Jack Welch Case Study

751 Words4 Pages
Jack Welch implemented huge changes at GE and achieved tremendous amounts of profits. However, when it comes to this case and CSR, GE in the Welch era did not fulfill this duty. Among the numerous acts that gave the company a bad reputation are the elimination of over 150,000 jobs, the demoralization of managers through a controversial ranking system, and placing priority on profits over pension funds. GE showed a lack of CSR when they released PCB chemicals into the Hudson River for 35 years. These chemicals polluted the river in New York City as well 200 more miles downstream to the ocean; the event caused major health problems and destroyed the fishing industry. GE did not show concern for protecting the river or the humans who relied on…show more content…
With regard to the General Principles of CSR, GE meets some of the principles, but fails to meet others. GE excels at the first principle: corporations are economic institutions run for profit. The second principle mentions all firms must follow multiple bodies of law. During the Welch era, GE had some civil and criminal transgressions. The company struggled to abide with this principle. The managers at GE were told to enforce integrity but also had high pressures to perform on them. With regard to the third principle here, managers may have not been acting ethically at times, but the emphasis on integrity makes us hope that they meant to. The fourth principle states corporations have a duty to correct adverse social impacts they cause. GE failed to meet this standard in the case of the PCBs and the large number of layoffs. Both caused great social impacts, and GE failed to correct them during the Welch era. The fifth principle is about social responsibility varying by company by size. GE, being a huge company, had a large social responsibility. However, Welch didn’t agree with that, and the company did little about CSR. The sixth principle states managers should try to meet legitimate needs of stakeholders. Employees are part of the stakeholders of a company; with the huge amounts of layoffs, GE hurt their stakeholders. They did, however, make large profits that benefitted other stakeholders. The article doesn’t mention about GE’s underlying social contract which is the…show more content…
Welch cut many jobs in order to make more money in a situation where shareholders ranked above employees. A pro: the company was able to achieve more profits, but not without cost to society and to employees’ families. Welch and his fellow executive board members made huge amounts of money and glimmered in the spotlight. Cons of ranking the shareholders above employees and other stakeholders include the negative impacts of layoffs on families, harm to society from legal issues, river pollution, and a competitive work environment where managers felt insecure. It’s not wrong to see employees as a cost of production. Production would be impossible without employees which come at a cost. However, employees provide more than only work for a company. People with different backgrounds with different opinions and experiences contribute differently to the company. Shareholders are important to a company, but employees are vital are should have been prioritized by
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