding concludes in looking the

ideas incorrectly. Faultless invoicing system is anidea. Dealing with getting a work to be done in one day

that was done in six days before is also an idea.

Everybody could contribute to this. Ordinary people

could too.

Welchs First Wave: GEs Restructuring

Goal: Be #1 or #2: Fix, Sell or Close.

Each business must become the #1 or #2 competitorin its industry, or disengage

To me, quality and excellence mean being betterthan the bestIf we arent, we should ask ourselvesWhat will it take? then quantify the energy andresources to get there.


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Jacks Second Wave: Cultural

ChangeA company can boost productivity byrestructuring, removing bureaucracy anddownsizing, but it cannot sustain highproductivity without cultural change

Changing the culture starts with an attitude. AndI would suggest it starts at the top with theCEOs and boards of directors

Good business leaders create a vision, articulatea vision, passionately own the vision, andrelentlessly drive it to completion.

Welchs Third Wave:Boundarylessness

The boundaryless company we envision willremove the barriers among engineering,manufacturing, marketing, sales and customerservice; it will recognize no distinctions

between domestic and foreign operations well be as comfortable doing business inBudapest and Seoul as we are in Louisville. Aboundaryless organization will ignore or erasegroup labels such as management, salaried,or hourly, which get in the way of peopleworking together.


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1. Super Leadership: Lead by own self

2. Leadership in every layer is important

3. Leadership is not absolutely better than

management. Management is also required in

organizations.

4. It is more realistic that leaders are made than

leaders born.

Realities about Leadership

Conclusion

Could a business leader absolutely improve the

productivity of his or her company? finds its

response in the leadership practices of popular

leader Jack Welch of GE. Welch may be the most

popular and widely emulated leader in businesshistory. He's used his own uncanny instincts and

unique leadership strategies to run GE, the most

complex organization in the world, increasing its

market value by more than $400 billion over two

decades.


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Conclusion

In his two decades as CEO, Jack Welch's principles, strategies,and tenets transformed GE into one of most dynamic andvaluable corporations in the business history. As a result,executives in all industries are now eager to hear Welch's everypronouncement and implement his strategies in their ownorganizations.

To whom wants to improve productivity in business world,Welchs successful leadership practices should be inspirationsource. The managers who lead instead of manage, make their

companies more flexible and lean, capture intellectual ideasfrom their subordinates, motivate them and apply performanceappraisal according to their competencies; so meet their

objectives sooner.

THANK YOU...

[email protected]

+90 312 467 55 90 / 255


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Objectives and Importance of the

Study

In this study, aiming to demonstrate concretelywhether leadership effects productivity or not inbusinesses; the most emulated leader of thebusiness history Jack Welchs leadership practiceswere analyzed and assessed.

Business leaders actually play an important role inbusiness life. This role is leadership but this is notdefined as always a product of powerful andcharismatic personality or inborn characteristic.

Methodology and Examination ofData

In this study, in order to meet the mentionedobjectives, secondary data sources were studied forcollecting the required data. Written articles andbooks about Welch, published interviews with him,

the web sites about him are all reviewed. These datasources about Welch are meticulously examined,analyzed and assessed.


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Findings and Evaluations

Leaders play a significant part in meeting theobjectives and improving the productivity of theirbusinesses. This should be more fundamental dueto the business world has been getting morecomplicated.

The findings and evaluations about the leadershippractices of Welch who improved the productivity ofhis company and subordinates by creating a changestorm in his company are explained in this study.

Wed Res 1500 Karaman

Documents

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