Carolyn B. Osburn (1959–1987) Jane Beasley (1989–2003) Suzy Wetlaufer (2004–present)
John Francis "Jack" Welch Jr. (born November 19, 1935) is an American business executive, author, and chemical engineer. He was chairman and CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4,000%.[2] In 2006, Welch's net worth was estimated at $720 million.[3] When he retired from GE he received a severance payment of $417 million, the largest such payment in history.[4]
Throughout his early life in middle school and high school, Welch found work in the summers as a golf caddie, newspaper delivery boy, shoe salesman, and drill press operator.[6] Welch attended Salem High School, where he participated in baseball, football, and captained the hockey team.[6]
Welch joined General Electric in 1960. He worked as a junior chemical engineer in Pittsfield, Massachusetts, at a salary of $10,500. In 1961, Welch planned to quit his job as junior engineer because he was dissatisfied with the raise offered to him and was unhappy with the bureaucracy he observed at GE. Welch was persuaded to remain at GE by Reuben Gutoff, an executive at the company, who promised him that he would help create the small-company atmosphere Welch desired.[10] In 1963, an explosion at the factory which was under his management blew off the roof of the facilities, and he was almost fired for that episode.[11]
By 1968, Welch became the vice president and head of GE's plastics division, which at the time was a $26 million operation for GE.[7] Welch oversaw production as well as the marketing for the GE-developed plastics Lexan and Noryl. Not long after, in 1971, Welch also became the vice president of GE's metallurgical and chemical divisions.[7] By 1973, Welch was named the head of strategic planning for GE and he held that position until 1979, which involved him now working from the corporate headquarters, exposing him to many of the "big fish" he would one day be among.[12] Not long after his promotion to head of strategic planning, Welch was named senior vice president and head of Consumer Products and Services Division in 1977, a position he held until 1979 when he became the vice chairman of GE.[7]
In 1981, Welch became GE's youngest chairman and CEO, succeeding Reginald H. Jones. By 1982, Welch had dismantled much of the earlier management put together by Jones with aggressive simplification and consolidation. One of his primary leadership directives was that GE had to be No. 1 or No. 2 in the industries it participated in.[13]
Through the 1980s, Welch sought to streamline GE. In 1981, he made a speech in New York City called "Growing fast in a slow-growth economy".[14] Under Welch's leadership, GE increased market value from $12 billion in 1981 to $410 billion when he retired,[15] making 600 acquisitions while shifting into emerging markets. Welch pioneered a policy of informality at the work place, allowing all employees to have a small business experience at a large corporation.[10] Welch worked to eradicate perceived inefficiency by trimming inventories and dismantling the bureaucracy that had almost led him to leave GE in the past. He closed factories, reduced pay rolls and cut lackluster units.[16]
Welch valued surprise and made unexpected visits to GE's plants and offices.[10] Welch popularized so-called "rank and yank" policies used now by other corporate entities. Each year, Welch would fire the bottom 10% of his managers, regardless of absolute performance.[17] He earned a reputation for brutal candor. He rewarded those in the top 20% with bonuses and stock options. He also broadened the stock options program at GE, extending availability from top executives to nearly one third of all employees. Welch is also known for abolishing the nine-layer management hierarchy and bringing a sense of informality to the company.[18]
During the early 1980s he was dubbed "Neutron Jack" (in reference to the neutron bomb) for eliminating employees while leaving buildings intact.[19] In Jack: Straight From The Gut, Welch states that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985. Of the 112,000 who left the payroll, 37,000 were in businesses that GE sold, and 81,000 were reduced in continuing businesses. In return, GE had increased its market capital tremendously. Welch reduced basic research, and closed or sold off businesses that were under-performing.
In 1986, GE acquired RCA.[20] RCA's corporate headquarters were located in Rockefeller Center; Welch subsequently took up an office in the now GE Building at 30 Rockefeller Plaza. The RCA acquisition resulted in GE selling off RCA properties to other companies and keeping NBC as part of the GE portfolio of businesses. During the 1990s, Welch shifted GE's business from manufacturing to financial services through numerous acquisitions.
Welch adopted Motorola's Six Sigma quality program in late 1995. In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion and in 2000, the year before he left, they were nearly $130 billion.[15] By 1999 he was named "Manager of the Century" by Fortune magazine.[21]
Embedding succession planning and employee development is important since the departures of management can have significant consequences on an organization.[22] This decision will have paramount effects on future activities. Welch was passionate in making people GE's core competency.[23] There was a lengthy and publicized succession planning saga prior to his retirement among James McNerney, Robert Nardelli, and Jeffrey Immelt, with Immelt eventually selected to succeed Welch as chairman and CEO. His successor plan has always been a priority, as noted in his 1991 speech "From now on, [choosing my successor] is the most important decision I'll make. It occupies a considerable amount of thought almost every day."
Nardelli became the CEO of Home Depot until his resignation in early 2007, and until recently, was the CEO of Chrysler, while McNerney became CEO of 3M until he left that post to serve in the same capacity at Boeing.
Welch's "walk-away" package from GE was not valued at the time of his retirement, but GMI Ratings estimates its worth at $420 million.[24]
Upon his retirement from GE, Welch had stated that his effectiveness as its CEO for two decades would be measured by the company's performance for a comparable period under his successors. Welch had grown GE to over $450 billion in market capitalization, of which about 40% was in financial services. Twenty years later, the company's market capitalization was only $200 billion, and Welch refused to discuss its decline, other than noting much of the decline had resulted from investments in real estate, and that his immediate, handpicked successor, Jeff Immelt had to deal with the aftereffects of the September 11, 2001 terrorist attack.[26] The New York Times wrote a critical article in 2017, noting GE's stock price as overvalued under Welch because of the growth of the financial services sector, as well as described the amalgamated corporation's decline in 16 years under Immelt, who likewise was one of the country's highest-paid managers and eventually sold off two of Welch's largest acquisitions, NBC Universal and GE Capital.[27]
According to BusinessWeek in 1998, Welch's critics questioned whether the short-term performance pressure he placed on employees may have led them to "cut corners", thus contributing to subsequent scandals over defense-contracting, and/or the Kidder, Peabody & Co. bond-trading scheme in the early 1990s.[10] The following year, CEO Welch took issue with reclassification of GE in the Fortune 500 as a "diversified financial services company" rather than an "electrical equipment company," and by 2005 many had noted that the price-earnings ratios of the financial services sector were lower than that for GE.[28] In 2014, GE Capital (the company's major financial services branch organized during Welch's tenure) agreed to the largest credit card discrimination settlement in history, concerning many years of deceptive marketing as well as discriminatory credit practices.[29] After Welch's tenure, GE Capital had been labeled as "too big to fail" and had become regulated by the Federal Reserve. The retired Welch publicly praised his former firm's "slim-down" and return to being an industrial company.[30] In 2018 Welch discussed the different financial culture in Kidder Peabody, whose acquisition he arranged during his tenure at GE, and whose ethos was based on short term bonus calculations.[26] Shortly before the settlement was announced, GE Capital renamed itself as Synchrony Bank; the spin-off took two years.
Welch also often received criticism for a lack of compassion for the middle class and working class. When asked about excessive CEO pay compared to ordinary workers (including backdatingstock options, golden parachutes for nonperformance, and extravagant retirement packages), Welch labeled such "outrageous" allegations and vehemently opposed proposed SEC regulations affecting executive compensation. Countering the public uproar, Welch declared that CEO compensation should continue to be dictated by the "free market," without interference from government or other outside parties.[31] One admirer believed Welch's acquisitions and wholesale shutdowns of GE business units Welch "proved" that keeping only the "good" units of a company can maximize ROI in the short term.[32]
Welch's income and assets came under particular scrutiny during his divorce from his second wife, Jane Welch, in 2001, for adultery with the woman who became his third wife. Court filings during the divorce described Welch's GE compensation, which led to a Securities and Exchange Commission investigation of the then-retired Welch's employment contracts with GE.[33][34] In 1996, Welch and GE had agreed to a "retention package" worth $2.5 million, and which promised continued access after Welch's retirement to benefits he had received as CEO—including an apartment in New York, baseball tickets and the use of a private jet and chauffeured car.[33][35] Welch stated that he did not want more money, nor a more traditional stock package, but instead preferred to retain the lifestyle he had enjoyed as GE's CEO. According to a 2008 interview with Welch, he had filed the agreement with the SEC, and addressed the media attention and accusations of being "greedy" by renouncing those benefits.[35]
In 2012, Welch and his third wife, Suzy Welch, quit their business associations with Fortune magazine and Reuters news service after Fortune published an article which criticized Welch's tweet shortly before the 2012 election that alleged the Obama administration manipulated certain economic statistics, as well as another article which elucidated the 100,000 jobs GE lost during his tenure as CEO.[36]
Following Welch's retirement from General Electric, he became an adviser to private equity firm Clayton, Dubilier & Rice and to the chief executive of IAC, Barry Diller.[37][38] In addition to his consulting and advisory roles, Welch has been active on the public speaking circuit and co-wrote a popular column for BusinessWeek with his wife, Suzy, for four years until November 2009. The column was syndicated by The New York Times.[38][39]
In September 2004, the Central Intelligence Agency published a parody of Welch applying his management skills while serving as imagined Deputy Director of Intelligence.[40]
On January 25, 2006, Welch gave his name to Sacred Heart University's College of Business, which was known as the "John F. Welch College of Business"[42] until 2016, when it began using the name the "Jack Welch College of Business." Since September 2006, Welch has been teaching a class at the MITSloan School of Management to a hand-picked group of 30 MBA students with a demonstrated career interest in leadership.[43]
In December 2016, Welch joined a business forum assembled by then president-elect Donald Trump to provide strategic and policy advice on economic issues.[44]
In 2009, Welch founded the Jack Welch Management Institute (JWMI), a program at Chancellor University that offered an online executive MBA. The institute was acquired by Strayer University in 2011.[45] Welch has been very actively involved with the curriculum, faculty and students since the beginning of the institution.[46][47] JWMI's MBA program was recently named the number one most influential education brand on Linkedin[48] and one of the top business schools to watch in 2016.[49] The program has also been named one of the Top 25 Online MBA Programs two years in a row (2017 & 2018) by the Princeton Review for its excellence in five areas of selection criteria: academics, selectivity, faculty, technical platforms, and career outcomes.[19] Its goal is not to make money, but to build over time focusing on the quality of the program and increasing the number of students enrolled year after year.[50]
At GE, Welch became known for his teaching and growing leaders. He has taught at MIT's Sloan School of Management and teaches seminars to CEOs all over the globe. "More than 35 CEOs at today's top companies [were] trained under Jack Welch".[51] He demonstrates his passion for the institute by being highly involved with the students, faculty, and the development of the curriculum. JWMI students have direct access to Welch and he hosts quarterly video conferences with his students.[51]
It is known that along with his video conferences, Welch creates many video responses to messages on bulletin boards and answers individual emails. His investment in the university is also reflected in his interest in the institute's Net Promoter score (NPS). He administers surveys on satisfaction regularly and scrutinizes the results to find scores that need improvement. In an interview with Wired Academic, Welch explained the overall status of his MBA program, stating that the persistence rate of students continuing on to a second year had grown from 90% to 95%, and that JWMI turns away very few students in the admissions process. He also said that he would like better leadership training for MBA students.[52]
Welch had four children with his first wife, Carolyn. They divorced amicably in April 1987 after 28 years of marriage.[citation needed] His second wife, Jane Beasley, was a former mergers-and-acquisitions lawyer. She married Welch in April 1989, and they divorced in 2003. While Welch had crafted a prenuptial agreement, Beasley insisted on a ten-year time limit to its applicability, and thus she was able to leave the marriage reportedly with around $180 million.[53]
Welch's third wife, Suzy Wetlaufer (née Spring), co-authored his 2005 book Winning as Suzy Welch. She served briefly as the editor-in-chief of the Harvard Business Review. Welch's wife at the time, Jane Beasley, found out about an affair between Wetlaufer and Welch. Beasley informed the Review and Wetlaufer was forced to resign in early 2002 after admitting to the affair with Welch while preparing an interview with him for the magazine.[54]
Starting in January 2012, Welch and Suzy Welch wrote a biweekly column for Reuters and Fortune,[55][56] which they both left on October 9, 2012, after an article critical of Welch and his GE career was published by Fortune.[57]
Welch identifies politically as a Republican.[58] He has stated that global warming is "the attack on capitalism that socialism couldn't bring", and that it is a form of "mass neurosis".[59] Yet, he has said that every business must embrace green products and green ways of doing business, "whether you believe in global warming or not...because the world wants these products".[60]
Regarding shareholder value, Welch said in a Financial Times interview on the global financial crisis of 2008–2009, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products".[61]
Welch was widely criticized for his views on the job numbers from September 2012.[62]
After the Bureau of Labor Statistics released employment data stating that the U.S. unemployment rate had dropped from 8.1% to 7.8%, Welch tweeted, "Unbelievable jobs numbers...these Chicago guys will do anything...can't debate so change numbers".[63] Welch stood by his tweet, stating if he could write it again, he would add question marks at the end to make it clear that his intention was to raise a question over the legitimacy of the numbers.[64] A subsequent New York Post article on the employment data suggested manipulation of some of the survey responses by an individual employee in 2010,[65] but that article was widely debunked, including the fact that the employee had not worked at the Bureau since 2011.[66][67][68] No proof of the political manipulation of the job numbers from September 2012 has been presented.[69] The Census Bureau later released a statement denying the possibility of systematic manipulation of the data.[70] Still, in a Wall Street Journal opinion piece, Welch wrote that the debate led to people looking at unemployment data more carefully and skeptically. Referencing his original tweet, he stated "Thank God I did", in a Squawk Box appearance,[64] and also wrote, "The coming election is too important to be decided on a number. Especially when that number seems so wrong".[71]
Jack Welch instilled an organizational behavior that he called "boundaryless". He called such a company, a "boundaryless company". He defined it as, removing the barriers between traditional functions, and finding great ideas, anywhere within the organization, or from outside the organization, and sharing them with everyone in the company.[72][73][74][75] General Electric under CEO Jeff Immelt has realigned itself becoming more specialized, cutting off ties with older businesses, and is now more focused on services in finance, health care, and aircraft engines.[75]
An article from The New York Times highlights the fact that General Electric after the era of Jack Welch is more focused on core businesses after a spin-off of its North America retail finance business. After selling a fraction of its business, Immelt planned to use the proceeds to build the capital as a "standalone company", resulting in "a boost for shareholders".[76]
On March 11, 2010, Welch cameoed as himself in the NBC sitcom 30 Rock, appearing in the season four episode "Future Husband". In the episode, Welch confronts Alec Baldwin's character, Jack Donaghy, to confirm the sale of NBC Universal to a fictional Philadelphia-based cable company called Kabletown. The sale is a satirical reference to the real-world acquisition of NBCUniversal from General Electric by Comcast in November 2009.
^O'Boyle, Thomas F. (1998). At any cost : Jack Welch, General Electric, and the pursuit of profit (1. ed.). New York: Knopf. p. 456. ISBN0-679-42132-7.
Jacked Up: The Inside Story of how Jack Welch Talked GE into Becoming the World's Greatest Company by Bill Lane – McGraw Hill (2008), (ISBN978-0-07-154410-8)
At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, Thomas F. O'Boyle, Vintage (1999) (ISBN0-375-70567-8)
Control Your Destiny or Someone Else Will: How Jack Welch is Making General Electric the World's Most Competitive Company by Noel Tichy and Strat Sherman, Doubleday (1993)(ISBN0-385-24883-0)
General Electric Company (GE) is an American multinational conglomerate incorporated in New York and headquartered in Boston. As of 2018, the company operates through the following segments: aviation, healthcare, power, renewable energy, digital industry, additive manufacturing, venture capital and finance, lighting, transportation, and oil and gas.
Steve Ballmer
Steven Anthony Ballmer is an American businessman and investor who was the chief executive officer of Microsoft from January 13, 2000 to February 4, 2014, and is the current owner of the Los Angeles Clippers of the National Basketball Association (NBA). As of October 2018, his personal wealth is estimated at US$42.4 billion, ranking him the 18th richest person in the world.
ABB Group
ABB is a Swiss-Swedish multinational corporation headquartered in Zurich, Switzerland, operating mainly in robotics, power, heavy electrical equipment and automation technology areas. It is ranked 341st in the Fortune Global 500 list of 2018 and has been a global Fortune 500 company for 24 years.
David M. Cote
David M. Cote is an American businessman. Cote previously worked for General Electric and TRW Inc. before he was appointed chairman and chief executive officer (CEO) of Honeywell in 2002, following their acquisition by AlliedSignal. Cote also sat on the JP Morgan Chase risk committee during the period in which the firm lost $6 billion trading credit derivatives. Cote stepped down as CEO at Honeywell at the end of March 2017 and was succeeded by Darius Adamczyk.
Jeff Immelt
Jeffrey Robert Immelt is an American business executive currently working as a venture partner at New Enterprise Associates. He retired as chairman of the board of the U.S.-based conglomerate General Electric on October 2, 2017. He was selected as GE's CEO by their board of directors in 2000 to replace Jack Welch upon Welch's retirement from GE. Previously, Immelt had headed up GE's Medical Systems division as its president and CEO. Immelt stepped down as GE's CEO on August 1, 2017.
GE Healthcare
GE Healthcare is an American multinational conglomerate incorporated in New York and headquartered in Chicago, Illinois. As of 2017, the company is a manufacturer and distributor of diagnostic imaging agents and radiopharmaceuticals for imaging modalities that are used in medical imaging procedures. The company offers dyes that are used in magnetic-resonance-imaging procedures. GE Healthcare also manufactures medical diagnostic equipment including CT image machines. Further, it develops Health technology for medical imaging and information technologies, medical diagnostics, patient monitoring systems, disease research, drug discovery, and biopharmaceutical manufacturing. The company was incorporated in 1994 and operates in more than 100 countries. GE Healthcare operates as a subsidiary of General Electric.
Genpact
Genpact is a professional services firm headquartered in New York City, New York.
Robert Nardelli
Robert Louis Nardelli is an American businessman. He was the chairman and chief executive officer of Chrysler. He had earlier served in a similar capacity at The Home Depot from December 2000 to January 2007. Prior to that, Nardelli had risen to become one of the top four executives at General Electric. Condé Nast Portfolio named Nardelli as one of the "Worst American CEOs of All Time".
Thomas Limberger
Thomas Peter Limberger is a German industrial manager, restructuring expert and investor.
James McNerney
Walter James "Jim" McNerney Jr. is a business executive who was chairman of The Boeing Company until March 1, 2016. He previously served as President and CEO of the company until July 2015.
Jack Welch Management Institute
The Jack Welch Management Institute at Strayer University is a for-profit online educational institution founded in 2009 and based in the United States, offering a Master of Business Administration degree, graduate certificates, and executive certificates for working adults. It was founded by Jack Welch, former CEO of General Electric. The company is headquartered outside of Washington D.C. at Strayer University's corporate office - 2303 Dulles Station Blvd, Herndon, VA 20171.
Hikmet Ersek
Hikmet Ersek was born in Istanbul, Turkey to a mother from Austria and a father from Turkey. His parents met in Paris and then settled in Istanbul. Ersek attended TED Ankara College in Ankara until, at 19, he moved to Austria to attend the Vienna University of Economics and Business. where he graduated with a Master's (Magister) degree in Economics and Business Administration. He speaks English, German and Turkish fluently. He also had a short career as a professional basketball player. Ersek currently lives in the Denver Metro Area, where he serves as the CEO of Western Union.
John L. Flannery
John L. Flannery is an American business executive. He succeeded Jeffrey Immelt as the eleventh CEO and tenth Chairman of General Electric, serving as CEO from August 2017 until October 2018. Prior to ascending to the CEO role, Flannery held leadership roles inside GE for nearly 30 years, heading GE Healthcare, GE India and other business units throughout his career.
