CROTON-ON-HUDSON, N.Y. -- Just inside the entrance to the main building at General Electric Co.'s sprawling management development center here is an amphitheater-like classroom known affectionately -- and officially -- as The Pit. A couple of times a month, GE Chairman John F. Welch Jr. comes to stand at the foot of The Pit and take tough questions from GE managers taking classes at the center.

Protected by the anonymity of numbers, the several dozen participants at the sessions pitch gripes and opinions at the chairman.

Welch, who gives as good as he gets, long has relished these sessions as a way to take the pulse of his huge company. And two years ago, he hit upon a way to put the format to a constructive use in rethinking GE.

Traveling back to GE's headquarters in Fairfield, Conn., aboard a company helicopter, Welch and James Baughman, GE's manager of corporate management development, were marveling over the particularly pitched nature of that day's session with 150 GE managers in The Pit. "These people were pretty outspoken about, 'Why can't we get the money to fix this?' " Welch recalled. "They were quite specific about their business -- 'Why aren't we doing this in our business?' "

Said Baughman: "We seemed to have found a way to open them up and get them talking about the things that had been bugging them over the years, particularly about the slowness of the pace of our ability to move."

Over the noisy swirl of the helicopter rotors on the short trip, Welch and Baughman wondered "if we could only find a mechanism where {employees} could get in front of their leadership and not have retribution," Welch recalled. By the time the copter had touched down, the two men had dreamed up a unique program called "Workout."

The name was taken from the company's then-current program to install physical fitness centers in many of its facilities. And the intent is similar. Welch envisions Workout as a way to trim the fat in GE's bureaucracy, to reduce what he calls "administrivia" and then to attack even larger questions about GE.

Welch is challenging GE's 300,000 employees to use Workout to fundamentally question the way the company conducts its business. Through a series of town-meeting-like Workout sessions throughout the company, GE employees are examining all sorts of company practices, with promises of no retribution and immediate feedback -- and action -- by management.

The three-day Workout sessions have taken on subjects as trivial as the number of manager approvals needed to obtain work gloves and as important as the way some businesses draw up their annual budgets.

Many Workout sessions break problems into two categories -- "rattlers" and "pythons." Rattlers are simple problems that can be "shot" -- solved -- on the spot. Pythons, more complicated to unravel, take a little longer.

Less than two years after the first Workout session, they have become a pervasive part of GE's corporate culture -- nearly 1,000 Workouts, involving 50 or so employees each, have taken place since the process was started. Despite some initial skepticism that the company would use the process to identify and eliminate unneeded jobs, even leaders of some of GE's toughest union locals are becoming Workout advocates.

Still, Workout is not a miracle cure, and some bugs remain. Some GE employees, mindful of the more than 100,000 jobs eliminated by Welch in the 1980s, worry that the process will be used to have them unwittingly identify additional jobs that can be cut -- something Welch adamantly denies.

There also have been problems getting some GE managers to go along with the sessions. It often takes a change in management style to get an executive to listen to -- much less act quickly and effectively -- upon the tough suggestions that come out of Workout sessions, particularly those that touch on management turf issues such as approval systems, meetings and planning.

Every Employee Involved

Over the next decade, GE will hold at least 700 of the sessions a year and Welch expects every GE employee to be involved in at least one Workout. "If you think about getting the idea from 1953001331practices and better practices," Welch said. "Productivity grows."

In the process, Welch also wants to break down boundaries between managers and employees and even those between the company and its suppliers and customers, who also are being invited to Workout sessions to air their gripes.

Workout is part of a broader effort by Welch to create what he calls a "boundary-less" company, in which ideas, customer contacts, technology and management practices flow smoothly throughout GE's dozens of disparate businesses, which range from light bulbs to jet engines to railroad locomotives to NBC-TV's "Late Night With David Letterman."

His aim is to achieve what he calls an "integrated diversity" that will keep GE's annual growth in double digits. Aspects of what he's describing sound more like the management talk around a small Silicon Valley start-up than that of a behemoth with $54.6 billion in annual revenue.

In his 10 years as GE's chairman, Welch, 54, already has made major structural changes, eliminating those 100,000 jobs, selling businesses that aren't ranked first or second in their fields and acquiring RCA Corp. in 1985 in one of the biggest corporate takeovers in history.

But because it strikes right at the heart of GE's corporate culture and represents a significant rethinking in the way companies are managed, Workout is perhaps the most unusual of Welch's efforts to remake GE -- and it is being closely watched by the rest of corporate America.

GE long has been a leader in corporate organizational theory -- the same decades-old bureaucratic management system that Welch is trying to dismantle was the model for the planning systems for many of the rest of the nation's large corporations -- and his latest strategy, if successful, is likely to be adopted by countless other companies. GE is being deluged with inquiries from firms looking for information on Workout and the "boundary-less" concept.

"He's perceived as a nut, {but} Jack Welch is the Gorbachev of American industry, with one fundamental difference -- unlike Gorbachev, who talks about change, Jack Welch does it," said W. Walker Lewis, chairman of Strategic Planning Associates Inc., a Washington management consulting firm that does work for GE.

A Rich Process

By almost all accounts, Workout is a rich process.

"The idea is to challenge every single piece of conventional wisdom, every book, every rule," Baughman said. "We're sort of saying, 'For the duration, let's turn everything on its head.' And, 'Everything is guilty until proven innocent.' "

"We just basically took out pens and paper and started crossing out things. ... We removed the work that was meaningless," said one Workout participant, Ralph Strosin, a manufacturing manager at GE's magnetic resonance imaging (MRI) division in Milwaukee. Strosin's Workout group focused on reducing the amount of time it takes to identify and fix problems in the manufacturing of MRI devices used for medical diagnostics, and it cut between two weeks and two months off the process -- a 50 percent savings.

Although each of GE's businesses is allowed to run Workout its own way, the basic format is the same: A three-day session, involving employees from all levels of the business, shop floor to front office, meeting to discuss ways to improve the way the company is run.

Top management of each business appears at the beginning of the three-day session and at the end; in between, the sessions are run by outside facilitators -- usually business school professors -- who can draw out employees' opinions dispassionately. The facilitators are the only outsiders involved in the program and they eventually will be phased out in favor of session leaders from inside the company.

Top Managers on Deck

On the third day, the Workout group presents recommendations to management, which must respond instantly to the specific requests. Some are approved on the spot; others are rejected, with explanations. More complex issues are taken under consideration with a response promised. Any issue not properly dealt with becomes fair game for the company's next Workout session, which usually is just a few weeks later, with a different set of players.

Participants say Workout sessions, especially those involving first-time participants, often start out timidly. But with prodding from the facilitators -- and with top divisional management outside the room to remove any intimidation -- suggestions on how to improve the business and reduce bureaucracy begin flying fast and furious.

Many of the suggestions -- at least at first -- can seem trivial. At one Workout session, the editor of a plant newspaper complained that she had to get approval from several different managers to get the paper to press every month; the process was ordered simplified. Many Workout gripes, not surprisingly, center on similar complicated approval processes for routine matters, as well as on the frequency and length of meetings and the nuisance of redundant business forms.

Such "administrivia," as any worker knows, can be the source of much aggravation and wasted time. And as such annoyances get chipped away, larger issues emerge, as does a process for dealing with them.

At a Workout session at a GE silicone plastics plant in Waterford, N.Y., for example, participants brought up the plant's centralized quality control system, set up when the facility was built 40 years ago and never reorganized as the plant expanded over the years. The antiquated system forced workers to use a jerry-built system of pneumatic tubes and motorized carts to move product samples from factory floor to the distant lab -- rather than testing them on the spot.

"It was almost like out of the Dark Ages," Welch said. "So right there we agreed to break up this lab and move it out."

"You start out with things like filing systems and, 'Hey, why do we have all these reports?' " said Jeff Bunten, an operations manager at GE's electrical equipment supply division in St. Louis who has been through two Workouts. "The next step in the process is to focus on the customer -- use the tools we developed in removing those impediments to focus on the customer."

Some divisions have adapted Workout to the budgeting process, calling in workers from all levels to make suggestions about where to spend and save money. Some are using it to address specific problems -- a session held by NBC Sports knocked nearly $1 million out of the cost of televising professional football games. And others are inviting customers and suppliers to join the process, reasoning that inefficient, frustrating interactions with those critical constituencies can be as damaging to a business as internal problems.

"It allows us to bring a group of buyers from Sears to spend three days with us on what are we doing wrong serving Sears, how can we serve them better," Welch said of the Workouts with customers. "Forty Sears buyers, 40 GE sales-service people for three days together -- that's a better relationship."

GE's management says it believes Workout helps labor relations by increasing dialogues between workers and management, and even leaders of the company's toughest union locals are being won over.

"I'm sold on it, and I'm probably one of the bigger radicals," said Norm Mitchell, president of Local 761 of the Electronic, Electrical Salaried Machine and Furniture Workers union, which represents 11,000 workers at one of GE's largest plants, its appliance-making complex in Louisville.

"It's empowering people," Mitchell said. "It brings people together. It gives people the feeling that they've got a part of the business. ... You can go into a room and feel you have as much power as the guy sitting beside you."

Mitchell said he hopes a Workout-like system can be used to raise issues to be tackled in the next round of contract negotiations.

In a reversal of GE's traditional engineer-precise corporate culture, in which virtually everything the company does is measured in some form, GE's top management says it is deliberately not keeping score of the results of individual Workouts. While some internal employee publications carry box scores tracking the progress being made on "rattlers" and "pythons" in individual businesses, even that rankles the company's executives a bit.

"It's non-measurable," Welch argued. "I'm going to measure it in market share, increased productivity and all those things over a decade. ...

"In the first year, we got a lot of GE people {asking}, 'How do we know we're doing well?' I said, 'Take it on faith.' ... Every measurement of a macro sense we look at" shows it.