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business leaders > profiles > Jack Welch
Kishore Biyani
Jack Welch: Leadership genius
Jack Welch is certainly among the most reverentially talked about and regarded-with-awe business leaders. He is credited with turning around General Electric (GE) from a slow moving company into a dynamic powerhouse. Under his watch as CEO, which spanned 20 years, General Electric (GE), from a $13 billion corporation catapulted itself to several hundred billion giant of a company.

Welch was born in Salem Massachusetts USA in 1935. He received his bachelor's degree (BS) in chemical engineering from the University of Massachusetts in 1957. Welch pursued his education to complete his MS and PhD in chemical engineering from the University of Illinois.

Welch joined GE in 1960 as a junior engineer in Pittsfield, Massachusetts, for a starting salary of $10,500. He was unhappy with the strict bureaucracy of the management and when he was offered a measly $1,000 raise after his first year, Welch wanted out. He decided to take up an offer he had received from International Minerals & Chemicals in Skokie, Illinois.

However, Reuben Gutoff, a young executive, one level above Welch, realised that the newcomer would be an important asset to GE. He took Welch and his first wife Carolyn out to dinner at the Yellow Aster in Pittsfield, and spent four hours trying to convince Welch to stay put. Gutoff promised that he would work to change the bureaucracy of the company and create a small-company environment with big-company resources. Gutoff's persuasive charms helped change Welch's as well as GE's fortunes.

Welsh's steady upward rise in the management ladder was due to his innovative marketing strategies in selling GE products and services. Welch was promoted to vice president of GE in 1972. He moved up the ranks to become senior vice president in 1977 and vice chairman in 1979. Welch became GE's youngest chairman and CEO in 1981, succeeding Reginald H Jones.

Thanks to his tremendous leadership skills, Welch succeeded in making GE a more competetive organisation. When Welch took over as the CEO, GE was a formal and massive nine-layer management hierarchy. It was ruled by more than 25,000 managers who each averaged seven direct reports in a hierarchy with as many as a dozen levels between the factory floor and the CEO office. More than 130 executives held the rank of vice president or above, with all kinds of titles and support staffs behind each one.

Welch hated the burecracy which almost led him to leave the organisation early in his career. He devoted most of his time in the field reviewing the company businesses. He soon found out that bigger the business, the less engaged people seemed to be. Too many people were just going through the motions. Jack had a vision of what he wanted GE to be and he didn't waste any time making it a reality.

He dismanteled the red tape and burecracy of the company and introduced an informal working environment within the organisation. The informal approach gave him the opportunity to know his employees better, interact with them and get involved in all aspects of the business. His excellent managerial skills helped him to effectively put across key ideas to the rest of the staff.

Welch noticed that some businesses did better than others because of good man management. He realised that if he could transfer the best ideas and practices of one business to all business units, everyone within GE would benefit through this knowledge. What is more, GE would become an even more competitive corporation.

He was also renowned for being a demanding and aggressive leader. He shut down factories, reduced payrolls and cut lackluster old-line units. He took pride in sending hand written memos to the employees.

Welch understood the importance of people in the organisation, supporting the best and removing the weakest. He set up grueling performance reviews to differentiate the stars from the weak links. He rewarded the top 20 per cent star performers with hefty bonuses and stock options while the bottom 10 per cent were fired and replaced with fresh talent. It sent a clear message to the employees that they didn't have to fit a certain stereotype to be successful in the new GE.Performance was the key to success.

In his persuit to change and streamline the company, over 100,000 GE jobs were terminated. For this, he earned the nickname Neutron Jack (in reference to the nuetron bomb), the guy who removed the people but left the buildings standing. In return, GE had increased its market capital tremendously.

In the 1990s, Jack introduced Six Sigma in the company, which intended to increase efficiency and quality of work. The objective of Six Sigma is to deliver world-class performance, reliability, and value to the end customer.

In 1999 Fortune magazine named Jack Welch 'manager of the century'. Geoffrey Colvin, the editorial director of Fortune felt Jack Welch deserved the ultimate manager title because in addition to his transformation of GE, he had made himself far and away the most influential manager of his generation.

Welch left his position as CEO to retire in 2001. His 40 years at GE, 20 years of running the place increased GE's market value from $12 billion to over $280 billion. GE is now one of the biggest corporations in the world made up of six businesses, each of which include a number of units aligned for growth. The corporation is also one of the most profitable.

After retirement, Welch is enjoying his new role as author. He has written two books, including Jack: Straight from the Gut (2001), and his most recent, Winning (2005). He also serves as a consultant to a small group of Fortune 500 business CEOs.

Whatever his tactics, the fact remains that Welch is one of the most successful business leaders of all-time and his strategy is adopted by other CEOs across America. This legendary business genius has always given his best shot and achieved success which is beyond most people's dreams.

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