Kit Kwan

Hv6255

General Electric under the leadership of Jack Welch

According to the text, corporate social responsibility is the corporate duty to

create wealth by using means that to avoid harm to, protect, or enhance societal

assets. General Electric in the Jack Welch era did not fulfill the duty because of the

following: Job elimination within the United States through layoffs, subcontracting,

and outsourcing to other countries. A Defective evaluation system hurt the morale of

employees who were not on top. Pollution in the Hudson Rivers, GE fought the

extended political battle against the environmental cleanup on own expense. Unfair

pension fund among the retired employees triggered the protests against GE.

Criminality at GE, the company committed a long string of civil and criminal

transgressions.

Removing the working opportunities within the United States

A big bunch of people were dismissed when Jack Welch was in charge as the

chief executive officer in general electric. There were 404,000 GE employees before

he took over the top management position, but only 313,000 left when he retired. In

order to fulfill the corporate social responsibilities, GE, as an American based

company, was supposed to protect social assets, which was to maintain a certain lever

of local employment, but it did a ruthless cut on jobs for profit oriented purposes

instead. Since GE in the Welch era had a ultimate desire gain more profits, the

company simply transferred most of its facilities and related job opportunities to the

low wages paid, third-world countries. According to Ed Fire, the union’s president,

assumed two-thirds of the 30,000 local lost jobs were the cause of outsourcing.

Using the vitality curve to evaluate employees’ performance

GE in Jack Welch era changed its ranking from five to three, and created the

vitality curve system. This system categorized the top 20% performers as As, the

middle 70% as Bs and the bottom 10% as Cs. This evaluation system did not only

discourage teamwork by pitting people against each other, but also promoted back-

stabbing behaviors. The system was also defective because of its inflexibility to

contribute unfair results when high and low performing units must classify managers

at the same way. In fact, GE cruelly ranked the bottom 10% as inefficient workers and

fired them whenever necessary. The vitality curve created a high-performance

management team, but it failed to create diversity at GE. Since Welch was the

management icon at the period, many other corporations tried to copy the ideas for

raising the performance, and the whole society became viciously competitive under

the introduction of this unfair evaluation system.

Pollution in the Hudson rivers.

According to the text, for 35 years, several GE manufacturing plants in New

York released polychlorinated biphenyls (PCBs) into the Hudson River. Since PCBs is

toxic to humans and animals, and is the cancer agent in test animals and humans; it

was outlawed in 1977. In 1983, the Environmental Protection Agency made the river

a Superfund site because of the heavy released of PCBs by GE. After realizing the

fact, GE took action to refuse removing the dangerous deposits on its own expenses,

and to hire its own experts to fight the liabilities. At last, GE complied to ease the

problems with the cost of 460 millions dollars. However, GE polluted the river but

refused to clean up became a disgrace in its history and a consideration of unethical,

irresponsible to the corporate social responsibility.

Unfair pension fund

GE announced to increase on employees’ pension fund from 15 to 35% in year

2000 under the pressure of unions and pensioners. However, the prices have been

rising since 1965 by 60%, retirees actually lost ground. GE’s pension fund was

observed to be very low comparing to other gigantic companies within the industry.

Jack Welch worked at GE for forty years and received 357,000 dollars pension

monthly while and other employee worked the same length for only 737 dollars.

Civil and criminal acts at GE

During Jack Welch’s tenure, GE committed a long string of civil and criminal

transgressions. There were thirty nine law violations, court-ordered remedies and

fines in 1990s. Many of them were pollutions hazards from its plants and other

facilities. Others were consumer fraud and defense contracting fraud. Although in

most of the business reviews, GE was ranked as one of the top performance company

in the United States history, it did not obtain respects from societies.

GE became the most profitable company under Jack Welch’s hand without any

dispute. Obviously, it did not reached Fridnan’s view that the only social

responsibility is to increase profits without violating the law, Jack Welch did break the

law to improve the performance of the company. In fact, GE selfishly chose to do

whatever possible by transferring the wealth from societal assets to make its

shareholders rich. It was a wrong approach for GE to take advantages on employees

and other stakeholders to enrich shareholders; and cut employees’ job

opportunities/benefits as the result cost of production. I believe GE should have a

better balance on assuring financial success while preventing harm to, but to protect,

or to enhance societal assets.