The Cult of Welch

By Hollon, John | Workforce Management, October 1, 2005 | Go to article overview

The Cult of Welch


Hollon, John, Workforce Management


After five years away from GE, Jack Welch has still got a powerful message that hits home for just about anyone in a leadership role.

THE LAST WORD

WHEN JACK WELCH SPEAKS, everyone listens.

At last month's World Business Forum on leadership at New York's Radio City Music Hall, a couple thousand executives paid a couple thousand dollars each to hear a who's who of leadership impart some words of wisdom. The lineup was impressive-Rudy Giuliani, Colin Powell, Tom Peters, Yahoo's Terry Semel and Richard Branson of Virgin were just some of the speakers-but Jack Welch was the only one who could generate an edge-of-the-seat, "I don't dare miss a word he's saying" reaction from the business crowd.

But that made me wonder: Why is Jack Welch such a management superstar five years after retiring as chairman and CEO of General Electric?

Maybe it's because three of his former top lieutenants now head Fortune 500 companies (Robert Nardelli at Home Depot, Jeffrey Immelt at GE and James McNerney, who was at 3M and has recently moved over to Boeing). Or maybe it's because he was able to weather a nasty public divorce and the airing of his generous (some would say whopping), perk-filled retirement package being splashed all over The Wall Street Journal without any lasting harm.

More likely, however, Jack Welch's cult status as America's management icon comes from two things:

1. His tough-talking, common-sense approach to business and managing the workforce.

2. His surprising ability, despite all the tough talk, to treat people with fairness and sensitivity.

Fairness and sensitivity? You may ask how that can be said about the guy who developed the famous 20-70-10 employee assessment plan (known fondly by its critics as "rank and yank"), where the top 20 percent of GE's workforce each year got a big raise, while the bottom 10 percent got shown the door.

Well, what you may hear about Jack Welch and his people management practices anecdotally is very different from what you hear from Jack Welch in person.

For example, during a Q&A session in New York he was asked how he would handle two different types of workers: a high performer who delivered the numbers but didn't buy into management's philosophy for the company, and a low- to mid-level performer who struggled to deliver the numbers but enthusiastically bought into the corporate vision and embraced what top management was trying to do.

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