Editorial
When Fortune magazine named Jack Welch “Manager of the Century” in 1999, two years before he retired as chairman and CEO of General Electric (GE) between 1981 and 2001, it was possibly the ultimate accolade for the legendary American business leader who died on March 1, aged 84.
In his two decades at the helm of the industrial conglomerate, Welch phenomenally improved its market value, which increased from $12 billion in 1981 to $410 billion when he retired. In the period, he made 600 acquisitions, which reflected his concentration on expansion. His severance package of $417 million when he retired from GE, said to be largest such payment in business history, showed not only his stature but also the size of the business he had grown.
He joined GE in 1960, after graduating from the University of Illinois, USA, with a master’s and a doctorate in Chemical Engineering. He had earned a first degree in the same discipline from the University of Massachusetts at Amherst in the US in 1957. He started as a junior chemical engineer at GE; and in 1979 became vice chairman of the company after almost 20 years. His rise demonstrated his capabilities as well as his commitment to the company.
In his mid-forties, Welch became GE’s youngest chairman and CEO in 1981. This put him in a position to redesign the company according to his ideas. He emphasised the idea that GE must be first or second in its businesses. He favoured workplace informality, and discouraged bureaucracy. Also, he placed employees at the centre of the company’s businesses and encouraged employee development.
Welch’s method brought great financial success, but ironically brought pains too. Under his leadership, 100,000 employees were said to have lost their jobs at GE. With his focus on efficiency, he closed factories and removed underperforming units.
Welch promoted a workplace reward and punishment system that became known as “rank and yank,” which was adopted by other corporations. He annually sacked the bottom 10% of his managers while those in the top 20% got bonuses and employee stock options. This approach underlined his emphasis on corporate performance and results.
There is no doubt that Welch had the mentality of a winner with which he magically transformed GE and changed its fortunes. Indeed, business leaders far and wide took an interest in his methods and tried to follow them. He was described as “by far the most influential manager of his generation.”
After his retirement from GE, he remained an active promoter of business education and business leadership. Apart from his appearances on the public speaking circuit, he co-wrote a column for BusinessWeek, with his wife, for four years until 2009. The popular column was syndicated by The New York Times. He also published a book about management in 2005, Winning, which he co-wrote with his wife. The book was No. 1 on The Wall Street Journal bestseller list, and was also listed as a bestseller by The New York Times.
From 2006, he taught a class at MIT Sloan School of Management to a selected group of 30 Master of Business Administration (MBA) students interested in leadership. According to a 2014 profile, “More than 35 CEOs at today’s top companies (were) trained under Jack Welch.” He was among those chosen by then US president-elect Donald Trump, in December 2016, to provide advice on economic issues.
His enduring passion for management studies inspired him to establish the Jack Welch Management Institute (JWMI) in 2009. The institute offers an online executive MBA rated by The Princeton Review as one of the Top 25 Online MBA Programmes four years running (2017, 2018, 2019 and 2020).
Welch made a name for himself as a managerial genius in a capitalist context. GE had its greatest financial success under him, and his achievement remains undiminished, despite the company’s decline after his glorious era.
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