career of Jack Welch (the former CEO of GE). Jack Welch has become a legend in successful management and leadership. He took over as the youngest CEO of General Electric in 1981, and by his retirement in 2001, he had turned the company around and created massive profits. Welch is often cited as one of the most successful leaders of all time, and is given credit for turning GE into the largest company in the world, with record-breaking profits.
Jack Welch, the CEO of GE, was born in Salem Massachusetts. He graduated from the University of Massachusetts with a BA, and obtained his MS and PhD in chemical engineering from the University of Illinois. He went to work for GE in 1960 as an engineer in Pittsfield, Massachusetts. He felt the company was full of bureaucracy and top-heavy with managers, and he even planned to leave the company, but one of his managers talked him into staying. He rose through the ranks and became CEO in 1981 (Walsh, 2008). He transformed the company into a multi-national corporation unlike it had ever been before. His biographer notes, "Under Welch's leadership, GE became America's greatest business powerhouse. In 1981, GE had annual sales of $25 billion along with earnings of $1.5 billion. In 2000, the last full year before Welch retired, GE's revenues had reached $129.9 billion, its earnings, $12.7 billion" (Slater 2004, vi). He cut costs, and cut employees, for which he earned the nickname "Neutron Jack," and many critics felt that he was too harsh on GE's blue-collar contingent. However, he continues to be a model for leadership excellence, and even in retirement, he writes, speaks, and teaches leadership practices.
Welch's leadership approach is dynamic, and includes employees in the decision-making process. One of the course materials notes the characteristics of a strategic leader include "Synergistic combination of managerial and visionary leadership, emphasis on ethical behavior and value-based decisions, oversee operating (day-to-day) and strategic (long-term) responsibilities" (Rowe 2001, 82). Welch's leadership style certainly matches these characteristics and many more, and that is one reason why his leadership was so successful. He always insisted on ethical behavior throughout the company, and if something happened, he would never make excuses. He also made sure to fire the violator immediately; there were no second chances. He urged his managers to embrace change, to be consistent, to invite input from their staff, and not to manage but to lead.
Another course document states, "Leaders can invite honest feedback from followers by their leadership style. Listening to employees is a hallmark of ethical leadership" (Brown 2007, 144). Jack Welch knew this. After he took over as CEO, he merged GE's numerous companies into 13 large operations, and slashed hundreds of thousands of jobs. Employees were disconcerted and felt vulnerable. He began a program to get them more involved in day-to-day operations, offering incentives for good ideas, no matter where they came from. His biographer continues, "By getting more involved, Welch argued, employees would be helping to strengthen GE's businesses -- and healthy, growing businesses were the best guarantee for job security" (Slater 2004, 85). The plan worked, and employees began to participate in large numbers, adding many unique ideas and operations to their departments.
Welch also was not afraid to make the unpopular decisions, such as slashing jobs, because he knew it was for the overall good of GE. His biographer states, "Perhaps Welch's greatest strength has been his willingness to make unpopular decisions, convinced as he was that he was acting for the general good of his business" (Slater 2004, v). He also believed the company had far too many managers and it was far too bureaucratic for it to survive. Author Slater says, "To create a leaner GE, Welch delayered; then he removed the entire second and third echelons of management -- the sectors and groups" (Slater 2004, 69). With fewer managers to report, he got findings earlier and had a more direct means of communicating with managers under him and people on the factory floor. He slashed more than 200,000 jobs, many in management, which earned him the name "Neutron Jack," which he hated. His biographer remembers, "He was accused of being heartless, insensitive, and brutal for tampering with the powerful, 103-year-old General Electric mystique. But tamper he did, earning himself the hated nickname 'Neutron Jack'" (Slater 2004, 66). With management and employees under control, the company's profits began to vastly improve.
Welch also did not believe in the impossible. He felt every successful business much stretch itself and always reach for more. This is essential for a successful leader, because businesses that do not stretch themselves can become stagnant and old-fashioned, just as GE had started to become. He believed that companies who do not stretch themselves become too comfortable, and that can lead to bad decisions and lazy management.
Probably one of his best-known management philosophies was "fix, close, or sell." No matter how big or how old divisions of GE were, they were not immune from Welch's reorganization. He merged many divisions into each other, scrapped many others, and sold off some. His philosophy was that every division could be fixed, closed, or sold, there were no other options. He applied this philosophy to NBC in the early 1990s, hiring Don Ohlmeyer to "fix" the network and make it profitable again. Ohlmeyer did bring the network around and make it profitable again, at a time when many experts thought Welch would simply sell off the network and be done with it.
Another important leadership strategy was that every GE business should be number one or number two in their business sector. He believed that anything other than that was not worth the effort, and the market was too diminished. He felt, "The weaker businesses lacked the resources, muscle, and power to compete on a global scale" (Slater 2004, 32). GE was a global business after all, and under Welch, it grew dramatically. Welch quickly shed any divisions or companies that were not one or two in their fields, another way he helped the company grow and remain profitable.
The leadership factors that contributed to the rise of Jack Welch in GE were his innate sense of leadership, his ability to get things done, and his visionary qualities. He knew how he wanted his organization to run, and he was not happy with the way it was being run. He was aggressive, and not afraid to be unpopular, but his success rested in his wisdom and his sound leadership practices. He recognized the elements of a great leader and worked to improve them in himself.
The course has touched on ethical leadership, and Welch was an ethical leader, but he was pragmatic, as well. He realized that in an organization as large as GE, there were bound to be ethical violations. It could not always be helped, although standards were strict. However, he dealt with ethical violations quickly and effectively, and never made excuses for them. That kept him from ever having his own ethics under fire, and it sent a message to those that committed the violations, as well. They simply would not be tolerated. Ethics is a big part of leadership, and Welch recognized this, and managed it effectively.
GE became a worldwide leader, and America's biggest company during Welch's lead, and Welch had to learn to manage a growing and diverse workforce. While he did not manage oversees, he did develop management roles and functions for very diverse operations. Our course material notes, "Expatriate managers working in multinational companies hardly need to be reminded of the wide variety of management practices found around the world" (Javidan, Dorfman, Sully de Luque, House 2006, 70). He had to be flexible enough to interact with managers from many…