DEFINITION of Jack Welch
Jack Welch was the chairman and CEO of General Electric (GE) from 1981 - 2001. Welch expanded the company, leading it to a dramatically increased market value from $14 billion to $410 billion under his leadership. Welch has a reputation as one of the top CEOs of all time, and Fortune magazine dubbed him Manager of the Century in 1999. When Welch left the company, he was given a severance payment estimated at between $417-$420 million, the largest severance payment ever.
BREAKING DOWN Jack Welch
After receiving his PhD in chemical engineering from the University of Wisconsin at Urbana-Champaign, Welch began working for GE as a junior engineer in 1960, but would eventually run the company as chairman and CEO between 1981 – 2001. Welch almost left the company on a number of occasions in his early years of employment, citing bureaucratic inefficiency in the way the company was run. But as chairman and CEO, Welch worked to eliminate bureaucracy and increase growth. He was known for firing unproductive managers and eliminating whole divisions within the company, then acquiring other companies and driving them to better management and increased profits for GE.
During the 1980s, Welch’s vision was to streamline the company, even if it meant selling off some divisions and then acquiring new companies outside of its standard service and product offerings. He closed factories, laid off workers, and presented a vision with teeth about “growing fast in a slow-growth economy,” the title of a speech he gave in 1981, soon after he became chairman.
Throughout the company and in the public eye, Welch believed and promoted an ideal whereby his company and other companies should either be number 1 or number 2 in a particular industry or else leave it completely. In adopting Motorola’s Six Sigma program for increasing productivity in manufacturing industries and other management changes, Welch illustrated that the key to excelling in an industry relied on the value of the people working for that company, but he had little patience with lackluster performance.
Welch was given the nickname "Neutron Jack" for eliminating employees while leaving the office buildings intact. Welch was known for making surprise visits to office buildings and factories to check on his workers. He developed a “rank and yank” style of dealing with underperforming employees and managers by making clear cuts from staff based on their rankings against other employees and divisions. At the same time, Welch made movements to cut the fat from what began as a nine level layer of management and to establish an air of informality at the company as if it were a small company rather than an amalgamated corporation as it became during his tenure and into the present day.
In retirement, Welch has continued to be active, as a writer and public speaker, penning a memoir in 2005 called “Winning” which reached number one on the Wall Street Journal and New York Times best-seller list. In 2016, Welch joined a business forum created by then President-elect Donald Trump to provide strategic advice on issues of the economy.