This series of articles seeks to examine the character attributes of highly successful leaders, regardless of their adherence to a strong faith or moral standard. In presenting these thoughts, Leadership Ministries is not agreeing with or advocating these traits or practices, but rather presents these as ideas for discussion and development in your own leadership journey.
Jack Welch (1935-2020) was a chemical engineer and writer early in his career. He was Chairman and CEO of General Electric from 1981 to 2001. He started with GE in 1960 at a salary of $10,500. Under his watch GE grew from $12 billion to a $410 billion company, making more than 600 acquisitions during his tenure. Early in his career at General Electric he became frustrated at the inefficiency of the giant corporation. He spent his time at the helm dismantling the bureaucracy. He closed factories, reduced payrolls and cut lackluster units. In 1999 he was named "Manager of the Century" by Fortune magazine.
Survival of the fittest. Welch was relentless in his desire to make GE leaner, tougher and more competitive. He advocated “survival of the fittest”. Those that could not succeed were not needed. In his book Winning,Welch advocated for employees to be separated into the top performing 20%, middle 70%, and bottom 10%—the latter of which, with “no sugar coating,” Jack said, “have to go.” Many people saw this as cruel, but Welch defended his stance as kindness.
Steam turbines for power plants is one of GE longstanding industrial businesses. Photo: Shutterstock
Welch explained, “What would happen if for years and years you don’t tell someone that they are underperforming, not giving them the chance to try to improve, check whether they can do something else in the company, or alternatively look for somewhere else? And then a recession comes, and you need to fire the person, older and unprepared, in a much tougher market? Which is crueler?” He did regularly fire the bottom performing 10% of managers, regardless of overall performance. He rewarded those in the top 20% with bonuses and employee stock options.
Be enthusiastic. Welch wanted his company to have great energy. He celebrated successes and wanted his teams to take time out to recognize achievements. Welch believed if people were excited about their work they would perform better. He said, “One of the jobs you have as a manager is to pump everyday self-confidence into your team to make them feel great, to make people like me feel like I've got a full head of hair and I'm 6 foot 10.” Welch was 5 foot 7 and bald.
Though he could be brutally honest, Welch exuded enthusiasm about his work and the company. He told his managers, “Excite them about what they're doing. Give purpose to their jobs and their lives. That's what this is all about. We spend most of our waking hours on these jobs. Make them fun, make them exciting, and reward the hell out of the ones who do the job you ask them to do.”
Get great at making people decisions. Welch believed that hiring the right people was key to the company’s success. He said, “Executives spend more time on managing people and making people decisions than on anything else—and they should. No other decisions are so long lasting in their consequences or so difficult to unmake.” In his years at GE, Jack spent more than half his time getting the right people in the right places. He felt that effective hiring was a brutally hard skill to develop. At his peak, Welch estimated he hired the right person 4 out of 5 times.
Welch is criticized for his choice of successor, GE CEO Jeff Immelt. Under Immelt’s tenure GE lost many billions of dollars in value. Welch had stated that his effectiveness as its CEO for two decades would be measured by the company's performance for a comparable period under his successors. Twenty years later, GE’s market cap is $100 billion—a fourth of what it was under Welch’s leadership.
Embrace change. Welch insisted that his managers, from senior level down, grew comfortable with change. Everything is constantly changing, said Welch—market conditions, business environment, consumer spending habits, technology, new products and even competitors. The senior management team, middle and junior managers, and individual employees must be ready to reinvent themselves and everything they do. Welch believed this was the only way to keep up with all of the many factors constantly in flux that impact a business, the way it operates and its bottom line. Welch would add and delete business units constantly, changing the company year upon year.
A GE9x engine on the newest Boeing 777 aircraft. Today GE makes the majority of its profits from aviation. When consolidations and spinoffs are completed in 2024, the core of GE will be strictly an aviation company. Photo: Boeing
A period of massive restricting at GE in the 1980s earned Welch the nickname “Neutron Jack” because he took out the people while leaving the buildings standing, just like a neutron bomb. Welch promoted the idea that GE and other companies should either be number one or two in a particular industry or else leave it completely. For nearly a century General Electric made appliances, including the first electric fan in the 1890s. GE experimented with everything from television to synthetic diamonds. Today they make airplane engines, healthcare devices and power plant turbines. When Welch retired, over 40% of the company was financial services.
GE was an industrial conglomerate like Siemens, Dow and DuPont in their time. Welch desired to simplify the burgeoning company but where he succeeded with management and hierarchy, he only marginally succeeded in their broad range of businesses.