Jack Welch famously guided GE through the single greatest increase in shareholder value – some $400 billion during his 20-year tenure – in the history of corporate America. When he took the helm as CEO in 1981, one of his first mandates was to layoff a huge number of people and redirect funds – $7 million in fact – toward the refurbishment of GE’s educational center and the attraction of top-level educators from major business schools. The move was extremely controversial; Jack was branded the meanest boss in America as the population at large could not understand why he’d sacrifice huge numbers of his workforce in exchange for a “nicety” like a corporate education center.
Throughout his reign as CEO, Jack continued the tradition by unceremoniously terminating the bottom 10% of his workforce. Ever the careful gardener, he and his managers diligently pruned the corporate ranks so that the cream rose to the top. And what of those at the top? The top 20% of employees were treated especially well. There was plenty of incentive to be great at what you did at GE under Jack Welch. Welch believed that a smarter workforce meant a more effective workforce. Today, being admitted to any of GE’s management programs means you’re on the fast track to the top. It’s no longer a “nicety” for advancement, it’s a necessity.
Jack epitomized leadership and vision. Though his early decisions were very unpopular – the terminations, the education center, and the divestiture of many of the businesses his predecessor worked hard to build or acquire (the only acceptable market position for any GE business was number 1 or number 2; all others would go) – there was a method to his madness. It took raw guts, courage and a belief that he was right to make the moves he made when he made them. The results, of course, speak for themselves.
Jack’s success at GE had much to do with frameworks designed around continuous process improvement. Improvement initiatives spanning decades included management innovations such as Work-Out, TQM and, today, Six Sigma. In turn, these methodologies became the GE Way, and those who broke ranks and dissented were swiftly shown the door. Embracing a “Way” of your own, committing to it and encouraging the rank-and-file to educate themselves in that Way is at the root of all excellent operations. Just ask Jack.