Jack Welch and Jeffrey Immelt - Continuity and Change in Strategy, Style
and Culture at GE
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : LDEN040
Case Length : 22 Pages
Period : 1981-2006
Pub Date : 2006
Teaching Note :Not Available
Organization : General Electric Company Industry : Diversified
Countries : USA
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Background
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GE's origin can be traced back to the late 1800s, when Thomas Alva Edison
(Edison), invented the first successful incandescent electric lamp in 1879.
Edison was an entrepreneur as well as an inventor and started several small
businesses dealing with power stations, wiring devices and appliances during the
late 1870s and 1880s.
In 1890, he brought all these businesses together and combined them under the
Edison General Electric Company (EGEC). EGEC merged with the Thomas-Houston
Electric Company4 in 1892 to form GE. The newly formed GE was then headquartered
in New York. In 1894, Edison gave way to Charles Coffin (Coffin), a former shoe
salesman, as the CEO of GE.
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Coffin licensed out the electric bulb technology to other companies, thus
consolidating GE's position in the emerging lighting industry. Coffin also
created a formal hierarchy at the company and organized GE's various
businesses in a systematic manner, arranging each unit around a product
line. Coffin was also responsible for setting up financial control systems
at GE.
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Coffin had a long tenure at GE and eventually stepped aside in favor of
Gerard Swope (Swope) in 1922. Under Swope, GE launched several progressive
industrial relations initiatives, setting up new policies to give employees
pensions, bonuses, stock purchase options, profit sharing and group
insurance. GE also became the first company to establish an unemployment
pension plan, which guaranteed laid-off workers a stipend of $7.50 per week
for a period of 10 weeks after the layoff. In 1940, Charles Wilson (Wilson)
became the CEO of GE. Wilson was an autocratic leader and employee relations
deteriorated during his tenure. After the Second World War (1939 to 1945),
GE faced a major crisis in industrial relations due to the increasing clout
of the trade unions. |
The crisis culminated in a major strike in 1948, which caused
a rift between the blue collar workers and the top management at the company. By
the 1950s, GE was a major industrial conglomerate with interests in a variety of
businesses. But growth brought its own problems. From the beginning, GE was
organized like a holding company, with a few executives at the headquarters
monitoring the activities of the various businesses.
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