The Transformation of GE

General Electric was a legendary company in the 1980s and 1990s. CEO Jack Welch was considered one of the world’s top managers, and many companies tried to emulate GE’s methods. After Welch retired, the company hit a number of speed bumps. The biggest was the financial crisis of 2008. Since then, CEO Jeff Immelt has been remaking the company. It barely resembles the old GE. This story discusses the transformation in depth and the likely future of the company.

Immelt also thought it was time to revamp GE’s annual review process to make the company more palatable to younger, software-literate workers. Under Welch, GE was famous for annual reviews that ranked all its employees numerically according to their performance. Then the bottom 10 percent were fired. “The biggest cowards are managers who don’t let people know where they stand,” Welch told Bloomberg Businessweek in 2012.

“It just didn’t make sense anymore,” says Susan Peters, GE’s senior vice president for human resources, of the annual review process. The company decided to scrap them altogether, replacing them with a gentler system where employees are “coached” by their more experienced peers.

Unlike some of Immelt’s earlier management initiatives—the idea jams and the imagination breakthroughs—the new ones seemed to have the intended effects.