Jack Welch

Jack Welch is a business writer of a widely read weekly column The Welch Way, which he writes with his wife, Suzy Welch. This column appears in BusinessWeek magazine and is published by the New York Times syndicate in more than 45 major newspapers around the world, reaching more than 8 million readers. The Welches are also the co-authors of Winning, a #1 Wall Street Journal and international bestseller, and its companion volume, Winning: The Answers. In 2001, he wrote his #1 New York Times and also international best-selling autobiography, Jack - Straight from the Gut.

Jack is currently the head of Jack Welch, LLC, where he serves as Special Partner with the private equity firm, Clayton, Dubilier & Rice and is a consultant to IAC (Interactive Corp). He is a contributor on a variety of television network business shows and speaks to business audiences and students around the world. Jack also teaches a leadership course at MIT’s Sloan School of Management.

Born in Salem, Massachusetts, Jack received his undergraduate degree from the University of Massachusetts and an MS and PhD in chemical engineering from the University of Illinois. He began his career with the General Electric Company in 1960, and in 1981 became the Company’s 8th Chairman & CEO. During his 20+ year tenure as CEO, the Company’s market capitalization rose from $13 billion to $400 billion, while revenues grew from $27 billion to $125 billion and earnings grew tenfold to almost $14 billion. In 2000, he was named "Manager of the Century" by Fortune magazine.

Jack is the father of 4 children and has 10 grandchildren. He is an avid Red Sox fan, is a life-long golfer, and is a fanatic about sports and business news in every medium.

Tenure as CEO of GE

Through the 1980s, Welch worked to streamline GE and make it a more competitive company. In 1981 he made a speech in Hotel Pierre, New York City called ‘Growing fast in a slow-growth economy’ (8.12.1981).^[1] This is often acknowledged as the "dawn" of the obsession with shareholder value.

He also pushed the managers of the businesses he kept to become more productive. Welch worked to eradicate inefficiency by trimming inventories and dismantling the bureaucracy that had almost led him to leave GE in the past. He shut down factories, reduced payrolls and cut lackluster old-line units. Welch's philosophy was that a company should be either #1 or #2 in a particular industry, or else leave it completely. Although he was initially treated with contempt by those under him for his policies, they eventually grew to respect him. Welch's strategy was later adopted by other CEOs across corporate America.

Each year, Welch would fire the bottom 10% of his managers. He earned a reputation for brutal candor in his meetings with executives. He would push his managers to perform, but he would reward those in the top 20% with bonuses and stock options. He also expanded the broadness of the stock options program at GE from just top executives to nearly one third of all employees. Welch is also known for destroying the nine-layer management hierarchy and bringing a sense of informality to the company.

During the early 1980s he was dubbed "Neutron Jack" (in reference to the neutron bomb) for eliminating employees while leaving buildings intact. In Jack: Straight From The Gut, Welch states that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985. Of the 112,000 who left the payroll, 37,000 were in sold businesses, and 81,000 were reduced in continuing businesses. In return, GE had increased its market capital tremendously.

In 1986, GE acquired NBC, which was located in Rockefeller Center; Welch subsequently took up an office in the GE Building at 30 Rockefeller Plaza. During the 1990s, Welch helped to modernize GE by shifting from manufacturing to financial services through numerous acquisitions.

Welch adopted Motorola's Six Sigma quality program in late 1995. He led the company to massive revenues. In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues increased to nearly $130 billion. When Jack Welch left GE, the company had gone from a market value of $14 billion to one of more than $410 billion at the end of 2004, making it the most valuable and largest company in the world.

At the time of his retirement, Welch received a salary of $4 million a year, followed by his record retirement plan of $8 million a year. In 1999 he was named "Manager of the Century" by Fortune magazine.

There was a lengthy and well-publicized succession planning saga prior to his retirement between James McNerney, Robert Nardelli, and Jeffrey Immelt, with Immelt eventually selected to succeed him as Chairman and CEO. Nardelli became the CEO of Home Depot until his resignation in early 2007, while McNerney became CEO of 3M until he left that post to serve in the same capacity at Boeing.

Welch announced the news of his succession to Jeff Immelt almost the same way as his earlier boss Reg Jones had announced it to him. Welch begins his bestselling book Jack: Straight from the Gut, with his experience of this.