July/August 2001 - VOLUME 22 - NUMBER 7& 8
T h e C a s e A g a i n s t G E
By Robert Weissman
For two decades, Chief Executive Officer Jack Welch has pushed General
Electric to operate at the extremes.
More than a decade ago, labor analysts Jane Slaughter and Mike Parker
began describing the introduction of Japanese work management schemes
in U.S. factories as management by stress [see Management
by Stress, Multinational Monitor, January/February 1990]. The idea
of the schemes was, and is, to stretch production arrangements so as to
eliminate any slack. Under this approach, Slaughter and Parker explained,
all workers should be working their hardest, all the time, and the standard
of what constitutes hard work should constantly be elevated.
Under Jack Welch, GE has openly embraced the management-by-stress model
as much as any company, applying it throughout the production process.
Welch has displayed a fondness for faddish jargon, introducing programs
with names like Six Sigma, most of which reflect management-by-stress
A series of internal GE documents reveals what GEs pursuit of management
by stress means in concrete terms. They show the company consciously seeking
to maintain a high level of tension among workers; pressuring suppliers
to move to low-wage countries by threatening to deny them GE contracts
if they refuse; and operating management training schools that teach executives
and mid-level managers how to implement management-by-stress and union
Maintain a High Level of Tension
A Positive Leadership Development memo discusses the tension-productivity
correlation. While warning that too much tension can undermine employee
efficiency, it instructs that if an individual/organization has
low tension, then a raising of that tension level would be appropriate.
Herzberg refers to this as KITA, an acronym for Kick In The A-- (Pants).
The memo notes that most people suffer from high tension, meaning that
techniques to reduce tension counseling, additional training,
lending an ear, giving recognition, allowing the person to do their own
thing, etc. should be employed. However, if approaches
used to reduce tension do not result in increased productivity, a new
assumption of low tension can more safely be made.
In this case, it is time to turn to the KITA approach. Maintaining
a high level of tension through the KITA approach does maintain acceptable
productivity levels, the memo notes. It requires constant
time and attention of the leader, because productivity will fall without
that false tension being maintained.
A companion 1991 document focuses on team manager training. It contains
a series of modules to make managers more effective. Module Four instructs
supervisors that they have five obligations: to appoint the right people
for positions; to make sure employees know their responsibilities; to
properly train employees; to set standards for professional pride;
and to weed the garden.
When you have met your obligations to an individual, Module
Four states, and they continue to fail to live up to the job description
or the Teams expectations, they must be terminated, or replaced.
The KITA approach is designed not only to squeeze workers physical
labor, but their mental labor and ideas, says Chris Townsend, political
director for the United Electrical Workers, which represents GE workers.
The tension from this management style is pervasive, Townsend says. At
meetings, workers should sit up at the table. If you lean back, your
posture suggests you are a potential weed, he says. With the massive
layoffs, job migration and outsourcing at GE in recent decades foremost
in employees minds, the fear of being weeded out becomes internalized.
A written presentation from a GE supplier company, Ametek, reports on
an April 1999 GE Aircraft Engine conference for suppliers, and indicates
the pressure GE applies to suppliers.
The GE meeting, held in Monterrey, Mexico concerned supplier migration.
At the meeting, according to the Ametek materials, GE set the tone
early and succinctly, telling suppliers to move their operations
from the United States to Mexico, near GEs newly migrated facilities.
The message from GE, according to Ametek, was:
More than 100 people attended the GE conference, according Ametek. They
were told that the average worker pay is $6 a day, and that Mexico has
friendly unions and a long-term low-cost labor market.
Multinational Monitor has also obtained a GE presentation made a week
after the Monterrey conference.
The April 29, 1999 Powerpoint presentation, GE Aircraft Engines:
Global Sourcing, shows that GEs supplier migration strategy
is limited neither to Mexico nor to the Aircraft Engine division. The
document divides the world into three regions. In a page titled Changing
the Game - Staffing for a Global Presence! GE identifies three sourcing
poles: Latin America, Central and Eastern Europe, and Asia.
The Global Sourcing document also indicates that other GE divisions are
set to pursue the supplier migration strategy. These include GE Appliances,
GE Transportation Systems and GE Power.
The GE document describes a migration process by which suppliers
are approached about migration opportunity, asked to decide
their interest level, invited to a migration seminar, and then surveyed
to determine further interest level. This was indicated for the first
quarter of 1999.
It also describes a broader eight-point migration strategy
for the second quarter, by which:
A Powerpoint presentation for a 1999 Global Sourcing GE Transportation
Systems meeting in Boca Raton, Florida highlights similar themes. Urging
that each business team has to develop a plan to overcome its hurdles
of resistance, it lists the following as among opposing forces:
Key to overcoming these obstacles, the presentation continues, is strong
top-down leadership that sets aggressive goals and demand[s]
results, and a successful effort to bring good suppliers with
you to emerging markets ... make them your global suppliers.
The Jack Welch way is taught to rising executives at an in-house campus
in upstate New York. GEs Crotonville operation offers Corporate
Leadership Development to managers who want to climb the corporate
GEs goal of becoming the most customer-responsive and productive
company in the world depends first and foremost on people, says
the 1998 Crotonville catalogue. Recognizing this fact, the Chairman
has charged CLD-Crotonville with providing educational interventions that
will reinforce the values, sharpen the skills and develop the leadership
talent needed to reach this goal. The CLD-Crotonville courses in this
catalog help us fulfill this mission.
A New Manager Development Course (NMDC) is mandatory for first-time managers
within their first year of appointment. This course is for first time
managers to successfully lead the GE way. The course intends
to teach how to: identify leadership strengths and development needs
through a 360 assessment; develop business strategy, including through
the Change Acceleration Process; and prepare an action
plan for leading and managing direct reports.
Other courses are more pointed, focused on finance, sales and sourcing
decisions. The courses typically run one day to a week. Tuition is charged,
with, for example, $1,750 charged for a four-day Service Strategies Program
and $800 tuition required for a two-and-a-half day Human Resources Orientation
The catalogue is laced with the New Age business jargon that Welch uses
to describe his hardball tactics.
Of particular interest is a Personnel Relations Leadership Seminar,
which provides an understanding of GEs non-union philosophy,
practices and strategy used within the United States. The seminar covers
legal issues, why and how organizing starts and proceeds, and union campaign
tactics and strategies used by both the Company and the Union.
Participants in the seminar are told they will become adept at
using the UA [UA stands for union avoidance] tools found most effective
to assess union vulnerability and become familiar with methods to reduce
One of the course learning objectives is to inculcate anti-union sentiment
in managers. The stated goal is to provide participants with the
belief that maintaining a union-free status of their associates is mandatory
for maximizing personal, business and employee objectives.
There is little doubt that global management by stress has contributed
significantly to the giant leap in GEs share value during Welchs
reign. But that jump has come at a price, which the GE documents suggest
has been paid in considerable part by employees and communities that host
or hosted GE facilities.