GE, Welch and the Trait Theory of Leadership - Essay Example

GE, Welch and the Trait Theory of Leadership With the various definitions and aspects of Leadership in business, there seems to be no real consensus on exactly what comprises leadership. However, the general directions given by analysts like Welch (2005), Byrne (1998) and Gardner (1995) have several common points with the definition given by House (2004) who states that leadership is, “The ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members (House, 2004, Pg. 15)”. With this definition, the importance of leadership in business can be fully understood if it is applied to the leadership qualities exhibited and promoted by Jack Welch during his tenure at GE. His leadership has been credited as one of the primary reasons which took GE from a company which was in financial trouble and losing investor confidence to the position of the most admired and respected company in the world (Colvin, 2005). Jack Welch comes across clearly in terms of his leadership ideal when he gives the eight rules of leadership in his book titled Winning. These rules can be studied in the light of leadership theories and a final analysis can be made as to which are the exact ideals of leadership that are recommended by Jack Welch. The eight primary rules as suggested by Welch (2005) are: 1. Leaders should continually upgrade their team by using opportunities to coach, mentor, judge and improve the abilities of the team. 2. Leaders pass on the vision of the company to the employees and show the employees that they embody the vision. 3. Leaders give out positive energy and are optimistic. 4. Leaders create trust and are transparent with the employees. 5. They have the courage to make the employees unhappy with decisions which can be considered unpopular. 6. Leaders are curious about answers and want action from the employees. 7. They inspire people to take risks and set examples for learning from mistakes which may be made by them. 8. They celebrate when they win. With these rules in mind, two theories of leadership can be applied to the style used by Welch and these are the trait theories set and the situational theories of leadership. Gardner (1995) presents us with several ideas which leaders can use to change their leadership styles or how they can balance the styles depending on the situation. The idea of leadership traits can come with several stereotypes or ideas that some people are born leaders, but leadership skills can also be taught to people although the right personality always helps (Welch, 2005). For example, when we consider the third rule given by Welch which states that leaders must give out and infect others with positive energy and optimistic views about situations. That is a key pointer towards the fact that Jack Welch considers the majority of leadership skills to come from the trait theory than any other applicable theory. Undoubtedly, optimism is a personality trait and being able to create optimism or any other emphatic feeling in others requires a leader to have charisma (DePree, 1989). Charisma is accepted by DePree (1998) to be a rare quality which is attributed to those leaders who create devoted followers. Devoted followers and employees who become your personal friends as well as have complete faith in your vision are simply essential. These employees can certainly be created with an informal style of management as applied in GE. As explained by Byrne (1998): “Making the company informal means violating the chain of command, communicating across layers, paying people as if they worked not for a big company but for a demanding entrepreneur where nearly everyone knows the boss. It has as much to do with Welchs charisma as it has to do with the less visible rhythms of the company--its meetings and review sessions--and how he uses them to great advantage.” (Byrne, Pg. 1, 1998) This creation of trust and making the employees believe in the leadership of the leader is also a trait since it requires the leader to possess the ability to convince them without coercion that his/her viewpoint is the correct one. The idea of being transparent means being honest with the employees about everything; going from their quarterly evaluations to the company’s annual financial reports, the leader has to create trust (Welch, 2005). It also requires the leader to be good with oral and written communications, be diplomatic and tactful as well as present his/her case to a group of peers or close subordinates when they do not agree with the decision or are hesitant at making tough calls (Gardner, 1995). Both Gardner (1995) and DePree (1989) agree with Welch when he writes as rule number nine that the leader should set an example for the employees to follow. It is not as simple as monkey see monkey do but rather a very complex yet close relationship between a leader and the follower where the followers try to create the same traits within themselves as the leader has within him/her. If the leader can take risks, accept that he may be wrong before taking the risk and then if the risk turns out to be a mistake, accepts the mistake, it means that s/he is a very good leader indeed (Welch, 2005). This shows both integrity and character which is the stuff real leaders are made out of. This actually calls for two traits to be found within a leader, firstly, the leader has to be willing to take risks and not play it safe when a risky opportunity presents itself. Of course many people are risk aversive and Welch is certainly not advocating jumping through flaming hoops, what he does recommend is that the leader should take risks to show the employees that it is perfectly acceptable to do so. It can be said without a shred of doubt that no business was successful without taking risks and no business ran for too long by taking unnecessary risks, but a company where the people are afraid to take any risks will miss many chances at making profits. Secondly, the leader has to accept responsibility when things do not turn out the way s/he expected they would. The case of Nelson Mandela comes to mind when he accepted the flaws in his thinking and changed his ideas according to the requirements of the time (Shriberg, et. al., 2005). It is this acceptance which Welch (2005) wants other leaders to have. It does take a big person to accept that they had been wrong about something and it is an essential trait for a leader to come to terms with their mistakes and move on. Some of the greatest political leaders like Mahatma Gandhi and Martin Luther King Jr. had this ability to share their vision with thousands of people and make them see things differently (Gardner, 1995). The leader becomes not only responsible for the finances of the company but also for its vision, mission and ethics (DePree, 1989). Jack Welch applied the same rules at GE when he had meetings with nearly all the middle and senior level managers of the company in an informal setting to share his vision and get feedback from them about the running and conditions of the company (Byrne, 1998). Welch, during his tenure at GE, put into place what he calls a 7 point program for management. This program is used for making managers into leaders by developing their business vision, changing the culture for achieving the vision, removal of hierarchies and boundaries, eliminating bureaucracy, empowering individuals and raising quality standards (Welch, 2005). This is perhaps the most important point which can be made about leadership since it is easy to create managers out of people by providing them training and education, but leadership skills come with a certain type of personality with extensive experience and added training. Works Cited Byrne, J. 1998, ‘How Jack Welch Runs GE: A Close-up Look at How Americas #1 Manager Runs GE’, BusinessWeek.com, [Online] Available at:: http://www.businessweek.com/1998/23/b3581001.htm Colvin, G. (2006). What Makes GE Great? Fortune. 153(4): 90-96. DePree, M. (1989). Leadership Is an Art. Doubleday. Gardner, H. 1995, Leading Minds: An Anatomy of Leadership. Basic. Schmitt, J. (2001). Welch has a lesson, even for small shops. Contractor Magazine. 48(10): 16. Shriberg, A., Shriberg, D., & Kumari, R. (2005). Practicing Leadership: Principles and Applications (3rd Ed). Wiley. Welch, J. (2005). Winning. HarperCollins. Read More