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New Yorks Hudson River was heavily polluted from several of GEs manufacturing plans
in New York. Over a course of 35 years 100,000 pounds of polychlorinated biphenyls (PCBs)
were released into the river. PCBs are toxic to humans and animals, causing cancer and other
illnesses. The outcome damaged the fishing industry on the Hudson River, and the chemicals
spread down 200 miles of the river into the ocean. The conclusion by the Environmentalists was
to dredge the bottom of the river to remove the toxins. GE was found liable for the pollution, but
Welch refused to take any action to clean up the mess. He claimed it would be a nuance, and
persuaded the community that it was an ineffective solution; he even hired lobbyists, a former
senator, and six former House members to fight against the cleanup.
The GE pension fund had a surplus of 21 billion and covered around 485,000 employees
and 195,000 retirees. Inflation hit in so retirees were unable to live off their 1965 pensions. GE
responded with a 15 to 35% increase in 2000, but there was a 60% increase in prices, so retirees
requested for a more generous increase. Welch refused to accommodate the requests. With the
abundance of leftover money in the pension fund GE was able to apply it to revenue, increasing
earnings to 13.7% (154). By ignoring retirees requests, GE was increasing corporate profits.
In September 2001, Jeffery Immelt took Welchs CEO position and applied vastly
different values to GE. . Under Immelt, his tactics were much different; he went out of his way to
enhance society. He cleaned up past pollution in the Hudson River at a cost to GE of $1 billion
dollars. He kept in place the ranking process for managers, but did not hold it to such strict
standards, Immelt even made an effort to enhance GEs diversity issues that Welch ignored. GE
transformed into a company that in 2008 it was the second most socially responsible company
among the top 100 global corporations. Immelt was not as concentrated on the shareholders, but
more on society.
GE in the Welch era did fulfill the corporate duty to create wealth; he made fortunes for
managers and directors, and paid taxes. Welch did fulfill the economic responsibilities to society,
but he did not take responsibility for the pollution of the Hudson River. GE was careless, and
was not willing to make right to the pollution they created.
GEs priorities under Welch represented practical methods, like the vitality curve. Welches
management style appeared cruel to some, because of the 132,000 employees he cut as a result of
his vitality curve ranking system. Although it appears Welch got carried away with his belief that
exactly 10% of employees must be cut, but this tactic is what lead GE to the outcome he wanted,
high profitability. Welch took the necessary actions to save money, even if it was at the expense
of employees. Welchs focus was on cost cutting efficiency, not supplying jobs. Implementing
strict employee ranking, it served as an effective elimination system cutting out poor preforming
employees. This method leads to employers working hard to stay on the top, and removing the
employees with inadequate performance, making the work place more efficient. The type of
employees in a firm reflects the business you create, so by retaining the profound performers the
company will see better results. It is not wrong to see employees as costs of production, because
having excess employees is a large expense. GE increased their efficiency by having productive
workers, and weeding out he bad. The concentration was on saving money, and raising profits.
An overflow of GEs pension fund was a significant factor to their competitive financial
statements. This is a strong play on accounting rules by Welch; he made the decision to limited
pension increases to benefit the company. Welch ignored the requests for more by ex employees,
but he did so for the better of the companies financial standing. By law, GE did nothing wrong,
so because of this decision GE and its stockholders were able to reap the benefits. If Welch
agreed to the larger increase, the company would have fewer revenues to report, so their financial
standing would be weaker, therefore not putting the stockholders needs first. This was an ethical
in 2000. (151) It is clear that GE under Welch served the economy greatly with profits they
created, but he took the cost saving methods too far when he ignored the pollution of the Hudson
River. Welch overlooked corporate social responsibility by refusing to take action to cleanup the
pollution GE plants released into the Hudson River, even though they were proven liable for the
contamination hurting the surrounding communities and destroyed its fishing industry.
GE did not conform to correcting the adverse social impacts they caused from polluting
the Hudson River with PCB. The responsible action would be to accept their accountability and
the effects that the pollution had on the community. Leaving behind a mess is not fair to society,
so Welch should have taken the cleanup expense without hesitation, restoring the River. As the
CEO he should have gone beyond dredging the River, by taking other steps to make the firm
more environmentally friendly. Welch should have exceeded the requests by also giving back to
the community that was affected. GE could have acted in a socially responsible way, by
accepting the liability, and agreeing to remove the dangerous illegal deposits. The refusal to
clean up the mess proved that in this case Welch worked too much for profit and not enough for
society. Welch left the Hudson River societys problem so GE could save money. By not
protecting societal assets, GE under the Welch area was not socially responsible.