Jack Welch In Memoriam: 5 Indisputable Management Ideas from America’s Toughest Boss
On the first of March, the world said goodbye to Jack Welch, one of the world’s greatest business icons. An industry giant, Welch’s six-decade career was a testament to the immense possibilities accessible to one with the right amount of foresight, discipline, shrewdness, and ruthless pragmatism. From joining General Electric as an unhappy junior engineer in 1960 to become the youngest-ever chairman and CEO, Welch rose through the ranks with a thunderous force that changed the corporate world forever.
As CEO, he implemented strict policies that transformed the company and delivered extraordinary growth. His radical business ideas, despite attracting criticism from time to time, paid off.
General Electric’s market value went from $12 billion when he took up reins of leadership in 1981 to $410 billion in 2001 when he retired. Many of those ideas are now considered canon, sacred principles followed by managers looking to replicate Welch’s success.
- Drop the Baggage.
Welch was infamous for his downsizing strategy which involved closing down the conglomerate’s least-performing businesses [and laying off its employees] and firing the bottom 10% of its managers based on performance. They were sent packing because they were bested by the top 90%.
Within five years of his chairmanship, Welch had cut off 100,000 of his employees, about a quarter of its workforce.
This was to ensure the company was not investing in business ventures that did not yield adequate returns and that managers were consistently kept on their toes to achieve the maximum. Top corporations across the Atlantic emulated this strategy.
- Don’t micro-manage. Lead.
One of Welch’s greatest beliefs was that managers who heavily supervised and barked orders at their employees put their foot on the brakes rather than the accelerator. He thought them to be the greatest obstacle to growth and employee performance. Before Welch’s revolutionary ideas, managers had the duty of performing only watchdog functions: harassing their subordinates until they got the results they wanted.
Welch detested this. For him, a true manager can only ensure productivity if he leads by example. A true leader would involve himself in the day-to-day activities of his business alongside his employees while giving room for innovation and an exchange of ideas. This approach also allows the managers to understand the various aspects of their business while gaining fresh perspectives.
- Embrace Change. It is the Recipe for Growth.
The tycoon advocated a healthy attitude towards change. He believed strongly that a company’s response to change could make or break the company. In the business world, change is a constant thing, and it is important to see the hidden opportunities in that flux so as to exploit it. There is always something new: changed consumer behaviour, advancement in technology, state policies, or new industry competition.
Change could be a signal to the company that it is time to alter some aspect of its production strategy, or a push to reinvent itself in the eyes of the consumer. According to the Massachusetts-born businessman, “Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while.”
A perfect validation for this can be found in the case of Netflix, which was founded in 1998 as a website for the sale and rental of DVDs. But towards the end of the year 2000, nobody was renting DVDs anymore. The company quickly adapted to this change in consumer behaviour and met its potential customers online. Today, it is the leading online streaming service with 167 million subscribers.
- Eliminate Bureaucracy
Bureaucracies—Welch detested them, thought them joyless and counter-productive. With their formality and obsession with slow-paced operations, they are very dangerous for growth and liberal exchange of ideas. According to Welch, an insistence on the stricture of hierarchy and complicated processes births a tense atmosphere that produces uptight employees.
This anti-fun work environment is bound for failure. Instead, the employees should be free to relate with not just each other but also their managers. If they feel they have access to their employers, they will not hesitate to share their ideas and decisions get made quickly.
For Welch, employees need a system that would “turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way.” With bureaucratic boundaries eliminated, informality, fun, and speed will be the founding blocks of a truly successful work environment.
- Focus on Values, Not Numbers.
While numbers are certainly important, they are not the bedrock of any successful organisation. Management is all about people and their attitude to work, which then translates into results, desired or otherwise.
Values represent the company’s vision, culture and, to a reasonable extent, strategy. For this reason, as Welch argues, it is important to ensure the right values are instilled into the workforce.
It is important to focus on the key behaviours and attitudes as they align with the greater vision. Without consistent values, the company would lose its identity and eventually struggle to maintain its unique presence on the market.
Welch, in his own words: “Let it be known that values will play a vital role in hiring and promoting at your company. Support and encourage those employees who typify the most important values of the company.”
