Jack Welch was the chair and chief executive of General Electric (GE) from 1981 to 2001. Welch dramatically increased the market value of GE from $14 billion to $410 billion. He had a reputation as one of the top CEOs of all time. Fortune dubbed him "Manager of the Century" in 1999. When Welch retired, GE awarded him a severance of about $417 million, the largest ever at the time. Welch died on March 1, 2020, at the age of 84 from renal failure.
- Jack Welch was the chair and chief executive of General Electric from 1981 to 2001.
- Welch closed factories, laid-off workers, and presented a vision of growing fast in a slow-growth economy.
- Welch was active as a public speaker and writer, co-authoring two books with his wife Suzy Welch.
- He retired from GE in 2011 and handed the reins to Jeffrey Immelt.
- Welch died of renal failure on March 1, 2020, at the age of 84.
Early Life and Education
John Francis Welch Jr. was born in Peabody, Massachusetts, on Nov. 19, 1935, to John and Grace Welch. He graduated from the University of Massachusetts, Amherst, with a bachelor's degree. He earned his doctorate in engineering from the University of Illinois, Urbana-Champaign.
Welch began working for GE as a junior engineer in 1960. He rose through the ranks to run the company as chair and chief executive officer (CEO) between 1981 and 2001. Welch threatened to leave the company in his early years of employment on a number of occasions due to bureaucratic inefficiency. He worked to eliminate bureaucracy and increase growth as the company's leader.
Jack Welch streamlined GE's sprawling businesses during the 1980s. He fired unproductive managers and eliminated whole divisions then acquired other companies and drove them to adopt better management models and increase profits for GE.
He closed factories, laid-off workers, and presented a vision of "growing fast in a slow-growth economy," which was the title of a speech he gave in 1981, soon after he became chair. This included cutting fat from what began as a nine-level layer of management. He also worked to establish an air of informality. The aim was to make GE seem as though it were a small company rather than the amalgamated corporation it became during Welch's tenure as leader.
Welch's core management belief was that high-performing managers could turn around almost any business, so GE experimented with everything from television to synthetic diamonds. Ironically, this led to an expansionary phase, making GE once again a conglomerate by nature—even if it was a more aggressively managed one.
Jack Welch, who was dubbed Manager of the Century in 1999 by Fortune, retired from GE in September 2001. His severance package was estimated to be $417 million.
This period of massive restructuring earned him the nickname "Neutron Jack," because he took out the people while leaving the buildings standing, just like a neutron bomb.
In retirement, Welch was active as a writer and public speaker. In 2005, he penned and published his memoir, Winning. The book focuses on management and business. It was co-authored by Welch's wife, Suzy. It sold more than 10 million copies worldwide, according to a 2020 report from The New York Times. The husband-wife duo also co-wrote another book called The Real Life MBA. Published in 2015, the book focuses on business, leadership, management, and career development.
Jack Welch joined a business forum created by former President Donald Trump to provide strategic advice on economic issues.
Welch's leadership remains his greatest legacy. He promoted the idea that GE (and other companies) should lead a particular industry or leave it completely. He led the adoption of Motorola's Six Sigma program for increasing productivity in manufacturing, applying it to GE as a whole. 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.
But Welch's legacy is somewhat complicated by GE's fate since his departure. Welch left the company just as the dotcom bubble burst, damaging some of GE's expanding business lines. His successor, Jeffrey Immelt, was forced to exit many businesses that were considered a distraction from GE's major profit centers.
Immelt also presided over a drop in GE shares as the 2007-08 Financial Crisis hit GE's financial operations. The model Jack Welch left behind was good at squeezing profits from top businesses. However, it left GE ill-equipped to survive outside shocks and grow new businesses and innovations that would carry the company into the future. In short, GE's success was very much a product of great timing that was difficult to sustain over the long term.
Welch was perhaps the first CEO whose performance was seen mainly through the lens of share performance. While investors generally appreciate this view of corporations, it led managers to focus on short-term performance. This short-term performance focus can have a long-term detrimental impact on the sustainability of a company when taken to an extreme.
Jack Welch was married three times. In 1959, he married Carolyn B. Osburn. The two, who had four children, divorced in 1987. He married Jane Beasley in 1989 and divorced her in 2003. He married his third wife, Suzy Wetlaufer, in 2004. Welch died in 2020 of renal failure.
Why Made Jack Welch a Good Leader?
Jack Welch was considered a good leader because of his vision of quick growth during times of economic slowdown. As chair and CEO of GE, he looked for inconsistencies and streamlined the company's businesses. He eliminated wasteful divisions and unproductive management personnel. He also attempted to remove the formalities of business by creating an informal environment.
How Did Jack Welch Transform GE?
Jack Welch joined GE in 1960 as a junior engineer. He worked his way up the corporate ladder and became the company's chair and CEO in 1981. As the leader of GE, he made major changes to the company and how it operated, using aggressive tactics to achieve short-term results. He made structural changes to the company, including streamlining its businesses and getting rid of entire divisions. He also found and fixed inefficiencies like closing down factories and laying off workers in an attempt to increase profitability and productivity.
What Happened to GE After Jack Welch Retired?
Jack Welch retired from his role as chair and CEO of GE in 2001. He was succeeded by Jeffrey Immelt, who called his reign "controversial." The company's share price dropped significantly during his term as CEO, unlike his predecessor. The company saw as much as $150 billion wiped out from its market value with Immelt at the helm, compared to the transformation of $14 billion to $410 billion when Welch ran the company.
The Bottom Line
Jack Welch was considered a powerhouse in the corporate world. Taking control of GE in 1981, he transformed the company by focusing on short-term gains using very aggressive strategies. Welch is credited with turning GE into a powerful conglomerate by reducing inefficiencies and making acquisitions. Under his leadership, GE's shareholders saw the company's market value increase. Welch retired in 2001 and handed the reins to Jeffrey Immelt. Although Welch died in 2020, his leadership at GE remains his greatest legacy.