Jack Welch, the CEO of General Electric from 1981 to 2001, was regarded by many as one of the best managers in recent business history. Do some research to identify the characteristics and behaviors that made Welch so admired. Can you see drawbacks to his management style?
I. Jack Welch
Jack Welch was born on November 19, 1935 in Peabody, Massachusetts. His father, John Welch, was a conductor for the Boston and Maine Railroad service, while his mother, Grace, was a homemaker. He attended the Salem High School and went on to graduate from the University of Massachusetts Amherst in 1957. He secured a Bachelor of Science degree, majoring in chemical engineering. He earned his MS and PhD in 1960, from the University of Illinois, Urbana-Champaign.
Jack Welch began his tenure at General Electric in 1960, as a junior engineer in Pittsfield, Massachusetts, at a salary of USD 10,500 per annum. In 1961, his annual raise and the strict bureaucracy within the then existent General Electric totally disillusioned him. He even made plans to join International Minerals and Chemicals, Skokie, Illinois. It was the foresight of Reuben Gutoff, a young executive at GE, that convinced Welsh to stay on. He agreed mainly on the basis of the promise that Gutoff would work towards changing the existent bureaucracy within the company. Welsh’s genius was duly recognized and he rose to the post of vice president in 1972. Thereafter, there was no turning back.
Jack Welch became senior vice president in 1977 and took over the office of vice chairman in 1979, before becoming the youngest chairman and CEO of GE in 1981. Within a year as CEO, he replaced nearly all the management strategies executed by Reginald H. Jones, his predecessor. He worked hard to make GE buoyant and competitive
Corporate America did not take long to follow in his footsteps. His brutal candor with executives pushed them to perform better. His reward system involved bonuses and stock options. He completely destroyed management hierarchy, ushering in an era of informality within the corporate world. He was fondly called ‘Neutron Jack’, with reference to the bomb that went by the same name. He increased the market capital of GE even prior to the company’s modernization in the 1990s. Under his leadership, GE expanded from manufacturing to financial services with the help of numerous acquisitions.
Armed with the innovative Six Sigma quality program, he earned the company massive revenue. Welch retired from office in 2001 after making GE one the world’s most valuable companies, rightly earning him the epithet ‘Manager of the Century’ by Fortune magazine. By 2004, its revenue had grown to more than USD 410 billion. Industry analysts still struggle to evaluate the credibility given to him for GE’s success.
II. Analysis and Conclusion
Welch’s rise from junior engineer to CEO took only 20 years, a stunning pace for climbing the ladder in a corporation with 29 levels of management. One of the first things Welch did as CEO was to set about erasing all those layers to allow ideas and people flow freely. Throughout his career, simple principles like “people matter” and a constant drive to anticipate and exceed expectations kept Welch from getting lost in the crowd.
Jack Welch’s leadership style had an element of commitment, honesty, credibility, intuitive, aggressive, candor and customer oriented. He closely followed upon the elements, which he believed, of leadership. He mentioned that a person with strong verve, infectious energy, decision-making power and result delivery with tremendous passion is a true leader.
He had been a great teacher and a role model to the entire organization. He obliterated bureaucracy and introduced informality. As he found that the bureaucracy was coming in the way of productivity and profitability. The employees had a sense of belonging and they started performing better.
He used to convert the corporate obligatory meetings to learning session for his executives. In these meeting he used to address issues in GE and used to get the reports of the test strategies been previously applied. All the perspectives were discussed to find the best possible solution. He also used to make surprise visit to his plants and offices.
He introduced a six sigma reward system, where the best was rewarded the best. An eye towards excellence was pushing everyone to contribute his or her best. He increased the number of stock options from 200 to 27000 and spread it across the company, within 18 years.
There is no doubt that Welch had great self-confidence in his abilities, but it was effort and trust he put into the people he chose that made him a great manager and helped him transform the company as CEO.
Gaynor Borade. (June 2009). Buzzle. Retrieved from
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