Jack Welch – Key Management Themes Informal Communicative Environment Informal Communicative Environment Cut Bureaucracy Cut Bureaucracy Build Efficiency Build Efficiency Foster Creativity Foster Creativity Develop People Develop People Clearly Communicate Visions & Expectations Clearly Communicate Visions & Expectations Cut Your Losses from Mediocrity Cut Your Losses from Mediocrity Six Sigma Methodology Six Sigma Methodology

Historical Parallels Jules Henri Fayol ( ) Jules Henri Fayol ( ) Began Career in Engineering Began Career in Engineering Elevated to General Manager Level Elevated to General Manager Level Closed or Reorganized Non-productive Business Units Closed or Reorganized Non-productive Business Units Acquired New Business Units to Promote Diversification and Integration Acquired New Business Units to Promote Diversification and Integration Pioneer in Management Theory Pioneer in Management Theory Managerial Ability vs. Technical Abiity Managerial Ability vs. Technical Abiity Developed 1 st Principles of Management Developed 1 st Principles of Management

Fayol’s Key Elements of Management Planning – Define & Communicate Objectives Planning – Define & Communicate Objectives Organizing – Providing Knowledge and Resources to Achieve Organizing – Providing Knowledge and Resources to Achieve People and not structure make the difference People and not structure make the difference Promoted Management Training Promoted Management Training Command – “Get the optimum return from all employees” Command – “Get the optimum return from all employees” Coordination – Harmonize Activities for Success Coordination – Harmonize Activities for Success Control – Measure Performance and make Adjustments Control – Measure Performance and make Adjustments

Fayol: Key Command Concepts Thorough Knowledge of Employees Thorough Knowledge of Employees Eliminate Incompetent Employees Eliminate Incompetent Employees Make Unity, Energy, Initiative, & Loyalty Prevail Make Unity, Energy, Initiative, & Loyalty Prevail

Chester I. Barnard – Executive Functions Formulate a Purpose Formulate a Purpose Provide Systems of Communication Provide Systems of Communication Promote & Secure Essential Efforts Promote & Secure Essential Efforts Recruit compatible employees – Group Dynamics Recruit compatible employees – Group Dynamics Maintain morale & “Informal” environment Maintain morale & “Informal” environment Maintain inducements & rewards Maintain inducements & rewards Maintain controls – training and performance measures Maintain controls – training and performance measures

Henry A. Murray ( ) Developing People - Factors of Motivation Power – Welch empowered Managers & Business Units to control their own destiny Power – Welch empowered Managers & Business Units to control their own destiny Affiliation – CEC sessions (top 500 execs), Crotonville training sessions (rising stars) Affiliation – CEC sessions (top 500 execs), Crotonville training sessions (rising stars) Achievement – 25% pay increases, 20%-70% bonuses, stock options (27,000 employees)¹ Achievement – 25% pay increases, 20%-70% bonuses, stock options (27,000 employees)¹ ¹ - Source: Business Week – June 8, 1998 (

Scientific Management & The Hawthorne Studies Linked to Six Sigma Methodology Linked to Six Sigma Methodology Statistically define, measure, analyze, design, verify Statistically define, measure, analyze, design, verify Create the best environments to accomplish work Create the best environments to accomplish work Eliminate factors that reduce quality and that waste time & energy Eliminate factors that reduce quality and that waste time & energy Implement conditions with the best opportunity for Success Implement conditions with the best opportunity for Success Six Sigma goes maximizes employee contribution and the effectiveness of designs, systems, and processes. Six Sigma goes maximizes employee contribution and the effectiveness of designs, systems, and processes.