General Electric Decision Making
Awarded the most admirable company six times in the past few decades by Fortune, General Electric (GE) is obviously a very successful company. However, they were caught up in a trap of handing their CEOs a ridiculous amount of money like many other large corporations. According to one article from “Competition Forum” called Executive Compensation: The Case of General Electric by Nwabueze, Scott, Horak, and Chhotu, new management came in the form of Jeffrey Immelt in 2003 and changes were made. Instead of continuing with this guaranteed payment, management made the long-overdue decision in regard to economic feasibility. Top leaders were seen as irreplaceable it seemed and paid as such to retain them. Alternatives were examined and it was decided that guaranteed stock options were replaced by performance based units (PSUs). Earnings instead would be based on meeting average earnings per share growth levels. These moves helped to stimulate the company and ties compensation to organizational performance, including helping stakeholder interests, both within the company and for investors.
Were I an investor in GE (come to think of it maybe I should be), these changes would make me very satisfied and confident that the company, with these decisions, has my best interest, as well as their own, at heart.
Effective decision making is an enormously important aspect of any corporation. It seems to be especially important to GE. The textbook (Jones) defines decision making “as the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.” Without decision making no changes would be made and improvement would be impossible within a corporation. Many organizations are run using groupthink, where members of the group strive to come to an agreement rather than the most valuable decision. This is not similar to decision making at GE. John Immelt, Chairman and CEO
Were I an investor in GE (come to think of it maybe I should be), these changes would make me very satisfied and confident that the company, with these decisions, has my best interest, as well as their own, at heart.
Effective decision making is an enormously important aspect of any corporation. It seems to be especially important to GE. The textbook (Jones) defines decision making “as the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.” Without decision making no changes would be made and improvement would be impossible within a corporation. Many organizations are run using groupthink, where members of the group strive to come to an agreement rather than the most valuable decision. This is not similar to decision making at GE. John Immelt, Chairman and CEO
Cited: Chhotu, Joti, Mohammed, Sarah, Nwabueze, Uche, and Scott, George. “Executive Compensation: The Case of General Electric.” Competition Forum 4.2 (2006): 389-394. Web. 29 September 2009. http://libweb.uwlax.edu:3106/pqdweb?index=18&did=1268524281&SrchMode=1&sid=3&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1254281358&clientId=3845. "Plugged In HR: The General Electric Strategy." Human Resources Leader 3 December 2003: n. pag. Web. 4 Oct 2009. . Ulrich, David, Kerr, Steven, and Ashkenas, Ronald. The GE Work-Out. New York: McGraw-Hill, 2002.