How to improve productivity.

When GE decided to rethink its corporate values, the company's objective was to become the most productive company in the world. GE executives believe they're well on their way.

Robert L. Frigo, Manager

Financial Services Operation

General Electric Company

To successfully compete on a global basis in the 1990s, General Electric believes a radical change is required in the company's culture-a revolution that must touch every single person in the organization every business day. We want to create a company free of the artificial boundaries of status or security. We want to grow a work ethic that plays to our strengths, like the productive energy we know resides in our workforce. The principal values we emphasize today? Speed, simplicity, and self-confidence-a significant cultural change from the hard values of the 1980s: candor, leanness, and agility, and being hard-headed but soft-hearted at the same time.

To achieve this goal, GE has launched a major initiative, called "WorkOut."

We see WorkOut as a movement, not as a program with definite timetables. In fact, we'll measure its progress over a relatively long period, perhaps as many as 10 years.

Under WorkOut, all business and organization leaders in the company are responsible for bringing about the desired cultural changes in their organizations, and the company is providing external consultants to facilitate the process.

In GE's Financial Services Operation, we're using the WorkOut concept to build awareness levels and empower our people to be more productive. Financial Services is comprised of approximately 1,000 employees in four accounting centers. These centers provide payroll services for about 175,000 employees and process about five million vendor invoices per year.

Our first objective was to eliminate unnecessary work, which is where the term "WorkOut" came from. in this phase, we are trying to build the confidence of our people. We believe that as employees develop self-confidence, they will challenge existing practices and help improve the speed and simplicity of business processes.

Like other organizations at GE, we're using two workshop formats. The basic workshop calls for 50 to 60 people to meet offsite and discuss such subjects as mindsets, team-building, communication skills, and idea generation. The advanced workshops call for smaller groups to meet for a day or less. They discuss issues and processes, and we bring in customers to participate in action-planning sessions.

For example, we invited people from our accounting firm to discuss ways to simplify our annual closing process, and we invited insurance carriers to discuss how we can improve the delivery of employee benefits. While these sessions do end up in eliminating some unnecessary work, their greatest benefit is to start a dialogue among key players who can tear down existing barriers.

The finance WorkOut road map

We started the process in Financial Services about 18 months ago, and we are about 75 percent through Phase I, which is employee initiation. Our main focus is now on Phase II, which develops the coaching skills of managers and supervisors. Phase Ill is focused on local ownership; we'll send out 18 leaders to facilitate WorkOut sessions at our four accounting center locations.

How does the program work? We encourage people to speak out in Phase 1. We encourage them to challenge the system, to challenge management practices-with no holds barred. The largest group is the nonexempt employees, and there is a fair amount of skepticism over our intentions. People are concerned about possible reprisals if they do speak out. But this is overcome in time, if management is consistent and plays by the rules.

We show our staff a traditional hierarchical organization, with management on top. We point out that, under this structure, each management level has turf to protect and defined job responsibilities, creating barriers between individuals and between functions.

The WorkOut organization turns this upside down. It puts the customer on top. Because customers' needs must drive our priorities. In fact, boundaries become less important and people share information when the primary focus is on the customer. Thus, we encourage staff to have the same message for everyone-for customers, for management, and for their peers.

What we seek is a change from the traditional style in which management decides, controls, and disciplines to one in which management spends more time at coaching, facilitating, and supporting.

After 18 months, our employees have been receptive to the concept of empowerment. But they are skeptical, as I said, about management's intentions, thinking that we simply want to reduce the number of employees. One major barrier that we didn't anticipate is that managers and supervisors have been reluctant to share power with their subordinates, even with their peers. To help break down barriers, we've eliminated time cards in our centers to downplay the distinction between exempt and nonexempt employees.

Experience has also reinforced the need for the leader of each business or each unit to be the driving force behind this change. So I have participated in virtually all of the basic workshops and have conducted regular feedback sessions three times a year with a cross-section of employees at each of our accounting centers.

It's difficult to measure the results in dollars and cents, but the benefits of WorkOut have been real:

* Speed-We have set up customer focus teams in our centers to improve response time. We've also reduced controls, trusting our people with more responsibility than ever before. And we continue to eliminate layers of management wherever possible.

* Simplicity-GE now closes its books on a quarterly basis rather than monthly. We're also consolidating jobs, going from as many as 28 job classifications in our accounting centers to five classifications.

* Self-confidence-People are setting their own goals more than before, and often they are tougher goals than management would set. People are also less reluctant to reveal problems, because there's less fear that management will kill the messenger."

A recent survey of all employees in Financial Services also measured the results of Workout. As you can see in the accompanying table, the percent of favorable responses to six statements was higher in each case in 1990 than in a 1988 survey. To me, this is a strong signal that WorkOut is working and that it is our key to moving ahead.