Leadership and change management. The General Electric case study

4 
 
 
 
Introduction 
 
 
 
“Yet most organizations must change, and change profoundly, if they’re to stay alive” 
In a market that changes more and more rapidly managing changes is basic for every 
kinds of firms, from multinational to small-medium enterprise. Organizational changes 
shape the way firms act, representing a big opportunity to get competitive advantage, 
but also a big threat if companies can’t perform it in the right way. Implementing 
changes, making it an integral part of the company is not easy, it requests that people 
changes their habits, their way of thinking, their loyalty. Many problems may arise dur-
ing the change process, the resistance of employees afraid of newness, issues with the 
integration of the new practices within the company, lack of the right skills for imple-
menting the innovations. For these reasons it has become essential to manage change as 
well as possible. A manager can run a company, but for the implementation of innova-
tions is necessary a real guide: The Leader.  
The leader has to drive the change process within the company, thanks to his charisma 
and his ability to motivate he must establish the direction towards which move, aligning 
people, creating a cohesive group, inspiring and motivating workers and removing all 
the obstacles that may occur during the change process. 
The main goal of my dissertation concerns the leadership and its application for the 
change management, explaining the entire change process and how a leader can help a 
company to implement innovation for getting a real advantage. 
The first chapter of thesis is dedicated to leadership. Will be examined the most im-
portant theories about the theoretical evolution of the concept, starting with the theory 
of traits, explaining the situational and behavioral theories, arriving to nowadays with 
the transformational leader and the empowering leadership. For each of these theories 
will be done a critical analysis trying to understand their strengths and weaknesses , and 
the limitations for which they were exceeded by most recent theories. Will be described 
the various styles of leadership, autocratic, democratic and Laissez-Faire, observing 
how these styles influence companies and how the leader really acts within the organi-
zation, taking in consideration also the process of leadership created by J. P. Kotter. 
At the end of the chapter will be done a wide differentiation between leader and manag-
er, explaining how two figure that might seem so similar are actually very different and 
which one is the right mix to lead a company successfully.
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The second chapter is the central one. In this chapter will be analyzed business changes, 
and how them can be managed to bring benefits within the organization. Will be de-
scribed the various types of changes, the change kaleidoscope with all the contextual 
features that can influence an organizational change and the process used by manag-
ers/leaders to implement innovations, considering the multi-step model by Kotter. Con-
tinuing in the chapter there is the examination of issues related to the process of change 
management, like the resistance of a single worker or of a group and the tactics to over-
come these resistances. In the second part of the chapter will be evaluated how the 
change leader acts to favor innovations, explaining Roger’s models about the innovation 
decision process and the adopters’ categories. After that will be examined the transfor-
mational leader, his features, his enduring skills, and how he can overcome the change 
manager in implementing and consolidating changes. In the final part of this chapter 
there is an overview of the other change agents, their role, how they can influence the 
change process. Finally there is the explanation of negotiation, and how it can be an im-
portant tool during the implementation of changes. 
The third and last chapter examines the case study of the American corporation General 
Electric. For the first will be analyzed the strategies and values that characterize the 
company since it was born in 1892 and how General Electric manages the change pro-
cess. Then will be presented two of the most important leaders in the last 50 years, Jack 
Welch and Jeffrey Immelt. Two people with two leadership style completely different, 
and yet able to run the same company to success, creating the right assumptions to de-
velop their way of leading. Welch with his autocratic style, his domineering ways, and 
his vision, and Immelt with his openness with the workers, his focus on the external 
communication with investors and customers, his democratic style, a perfect transfor-
mational leader.  
The chapter ends with a critical analysis of both leaders, their styles and how they have 
influenced in a very different way the entire General Electric.
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CHAPTER 1 
THE LEADERSHIP AND ITS THEORETICAL EVOLUTION 
 
 
 
 
 
 
 
 
 
 
1. Definition of leadership 
In the past 60 years as many as 65 different classification systems have been developed 
to define the word leadership
1
. 
One such classification system is given by Bass
2
, he suggested that some definitions 
view leadership as the focus of group processes. From this perspective, the leader is in 
the centre of the group, managing group’s activity, and embodies the will of individu-
als
3
. Another set of definitions conceptualize leadership from a personality perspective, 
suggesting that leadership is a combination of special traits owned by some individuals. 
These traits enable individuals to induce others to accomplish tasks
4
. In this way leader-
ship is an authority that comes from an individual natural talent. The leader assumes the 
role of head of organizations, associations, groups, because his decision and ideas, his 
behaviours and attitudes influence significantly the members of community: the follow-
ers. Despite the multitude of ways in which leadership has been conceptualized, the fol-
lowing components can be identified as central to the phenomenon: 
                                                 
1
 Peter G, Northouse, leadership: theory and practice, SAGE publications, 2012 6
th
 edition, page 2 
2
 Bernard M. Bass is one of the most important supporter of transformational leadership. He has spent 
over 25 years on research and applications to management development of transformational leadership. 
He published Handbook of leadership, one of the most important works about leadership.  
3
 M.B. Bass, leadership and performance beyond expectation, New York the Free Press, 1985, page 5 
4
 Peter G, Northouse, leadership: theory and practice, SAGE publications,2012 6
th
 edition, page 2
7 
 
 
 
 Leadership is a process, it means that leadership is more than a linear and unidi-
rectional event; 
 Leadership involves influence, this aspect suggests that a leader must have the 
power to affect followers, without influence leadership does not exist. However 
some researchers, like Guest (1987), said that influence is a reciprocal process 
because managers exert leadership influence over subordinates, and subordinates 
exert leadership influence over managers
5
; 
 Leadership occurs in groups, they are the context for leaders. The group can be a 
small task group, a community group or a large group encompassing an entire 
organization, but without a group, leadership cannot occur 
6
; 
 Leadership involves common goals. This is a very important point, because 
without a common purpose, leadership is useless; leaders direct their energies 
towards individuals who are trying to achieve something together.  
Defining leadership as a process means that it is not a trait but a transactional event that 
occurs between leaders and followers. Process implies that a leader affects and is af-
fected by followers
7
.  
Leadership can be seen as a process of generating changes, too. This change is not im-
posed by the leader it is a sharing process of the same purpose and values. Leaders have 
to be promoters of changes, they must encourage changes, motivating people, helping 
them, but they shouldn’t impose changes, because forcing employees can lead to a 
negative atmosphere inside organizations and resistances by workers.  
A leader of change is an individual who influences the commitment of any key group 
within the organization. His effectiveness resides in the capability to manage employee 
resistance molding their behaviour towards the implementation of successful changes
8
. 
 
1.1  Leadership’s styles 
As seen before leadership is the ability to lead people inside an organization to a com-
mon goal, but how a leader can do that? 
Researchers distinguish three different leadership’s styles:  
                                                 
5
 M.M. Kan and K.W. Parry, A grounded theory of leadership in overcoming resistance to change, The 
Leadership Quarterly, 2004, Vol. 15, Issue 4, page 467-491 
6
 Peter G, Northouse, leadership: theory and practice, SAGE publications, 2012 6
th
 edition, page 5 
7
 Peter G, Northouse, leadership: theory and practice, SAGE publications, 2012 6
th
 edition, page 6 
8
R Bejunaru, C. Baesu, leadership approaches regarding the organizational change, The USV annuals of 
economics and public administration, Vol. 13, Issue 2, 2013, page 147-153
8 
 
 
 
- Autocratic (authoritarian) leadership. Leaders are central authority figures who 
retain a high degree of control and power over their followers. They take deci-
sions for the entire group without advices or opinions from followers
9
. The lead-
ership literature generally identifies autocratic leadership as a leader type not 
taking care of the socio-emotional dimension of groups, such as maintaining 
group cohesion and promoting the group as a viable social entity
10
.  
This style of leadership allow a quickly solution for problems because there is 
only one person, the leader, that takes decisions for everyone. If leader has good 
skills he can make few errors, taking the most appropriate decisions for the 
group. This style is particularly suited for newbie, when there is a frequent viola-
tion of rules and regulation inside organizations, when the leader is the only re-
sponsible for the decision, when tasks are fairly simple, or if the group is very 
large. Disadvantages of this style are that employees have a big dependence 
from the leader, so they lose trust in their own skills, they are unmotivated, so 
they do their job because they are forced, and not because they like it, so this 
situation could create a sense of hostility and dissatisfaction inside the group. 
- Democratic leadership style. Leaders and followers make decisions together and 
jointly determine courses of action. They are participative leaders that consult 
the group for taking decisions
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. Using this style the leader involves employees, 
so they can feel motivated, an active part of the company. Leader expresses trust 
in workers, asking for their opinion and feelings.  
This style is particularly recommended when member’s satisfaction and personal 
commitment are crucial, for example in case of big changes inside the organiza-
tion. Researchers say that democratic leadership is the perfect style for change 
management and for complicated tasks that require lengthy discussions. Disad-
vantages of this style are that a decision can be time and resources consuming, 
and in the end is the leader-manager that takes the final decision even if employ-
ees do not agree. 
                                                 
9
 C. Hamilton, A guide for business and professions, Cengage Learning, 2010, page 14 
10
 D. De Cramer, emotional effects of distributive justice as a function of autocratic leader behaviour, 
journal of applied social psychology, Vol. 37, issue 6, page 1385-1404, 2007 
11
 C. Hamilton, A guide for business and professions, Cengage Learning, 2010, page 18