Organizational Behavior Include a Wide

¶ … organizational behavior include a wide range of issues that impact all aspects of organizational development and function. Although many some organizations are able to use these concepts to their benefit, many face notable challenges when it comes to balancing the internal needs of the organization with the external pressures to compete. Thus, when examining any organization and the behavioral concepts which drive its development, a mixed picture of both success and failure are often seen. Such is the case with General Electric (GE). Although GE has faced notable challenges over the course of its history and development, the company has been able to develop significant paradigms for positive forward momentum.

With the realization General Electric truly represents a living example of organizational behavior concepts there is a direct impetus to consider the organizational behavior concepts that have prompted positive and negative outcomes in this organization. Using this as a basis for investigation this research examines the organizational behavior of General Electric and various issues of organizational behavior have contributed to overall development of the organization. Through a careful consideration of the current trends that are taking place in the context of organizational behavior, it should be possible to provide a more integral understanding of how these trends have impacted the General Electric organization at its methods for expansion and development. Further, by examining what has been written about the success of the organization a clear overview of the dynamic interplay between the development of the organization and its internal behavior will be elucidated.

Literature Review

General Electric: Structure and Culture critical review of important organizational behavior concepts that are integral to the success of the organization suggest that organizational culture and structure are among the most important variables contributing to the success of the organization. Given the importance of understanding culture and structure with respect to the development of organizational behavior, it is clear that these issues are a salient starting point for examining the organizational behavior of a particular company. With this in mind, this analysis of General Electric (GE) begins with an examination of the organization's culture and structure. By documenting what has been written about the unique culture and structure that have been established in the General Electric organization, it should be possible to provide a formidable framework for analyzing the overall behavior of the organization.

Examining first the history and development of General Electric, it becomes evident that the organization has undergone notable changes in the last 25 years. When Jack Welch took over as CEO of the organization in 1980, General Electric had become a paragon of inefficiency. In order to improve the organization, Welch engaged in a program of organizational restructuring known as delayering middle management. This process was aimed at reducing the number of individuals in the organization that served no real role for moving the organization forward. After streamlining the organization, Welch put a number of new strategically oriented projects into place that called for individual accountability from each and every employee in the organization. Welch's goal each year that he led the organization remained the same: "delivering market-beating shareholder returns" (Gunther, 2004, p. 176). Welch argued that for any one enterprise in the GE organization to remain in business it had to prove that it could be either number 1 or number 2 in its market. If employees in each branch of the organization could not deliver this performance, Welch argued that these branches needed to be shut down.

The organizational culture created at General Electric under the guidance of Jack Welsh is one that focused heavily on the establishment of benchmarks to ensure the profitability of the organization. Welch was so focused on the bottom line of the organization that he was able to create a culture in which all employees focused on this issue as well. Paradigms such as Six Sigma were instituted as a means to ensure that every practice used by the organization was as efficient. Even though this process had notable ramifications for improving the overall financial health of the organization, it did breed considerable competition among individual employees in the organization. Each year, Welsh established goals for managers in each departments, those that were capable of reaching or exceeding these goals were given bonuses for their accomplishments; those that could not reach Welch's goals were fired from the organization. Researchers examining Welch's stance on employment in the organization notes that Welch adopted the following policy:

Twenty percent of your people are your best. You reward them, you want them to get rich, you want them to have a great job and you want them to have fun. The middle 70%, you reward them but you tell them all the time where they stand and then the bottom 10% you ask to move on. You don't waste time with them (Welch on..., 2005, p. 7).

Benchmarking and evaluation in the organization each year produced a new crop of "10%." Individuals in this lower percentile were asked to leave the organization.

Examined in this framework, it is not surprising to understand why such fierce competition typically developed in the organization. Welsh led by pitting each of his employees against each other. In doing so, Welch was able to increase the profitability of General Electric enormously. "In a 2-year career at General Electric, Jack Welch is credited with increasing the company's market value from $12 billion in 1981 to $280 billion in 2001" (Welch on..., 2005, p. 7). Thus, even though the specific tactics used by Welch to motivate employees in the organization have been criticized as harsh by some critics, the end result has been a dramatic increase in the overall efficiency and profitability of the organization. Through the culture created by Jack Welch, employees in the organization were motivated by the opportunity to become one of Jack Welch's most important employees and share in the spoils of attaining this position. Unfortunately, the specific context of this culture is noted to have had detrimental impacts on specific groups and individuals in the organization.

Exploring the specific issues of behavior that developed under the tenure of Jack Welsh, Gunther (2004) reports that even though the organization had reached a high level of profitability, in an effort to retain the position of the organization, many employees in the organization became involved with unscrupulous activities. Gunther notes that General Electric under Jack Welch was not know for having a high level of corporate responsibility. Under Welch, GE has been cited for dumping toxic chemicals (PCBs) into the Hudson River. In addition, General Electric had embarked on a project to establish a host of business ventures in Iran. These projects were eventually stopped under the organization's new CEO, Jeffrey Immelt. When it comes to the issue of corporate social responsibility, Immelt examines the organization from the inside out, noting that if the company is to be successful in the long-term it must project a positive image that establishes a firm's reputation as an ethical organization. While Jack Welch did not support the use of illegal activities as a means to move the organization forward, it is important to note that the specific culture created by Welch is one in which employees felt that they had to employ these means in order to make themselves and the organization successful.

What this data effectively suggests is that in order to create change in the organization, Welch faced a number of notable trade-offs which prompted various members of the organization to act unethically, and in some cases, illegally. Although GE was able to maintain a prominent position as a global leader in its industry, the reality is that this position was difficult to maintain. Thus, the true challenges that arise in the context of organizational management are revealed in the case of General Electric. Even though GE had acquired market dominance and was a model of internal efficiency, the company had to cut corners in order to retain its overall position.

Change Management and Human Resource Practices at GE

According to Cummings (2005) "Throughout the 1980s and 1990s, Jack Welch served as chief executive officer (CEO) of General Electric (GE), transforming the company from a largely national $14 billion business into an international $490 billion corporation" (p. 1). In order to accomplish his goals, Welch developed a program of Six Sigma in the organization. One scholar examining the development of Six Sigma in the GE organization under Welch notes that Six Sigma was originally developed as a quality management tool for the organization. However, as the program developed, Welch expanded the program to all aspects of the organization. In this context Six Sigma was not just used for quality development in the organization; rather it was used as a central force to drive all aspects of organizational development and change (Six Sigma..., 2005).

While the program of Six Sigma is indeed important to the development of GE, research on this program indicates that notable changes occurred after Welch stepped down as CEO and Jeffery Immelt assumed control of the organization. When Immelt took over as CEO of General Electric in 2001, he pledged to continue the tradition of Six Sigma that had been created by Jack Welch. However, in the years that have passed since Immelt gained control, the GE organization has struggled to maintain the same quality of culture that existed under the leadership of Welch. Brady (2004) interviewed Immelt about his position on Six Sigma in the organization. In this interview, Immelt admitted that his push toward innovation had made Six Sigma less of a driving force for quality development in the organization. While Immelt contends that he still utilizes Six Sigma as a foundation for operations in the organization, he also notes that Six Sigma and innovation cannot exist simultaneously.

Despite the challenges facing Immelt in his efforts to develop the organization, research demonstrates that this leader has had notable success in this area. To demonstrate the overall impact that Immelt's methods have had on the organization, Brady (2005) reports that, "He [Immelt] worries that GE's famous obsession with bottom-line results -- and tendency to get rid of those who don't meet them -- will make some execs shy away from taking risks that could revolutionize the company" (p. 64). For this reason, Immelt has focused organizational development on programs that motivate individual employees. Immelt has developed a host of programs that break from the quality standards that are required under the Six Sigma management system. Brady reports that overall the focus of the organization is not quality improvements for managing the bottom-line; rather Immelt has shifted the focus of the organization from deals and cost-cutting to new products, services, and markets" (p. 65).