Responsibility, I believe that, while no corporation is ever going to be ‘perfect’, GE did an excellent job of fulfilling this duty. The reason many critics argue against this is because so many jobs were cut during this period. However, the bottoming goal of a company is to increase profits, and as Jack Welch was known to argue, a profitable firm is going to be in the best place to benefit and give back to society. GE may have cut jobs, but he cut them based on performance and cultivated efficiency. Jack Welch was known as the manger of the century and turned GE into the most admired company (as descried by he Financial Times’).
Jobs may have been lost in the U. S. But encouraged globalization of production and jobs transferred to lower wage countries, thus creating growth in places that need it. With Jack’s 3 tier evaluation system (top 20%, middle 70% and bottom 10%), employees were constantly driven to evolve, motivated to perform better, and refrain from getting ‘too comfortable’. The employees that fall In the bottom 10% of performance standards they were let go. I love this, its no different than a sport, or best analogy is a race- as a coach you are not going to keep the bottom on a aid scholarship.
The more you eliminate the bottom later, the better the entire overall team gets. The bottom 1 0%, are the weakest links, and either need the ‘kick in the rear end’ to take their performance up, or the job or company was not for them. Jack rewarded performance and innovation, he encouraged a culture to compete to be better, but he did not do it in a way that was unethical or corner cutting. In fact, integrity was his ‘no 1 value. Nothing came before it…. [and he] emphasized it in all his closing remarks. When it comes to enhancing societal assets, a company must make decisions, t cannot be everything to everyone.
Jack’s decisions focused on creating a top level team of all stars, a culture of integrity and efficiency, and a profitable company that put it in a position to give back. The only item I saw that did not directly enhance societal assets was the refusal to clean up the pollution in the Hudson River. However, this was simply one issue in many years that can be called out, and I believe that the benefits that came with the profitability and value created many opportunities and ‘societal assets’ that outweighed this instance.
Also, Wheel’s argument was not given valid attention, he lived the protocol would be an ‘ineffective nuisance’. Society tends to get hyped on things like this and want to point fingers, and tend to think the ‘big rich power heads’ should pay, however- there is no evidence that this pollution clean up would be effective. In the end, they ended up agreeing to the clean up, but this was after Welch retired, and also to be noted: when the company shareholder value plummeted. 2.
At first glance, Welch may seem to illustrate a narrower view of corporate social responsibility, one that more closely reflects Friedman;s view that only social responsibility to increase profits while obeying the law, however, his viewpoint has a much greater macro effect on corporate social responsibility and fulfills the overall definition Of corporate social responsibility much better than many firms who appear to put ‘green efforts and social causes first’, but do not do well financially.
Bottom line: 90% of people who nit pick at all the issues about cutting jobs of the ‘weakest performers’, and keeping the culture focused on financial success fail to realize that if a manager does not act in a way hat puts financial success as a goal, the company will not be in the sections to do great things. For example if a company goes under, 100% of jobs will be lost versus 10% of the bottom performers. A thriving company creates new jobs, and has the resources and ability to give back and do a lot more good. 3.
According to the General principles of Corporate Social Responsibility set forth in Steiner’s chapter 5 discussion, GE conformed in every accepted principle as follows: Corporations are economics institutions run for profit – Welch did exactly that, which is reflected in not only in his belief statement that ‘social responsibility begins with a strong competitive company, only a lately enterprise can improve and enrich the lives of people and their communities,… That’s why a Coo’s primary social responsibility is to assure the financial success of the company.
Only a healthy and winning company has the resources and capability to do the right thing’ 1 . All Firms must follow multiple bodies of law 2. Managers must act ethically. 3. Corporations have a duty to correct adverse social impacts they cause 4. Social Responsibility Varies with company characteristics In explanation of principles 1-4: After the pollution in the Hudson issue is raised, it is easy to argue that principle 3 was not in adherence, however, Jack Welch was an exceptional leader who looked out for the best overall answers for the company.
He was not cruel or dishonest, rather he did not believe the proposed solution would be effective, and rather a nuisance. He clearly weighed the risks vs. benefit and made the decision he believed would produce the best long term outcome. The fact that this decision was not risking adherence to any body of law, believe, in itself justifies that the matter is subjective to public opinion and bias. 5. Managers should try to meet estimate needs of multiple stakeholders by maximizing shareholder value, GE was I the position to better meet the needs of multiple stakeholders. 6.
Corporate Behavior must comply with an underlying social contract – Welch believed in running a first class team of great performers and his system for employee managers and workers of all levels reflected this. For example, Welch believed that there are four types of managers. The types revolve around values and commitment, whether the commitment is financial performance or otherwise: The first type of manager delivers on commitments and shares the values of the company. They are keepers. All others are let go if they do not comply with this internal social contract Of the firm. . Corporations should be transparent and accountable. Gee’s culture was such that employees ALWAYS knew where they stood. I believe this statement on his GE employee ranking and evaluation system, this statement clearly demonstrates this principle: ‘Welch says this method is much better than false kindness, where employees aren’t told they aren’t good, and then they take a termination or layoff as a surprise. Welch advises that you should not create false kindness, but rather create candor. 4.
Pros/Cons of Ranking Shareholders over employees think the pros of ranking them higher than employees and other stakeholders is that they are actually invested into the company, they have part ownership in a company so they are personally motivated and invested in its overall success. Employees are not personally invested, they simply get paid to do their job, as long as they are getting paid, the overall company success will not affect them as much. They are still collecting their paycheck unless the company goes under, in which they can get another job without a personal investment loss.
Cons include the fact that shareholders can exercise more control and power and affect how decisions are made, without knowing first hand how things work in the day-to-day of the company. What may seem like a good decision, ex. To cut employees in a certain department, may actually be detrimental, as that department is not doing well because it’s under staffed or poorly staffed. I don’t think it is wrong to see them as costs of production because after all they are a factor in output. Many companies have even switched employees to automated systems, such as bank machines replacing tellers (very basic example).
But the cost of purchasing and servicing the bank machine is no different than the cost to pay the teller to serve customers. Believe Gee’s way of keeping employees competitive and motivated was incredibly smart. They were able to keep shareholder value on top, while maintaining motivated and personally incentive employees. 5. Ironically, due to the ‘unbeaten of the profile’ of Melt vs. Welch, I believe The Welch era led to a much more socially responsible corporation because it was in a position that had more benefit to society. Profits were high and it had the ability to give back most.