On Monday, the struggling industrial giant announced that it would replace CEO John Flannery with former Danaher chief Lawrence Culp, a move related to Flannery's slower-than-anticipated turnaround plans, sources told CNBC.
"When you boot a CEO after just 13 months, the presumption is that the company's doing far worse than you think," Cramer, host of "Mad Money," told viewers. "Otherwise, why not let Flannery muddle through, right?"
"We learned, once again, that GE is doing far worse than we thought, that the power division is even more of a disaster, and there's no easy fix whatsoever," Cramer continued.
But with a "brilliant manager" like Culp, a GE board member who was CEO of science-and-tech colossus Danaher, GE can at least "put an end to the negative surprise chatter" associated with the company's overhaul efforts, the "Mad Money" host said.
"The response? The stock surged more than 7 percent today," he said. "It's a brutal move, but Wall Street loved it, even if it didn't make any of the bearish analysts change their minds. Maybe they'll become more positive once the full story is known."
GE's stock ended the day up 7.09 percent, at $12.09 a share. Earlier on Monday, Cramer admitted he felt for Flannery, who was abruptly removed from his post by GE's board of directors.
Even so, Culp "was fantastic at Danaher," Cramer said. "So I think the company is in better hands.
—CNBC's Matthew J. Belvedere contributed to this report.