General Electric Decision Making

Topics: Decision making, Risk Pages: 5 (1779 words) Published: December 17, 2009
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 of GE, states “A leader’s primary role is to teach. People who work with you don’t have to agree with you, but they have to feel you’re willing to share what you’ve learned.” As one can see, group think is not a form of decision making used at GE. This ensures the corporation that decisions are made in regards to what is the most beneficial options rather that what option is easiest to agree on. This tool is very valuable to GE by allowing the corporation to evaluate and analyze different options and alternatives.

With such a large and diverse company, leaders at GE stress the importance of working collaboratively across different sectors when facing challenges and making decisions. The company’s business strategy approach follows the typical top-down hierarchal command chain with starting at the top with the Board of Directors. The board is responsible for overseeing how management serve the interests of shareowners and other stakeholders while considering such issues as risk management, environmental, social and regulatory challenges, and global trends. GE also stresses the importance of receiving input from stakeholders and being aware of their concerns. This allows GE to hear new perspectives and better understand how its business goals can be reconciled and aligned with their concerns. For example in 2008, GE undertook open dialogue with a diverse set of global stakeholders, including government representatives, non-governmental organizations, industry and financial analysts, environmental advocacy groups, the media, customers, community leaders, as well as employees.

GE assembles stakeholders, thought leaders, and GE executives to discuss challenges together in hopes of giving the company a valuable opportunity to learn, drive innovation, and receive advice and feedback in order to improve the company’s approaches on strategic issues and decision making. The three corporate-level committees responsible for collecting input and learning from...

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.
"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.
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