Impact of General Electric Choosing the Six Sigma Methodologies

Subtitle: This management overview of General Electric will show how moving to the Six Sigma quality initiative meant going from thirty five thousand defect- per- million operations- to fewer than four defects per million for GE.

The General Electric Company can be tracked back to Thomas Edison himself. In 1892 there was a merger of Edison General Electric Company and Thomas- Houston

Electric Company that created General Electric Company. (ge.com, 2008) It is true that general Electric has been in existence for a long time by any standards. In fact they are the only company listed in the original Dow Jones Industrial Index in 1896 and continues to be listed to this day. Today’s General Electric Company consists of six businesses. They’re versatile working with everything from diversified technology to media to offering financial services. The products that are produced by General Electric Company range from aircraft engines to media content. General Electric Company is servicing people in over one hundred countries, and employs over three hundred thousand people. Though General Electric Company has made it through the ages, you would never know by looking at them. They have managed to stay vital and are just as influential today as they were in the late nineteen hundreds. In fact there were many of these business altering changes made in the time of John F. Welch, which began in 1981 and lasted until he retired in 2001. He made many changes that at the time might have been seen as drastic and perhaps unconventional, but these changes resulted in what no one can deny are very positive outcomes. In fact when he entered the company it had a net worth of nearly fourteen billion dollars and when he left the net worth of almost five hundred billion. General Electric Company has grown to become a successful, multifaceted company that has made many changes over the years; these changes have brought together many aspects of the company, and made them inseparable.

According to General Electric Company’s web site their statement on their culture is as follows.
“At General Electric, we consider our culture to be among our innovations. Over decades our leaders have built General Electric’s culture into what it is today- a place for creating and bringing big ideas to life. Today, that culture is the unifying force for our many business units around the world.”
(Ge.com, 2008)

This place for creating and bringing big ideas to life has shown itself over the years. Not only is General Electric Company highly innovative in it’s products and services, they have also created an environment of free and open ideas. They will listen to proposals from any employee no matter the status. What’s more is that in an interview that John F. Welch did in 1999, he said that they bring in people of all ranks and functions when there is a problem or an opportunity. Examples he gave were “Managers, secretaries, engineers, line workers, and sometimes customers and suppliers- together into in a room…” After these differing people were all in one place they would begin to search for answers and then they would act on the information discovered. (Abernathy, 1999) It is this that has been called their boundryless organization. They do not keep ideas and information to themselves because they believe they might need it later or they think they might not be heard. The organizational culture of General Electric Company is more open and free flowing than their competitors.

Through the 1980’s and the 1990’s General Electric Company developed their unique style of management and culture by implementing new concepts. They put Work Out, and six stigma into place and made themselves “the stuff of the global management culture.” (Colvin, 2006) These were new and rarely used practices that General Electric Company put into place and made them succeed. These practices have managed to affect all ranges of the organization, but they are obvious in the culture, motivation, as well as greatly changing the way they run their human resources.

General Electric Company has made all of their employees, no matter their standing; continue their education in these areas. It is their belief that through continuing to learn and then teaching each other is the path to excellence. As John F. Welch puts it, “Our businesses do learn from each other. They’re a wellspring of ideas and learning, with tens of thousands of people playing alternate roles of teacher and student.” (Abernathy, 1999) It is this thought process that has not only kept them afloat all of these years but has also made then a success to learn from. In fact, out of the past ten years, General Electric Company has been voted the most admired company by Fortune magazine. It is not because they have the best profits or the highest stock, but because they are strong and reliable. They are always one or two steps ahead of the pack with their innovative practices. “The results of General Electric Company’s seamless, constant reinvention of itself are that while companies are constantly emulating General Electric Company, they’re frequently a step or more behind, and they know it.” (Colvin, 2006) This article also explains that in order for the General Electric Company to receive this award year after year, or even for just one year, they would have to be voted in by other business professionals. It is not a panel of people that might or might not be allied to General Electric, but it is a panel of people that might or might not be in competition with the General Electric Company. It is a sort of MVP of the business world. “Practically everyone in business realizes this. General Electric Company’s record of being ahead of the game is remarkable.” (Colvin, 2006)

This nearly immaculate record is part of the employee’s motivation. According to the General Electric Company’s web site’s page on their people
“General Electric attracts leaders with an extraordinary combination of attributes; vision, passion, and deep sensitivity to the big issues that challenge the world around them. A remarkable thing happens when you bring together employees who are driven to make a difference; they do.”
(ge.com, 2008)

These people are motivated because there are new and free flowing ideas all around them. They are working in a fast paced and ever changing company. There are also many people above and around them that are trained to be there to motivate. I am sure it is also motivating to know that there are consequences for performing below the bar.

The Motorola Company pioneered the six stigma, and accomplished success. After their success the Allied Signal embraced it and experienced the same return of success. This history of the six stigma’s success made it much easier and faster for General Electric Company to embrace the system to find their own positive results. (Abernathy, 1999) John F. Welch explains six stigma as:

“The six sigma quality initiative means going from approximately thirty five thousand defect- per- million operations- which is the average for most companies, including General Electric- to fewer than four defects per million in every element of every process that General Electric engages in everyday, from manufacturing a locomotive part, to servicing a credit card account, to processing a mortgage application to answering the phone.”
John F. Welch (Abernathy, 1999)

When making the decision to implement six stigma there were many positives but two that standout the most were the fact that all of the companies executives desired the concept of having absolutely no defects mo matter the amount of services or products, while that is slightly unreasonable, having three point four is as close to perfect as can be expected. The other reason that stood above the rest was to improve financial performance. What better way to do that than to make you product need less repair or even needing to be completely redone. Having less mistake will inevitably cost less. The way that General Electric Company monitors the six stigma process is through quarterly customer surveys and manufacturing checks done daily by the internal engineers. (Henderson & Evens, 2000)

In order to make sure that their employees were armed with the information they would need to have to succeed, General Electric Company gave every employee thirteen full days of training. Also in order to make sure that their employees complied with the training, General Electric Company made it mandatory to have completed the training in order to be considered for a promotion. These are great steps, but they also seem small and simple. But in reality there is no better way to ensure the triumph of a change like this one than to inform and educate your employees thoroughly on what the change is and how it will work. (Henderson & Evens, 2000)
These quarterly evaluations are key to an employee earning a promotion, keeping their current status, and even keeping their jobs at all. This is the human resources departments’ responsibility. General Electric Company works hard to develop their employees and make them stronger, but they are also well known for evaluating them and then acting quickly on the results. It is a little loved fact that every year General Electric Company fires the bottom ten percent of the employees. “Most companies, frankly, do not have the stomach to give frequent, rigorous evaluations- and fire those that need to be fired.” (Colvin, 2006) This must not makes things easy for those in the Human Resources Department of General Electric. They know that every year they are going to have to fire a good number of people, but the truth of the matter is that most of those employees that are losing their jobs probably see it coming. They know what is in their evaluations, and what is more than that, they know what they are doing at work and how well they are doing it. According to the new CEO of General Electric Company, Jeff Immelt, “The ability to demand high performance without being heartless has been a part of General Electric for a long time.” (Colvin, 2006)

The truth of the matter is that there are many wonderful things that are happening at the General Electric Company. If they were not happening the company would not be being voted for by their competitors as the most admired company in America. Over the years they have had their ears to the ground looking for that next big idea that will either make them more successful than they already are or will make them better at what they are doing. The more noticeable changes like the six sigma are making every aspect of the company work on the same issues. There is also fact that there are times when even a man down working on the line might just be pulled in for some brainstorming with the executives that has made this company so desirable to work for. Because they are in fact desirable they have a staff of employee that want to be there and are motivated to do what they need to so that they can stay there or even move up.

“What sets it apart is a culture that uses this wide diversity as a limitless source of learning opportunities, a storehouse of ideas whose richness is unmatched in world business. At the heart of this culture is an understanding that an organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage.”
John F. Welch (Abernathy, 1999)

It is because of this that General Electric is thriving and will continue to do so. There are departments that are segregating the company but at the same time the same company is using those differences as a tool. General Electric Company has grown to become a successful, multifaceted company that has made many changes over the years; these changes have brought together many aspects of the company, and made them inseparable.

References
Abernathy, D. J. (1999). Leading-edge Learning: two views. Training & Development, 53, 40-42. Retrieved December 16, 2007, from Thomas Gale database.
Colvin, G. (2006, February 22). What makes GE great? CNNMoney.com. Retrieved February 2, 2008, from http://money.cnn.com/2006/02/21/magazines/fortune/mostadmired_fortune_ge/index.htm
G E .com. (2008). Retrieved January 11, 2007, from http://www.ge.com/company/businesses/factsheets/corporate.html
Henderson, K. M., & Evens, J. R. (2000). Successful Implementation of Six Sigma: Benchmarking General Electric Company. Benchmarking, 7, 260. Retrieved February 2, 2008, from ProQuest database.
Maccoby, M. (1991). Closing the Motivation Gap. Research Technology Management, 34, 50. Retrieved February 8, 2008, from ProQuest database.
Williams, W. (2008, January 2). Selfishness is motivation that gets things done. Deseret News. Retrieved December 17, 2007, from ProQuest database.

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