The Jack Welch Era at General Electric

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The Jack Welch Era at General Electric

Abstract

John Francis “Jack” Welch Jr. was Chairman and Chief Executive Officer of General

Electric Company between 1981 and 2001. He was responsible for building a tremendous

reputation for his company and the leadership that helped him achieve that. With combination of

ruthless focus and contradictory commitment to staff involvement, Welsh delivered the growth

figures that could only be dreamed of by smaller companies. Under his leadership, General

Electric thrived like never before and he took the world as he found it, by following basic rules,

broking a few and in those terms performed to his utmost. Within those twenty years he

accomplished things no other CEO had in GE's history; he fulfilled the company's primary

economic responsibilities to society and communities around the world by turning it into an

exceptionally profitable conglomerate.

Social Responsibility at General Electric

Jack Welch’s tenure at General Electric is often used as a model for corporate social

responsibility. “Corporate Social Responsibility (CSR) refers to operating a business in a

manner that accounts for the social and environmental impact created by the business.”

[1] In Welch’s era, GE fulfilled its responsibilities to society by serving customers worldwide

and stimulating the economy. His popularity was shared with opposing views. There were those

who despised him because of the jobs lost and those who shared his vision because they became

rich off of it. There are many aspects in the way he restructured the company that would play to

the social responsibility tactics. “Welch has gone on record as saying that he believes the time

has passed when making a profit and paying taxes was all that a company had to worry about.”

[2] He stood by his vision and in turn made General Electric a very successful company.

According to Milton Friedman, the social responsibility of business is to make profits.

“That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society,

both those embodied in law and those embodied in ethical custom.” [3] Both Welch and

Friedman shared the vision to make money, but their views on social responsibility were

similar. Friedman believed in obeying the law while making profits and Welch believed in the

financial success of the company. Welch’s vision was that every GE business would be the best

in their industry. For that reason, it’s apparent that GE under Welch does illustrate a narrower

view of corporate social responsibility closer to Friedman’s views.

Under Welch’s management, General Electric failed to comply with the General

Principles of Corporate Social Responsibility.  Companies should always be honest, ethical an

devoted to the well being of their environment and the public they serve. While his motto was to

make a profit, he did so by doing some questionable things. Welch's years as CEO have not

been free of controversy and criticism. With so many acquisitions and divestitures, GE became

what Welch set out to make of it, a powerful conglomerate.

Ranking shareholders over employees and other stakeholders can have both pros and

cons. There are several strengths when it comes to ranking shareholders higher than employees

and other stakeholders. Shareholders have to be invested in the company because they have part

ownership and it’s beneficial to them that they work harder to be successful.  The only beneficial

thing to an employee and stakeholders is the job they posses which pays them their salaries and

incentives so it is not really important that the company does well. Shareholders also hold some

weaknesses because they...
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