Organisation Behaviour - Case Study Example

Organisation behaviour In a broad sense, an organization is a group of people coming together to work towards a common goal. These entities are usually made up of formal membership and a given set of rules that govern them. An organization is defined by the way its members communicate, the way the power or authority is distributed, by its membership models, and the way it reacts to the environment. An organisation achieves the common goal by planning and coordination that stand-alone entities are not able to achieve. Organisational advantages include easier achievement of targets, strength due to amalgamation of talents and ability to extend itself beyond what is possible when solitary. The disadvantages would be that collective forward progress is slower and lack of personal creativity due to compliance to common ideals. General Electric (GE) is one of the well-known corporations of the world. It is an enormously diversified company with its products ranging from telecommunication fibre optics to large Magnetic Resonance Imaging (MRI) machines capable of projecting 3-D images of the human brain. It makes immense aircraft engines to and advices public to reduce their energy bills. Its ability to innovate and maintain impeccable quality has helped GE to remain a market leader and function as a successful organisation. Bureaucracy has been exhaustively discussed in organisational concepts. Ideally bureaucracy is symbolised by authority relations, recruitment by competence, and fixed salaries. Max Weber described it as technically superior to all other forms of organization and hence indispensable to large, complex enterprises. Weber's Principles of Bureaucracy proclaims the following of the principles of Divide labour into specialized expertise areas throughout the organization, Pyramid position defined by a hierarchy of authority and an explicit chain of command, Formal rules governing decisions and actions of everyone that allows continuity in event of personnel changes, Be detached with employees so that sentiments do not distort objective judgment and Select workers by their technical utility to rule out friendship or favouritism is ruled out, and advancement is by seniority and achievement. Rigid documentation is followed to keep tabs on progress and evaluate. However, bureaucratic organisations seem to stifle worker creativity since omni-present rules and regulations create no room for innovation and improvisation by the workers. The inability take quick decisions due to lack of authority also results in reduced productivity. This downside of bureaucracy especially in large organisations has made it questionable as to its rationality and efficiency. Its principles have also attached a connotation of disapproval to the terms bureaucratic and bureaucracy due to its incompetence and a lack of broad-mindedness. However, although it sounds improbable considering its successful image and culture today, GE was a struggling bureaucratic organisation in the 1990's. Too many layers and no decision-making capabilities characterized it. The organisation lagged behind in making timely strategic decisions. This success is attributed to what was essentially a single managerial decision made by Welch back in the mid-90's. Jack Welch joined the General Electric Company (GE) in 1960. Welch started work as an engineer in the plastics division. However although his immediate work environment was fast paced and exciting, he felt smothered by the bloated bureaucracy of the company. He could not function to his full ingenious limits, had to wait for management decisions on the smallest of tasks. He felt under valued, and was highly dissatisfied with the standard bonus he received. He found another job and almost quit but was persuaded to stay on by Reuben Gutoff, who saw his immense potential. Although he stayed on, Welch had not changed his mind about GE's administration, which he saw as unresponsive at best and debilitating at worst. Welch carried this experience in heart and his tenure at GE was the struggle to balance the need for effective administration against the needs for efficient production and market agility. Jack Welch's track record of good performance and revenues in spite of the constraints promoted his climb on the corporate ladder and ultimately landed him his top job in GE. He brought with him the priceless vision of what he wanted GE to eventually become. Organizational Culture refers to an organization's values, beliefs, and behaviours. In general, GE was struggling because of its prevailing culture where employee morale was not very high due to lack of onus. Although GE had valuable resources, it had managers who were blind to changes that were so obviously needed. Its management style left a lot to be desired. A firm statement of belief in the capabilities of the employees and strong focussed targets was needed. Firms with strong cultures achieve higher results because employees sustain focus both on what to do and how to do it. As Jack Welch wrote in a letter to shareholders: "In the old culture, managers got their power from secret knowledge: profit margins, market share, and all that... In the new culture, the role of the leader is to express a vision, get buy-in, and implement it. That calls for open, caring relations with every employee, and face-to-face communication. People who can't convincingly articulate a vision won't be successful. But those who can will become even more open - because success breeds self-confidence." When Jack Welch arrived, he had the unenviable task of adapting the entire business unit to cater to the shifts in the markets and the economic changes. Change can be of two types, evolutionary change that is more gradual and has sufficient timelines to attain goals, or it can be disruptive where the actions are drastic like layoffs and reengineering. While evolutionary changes are relatively easy because of the time they offer to be absorbed, disruptive changes are often urgent to compete with the changing environment. In situations when timing is critical to success, and companies must get more efficient and productive rapidly, revolutionary change is demanded. Jack Welch did just that. He tackled the crippling bureaucracy as the first step. GE had three hundred separate businesses, contributing to large inefficiencies. He aggressively sold of entire lines of business that lagged severely behind their competitors. Only operations that were ranked first or second in the given field were retained. He supervised massive layoffs to curtail wastage and by 1985 billions of dollars had been made or saved through sales and layoffs. However, deciding between evolutionary change and revolutionary action requires balance and diligence. Implementing change hurriedly will contribute to more chaos and add to the problems rather than being a solution. Change always brings in resistance, but when communicated and clarified adequately, it has sufficient time to be imbibed and followed. Welch judiciously incorporated the changes and made sure that it was communicated to the to the actual hands-on workforce. His company wide program called the "Work Out" so named because Welch wanted to "work out" the nonsense in the system that contributed to wastage. Here the personnel are educated and come up with new brainstormed ideas. Mangers are kept out initially and then brought back to instantly accept or reject the brainstormed ideas convincingly. This has brought enormous feedback from the employees that has proclaimed itself to democratic outcomes and caused an increase in productivity and output. It has also served to share and implement valuable ideas communicated throughout the company. Traditional organisational structures are often rigid. Fixed hierarchies, tend to curb information flows and communication, procedures are accepted and not challenged and over time the value created gets lost in the bureaucracy. This tiredness in the structure manifests itself more and more as organisations grow larger and older. Workout was a like a newly charged energy in the corporation. Its simplicity and the dare to break out the boundaries and think outside of the box instilled a new energy into GE. In Welch's words, "In the eighties, we saw that organizations get faster as controls are lifted. As this occurs, people who spent years devoting half their time serving the system and their other half fighting it suddenly come to life and make face-to-face, spontaneous decisions on topics that would have previously taken months of hesitation and tons of paperwork". Welch's greatness lay in the fact that he was never afraid to implement what he believed was right. Welch had a vision of a "boundary less company," a company without administrative walls between separate business units and where knowledge applied to one area could be applied company wide. At the time of his retirement Welch had only begun to see his vision of a boundary less company come to fruition. Work Out increased product quality and output, but error reduction remained untracked. As the 1990s progressed Welch instituted the Six Sigma program at GE. This program was developed to maximize the efficiency of manufacturing processes through the minimization of production of defective units. Welch launched the effort in late 1995 with 200 projects and intensive training programs, moved to 3,000 projects and more training in 1996, and undertook 6,000 projects and still more training in 1997. This has been a great success for GE exceeding expectations initially set. In 1998, Six Sigma delivered $320 million in productivity gains and profits, more than double Welch's original goal of $150 million. In 1999, GE ramped up about $750 million in net benefits. In Welch's words, ''Six Sigma has spread like wildfire across the company, and it is transforming everything we do.'' Motivation of the employees is an extensively debated topic due to its relevance in the workplace. Most motivation theorists assume that motivation is involved in the performance of all learned responses; that is, a learned behaviour will not occur unless it is energized. It also brings to the fore the question whether motivation may be intrinsic or extrinsic. While Maslow's theory states that each individual has a hierarchy of needs that promotes motivation, often, inducement systems are the most used in workplaces as instruments of motivation. This may be monetary rewards, promotions, stock options etc. Welch's realization of his vision may be attributed to his ability to genuinely enthuse the employees to work towards his vision. His believed that performance has to be rewarded and took pride in distributing wealth among the performers. He made the granting of stock options more liberal than just constraining it to the top leadership. The hand written faxes they received enthused the employees and the substantial stock options performers were rewarded with motivated them to perform better. Targets and performances are continually monitored and ingenious ideas for improvements are analysed and absorbed no matter where they emanate from. Welch believed that great business leaders have to step aside to let individual productivity shine through. : He wrote: "The individual is the fountainhead of creativity and innovation, and we are struggling to get all of our people to accept the counter cultural truth that often the best way to manage people is just to get out of their way. Only by releasing the energy and fire of our employees can we achieve the decisive, continuous productivity advantages that will give us the freedom to compete and win in any business anywhere on the globe." Welch retired in 2000 after a greatly acclaimed and triumphant sojourn. His implementation of Six Sigma was a massive effort and one whose accomplishment was easy to quantify because of the ability to monitor defect reduction. There were a few problems like all the managers not embracing the concept and harbouring negativity and promoting miscommunication. Training issues due to the highly technical content of the Six Sigma project was a problem, though this was toned down later to cater to the employee needs. There is a notion that the rigidity of Six Sigma is slowly allowing the bureaucracy to creep in again. All said and done, Welch leaves behind an unsurpassed legacy of change and accomplishment, where he was not afraid to break a few rules and take a few chances and put GE solidly on the path to fame. Organizational theories and practices are a solid base to start upon but cannot be completely imbibed in any given situation in a changing organization. Modifications are part of adopting any theory or structure. While bureaucracy has also had its share of critics, there are a few who say that they function well as buffers during uncertainties. Richard Edwards is of the view that bureaucracies do not necessarily mean direct or coercive authority. While popular opinions point to the wasteful costs of bureaucracy, Edward observes that these corporations survive on their ability to organize routine, normal efforts of workers and not on their ability to elicit peak performances. Eventually, best practices that combine organisational goals and employee satisfaction leading to ultimate organisational efficiency seem to be imbibed more by the current day organisations that operate in a dynamic environment. Organizational effectiveness is the maximization of return to the organization by all means and GE exemplifies this where by respecting the person as a fundamental force in organizational change, Welch created a model of exceptional performance every corporate leader can learn from. . 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