Jack Welch Leadership Style

John Francis Welch Jr (known as Jack Welch) spent 20 years as the Chairman and CEO of General Electric Company (NYSE:GE). During his reign, the stock skyrocketed from just over $1.00 per share in 1982 to a high of $60.00 by the end of 2000. To this day, the company struggles to return to its glory under his direction.

But what was so special about the Jack Welch leadership style?

When he died in March 2020 at the age of 84, Welch was memorialized in mainstream media outlets across the world. Known as “Neutron Jack,” he’s known for downsizing employees while maximizing the company’s operational efficiency.

In fact, Welch set off a downsizing trend through the end of the 20th century as the world shifted from paper to digital. He was a ruthless leader who focused on high-quality management performing specific tasks toward a common goal. And he never settled for less than second place in any market.

He set the tone and wrote the book many modern executives follow, detesting bad businesses and focusing on the numbers. His only regret in life, as mentioned in his post-retirement memoirs, was that he didn’t sell off more bad businesses sooner.

Let’s dive into the history and philosophy of Jack Welch to break down why his management is revered (or reviled) by so many.

Jack Welch: What Is The Role Of A Leader?

In 2016, the Jack Welch Management Institute published a YouTube video with the man himself outlining his thoughts on the role of a leader. His answer is to be the “Chief Meaning Officer.”

He then explains that your job is to drive the company with a vision of where they’re going, why, and the incentive to follow. That’s the key difference to dive into – everybody has (or at least can have) a vision or roadmap for the future. But people won’t follow unless they’re given a reason to roll up their sleeves for the long journey.

According to Welch, people hate change, and explaining to them what’s in it for them to change with you is the most important part of leadership. We see this all the time with companies. Steve Jobs, for instance, is a visionary leader, but the incentive of sleek, easy-to-use, more accessible technology gave people reason to follow his visions.

Welch believes it’s important to get rid of all the bureaucratic clutter within your company to make it possible for employees to succeed. He compares it to curling, where the key to hitting targets is to remove obstacles from the forward path.

And he’s a huge proponent of leaders enjoying the success of every employee in the company. Celebrating successes and being generous keeps employees dedicated to you. It’s clear that he made his impression on the world by helping everyone around him have fun and enjoy their lives.

Even in the speech itself, he makes the crowd laugh. He’s not the hard-nosed boss you would think someone with such a tough reputation would be. In his view, the people who were let go were unnecessary obstacles.

But he made life fun for those who survived the culling. It’s that company culture that ultimately drove the company to its greatest market successes.

What Made Jack Welch a Great Leader?

It wasn’t just his personality that got Welch recognized by Harvard Business Review as the greatest leader of his era. He transformed the company from an appliance and light bulb company to a multinational conglomerate.

Fans of the NBC sitcom 30 Rock are familiar with the running jokes around GE buying the nation’s oldest major broadcast network in 1986. Besides media, it created GE Capital to get into financial services while servicing government and industrial markets too.

The company serves as a model followed by many of modern tech’s largest companies. As it expanded across verticals, it created new revenue streams while also limiting expenses through a smaller staff. He succeeded by drilling into effective hiring.

Welch spent much of his time evaluating and developing great managers who could effectively optimize their respective business units. He helped people thrive by sending his best and brightest people to lead the smallest, hardest struggling divisions.

He also stressed rating employee performance based on productivity and quality. The top-performing 20 percent of employees should be rewarded, the middle 70 percent remain stagnant, and the bottom 10 percent are coached or let go.

This is a key ingredient to how he motivated employees to stay productive.

How Did Jack Welch Motivate His Employees?

Welch found smart incentives to be the most important ingredient in a business’s success. Without that, people will simply stop following your vision since they no longer share it. He fostered loyalty in his GE through energizing efforts that renewed their passion for work.

It’s a mixture of money and happiness, and a big goal to run towards.

The structure outlined above rewards the top performers with financial incentives. These are the employees who receive the highest pay raises, bonuses, and other monetary rewards. It’s not much different than how golfers are ranked by how much money they earned winning tournaments through the year.

But money can’t be the only motivator – people also desire happiness and fun in their lives. Welch fostered an air of fun around him and was personally invested in employees’ personal happiness. He laid the foundation for what would eventually become gamification in business.

And this brings up the next point of how transformational of a leader Jack Welch truly was.

Was Jack Welch a Transformational Leader?

Welch did more than just grow GE – he transformed it from a leader in its niche industry into one of the world’s largest and most competitive enterprises. This was no accident and more a testament to Welch’s ability to continuously seek more.

Had a company like Blockbuster been led by a visionary like Welch, perhaps it could have survived the threat of Netflix (NFLX). Jeff Bezos is also a great transformational leader who grew Amazon (AMZN) from an online retailer to a cloud service provider, ecommerce giant, and more.

Welch breaks transformational leadership down into four steps:

·       Work on yourself

·       Encourage initiative

·       Utilize everyone’s brains

·       Let workers speak

He believed it boils down to developing emotional intelligence. When you understand your employees and treat them like people, they will contribute to their full potential as humans.

And he pulled the best out of people through his unique leadership style.

Jack Welch Leadership Style

We mention 30 Rock, because the caricature of Welch highlights how people remember his leadership style. When asked to describe it himself, he calls it “boundaryless.”

He was never the type to create layers of bureaucracy. In fact, his goal was always to remove the boundaries and limits in corporate America. Today’s open-door policies were pioneered by Welch, and he always preferred to inspire people to want to perform over directing them through micromanagement.

This is the leadership style that made Silicon Valley what it is today. Before the Googles (GOOG) and Facebooks (FB) of the world took Welch’s ideas to the extreme, offices were drab and boring places.

With the shift to virtual work during the pandemic, it wouldn’t be surprising to see even more companies transform the office. When people are more comfortable and feel heard, they are more likely to speak up.

And this is how you crowdsource the best ideas from your workforce to build toward a better future. This optimism is part of why Welch has a legacy that has outlived the man himself.

Jack Welch Rules of Leadership

According to Jack Welch, there are 8 rules of leadership, and anyone can follow them to success. However, they’re not steps – instead, they’re things that will come up daily in many shapes and forms. Sticking to these rules ultimately keeps you on the path of leadership.

1.     Leaders use every opportunity to learn. You can’t always win, but if you learn from the losses and continue to improve, you’re winning in the long run. Welch believed every opportunity is a learning opportunity.

2.     Leaders make people live and breathe their vision. Anyone can have a vision. A true leader inspires other people to take their vision on. When these people internalize your vision, you’ll create a strong operation that can build sustainable success.

3.     Leaders exude positive energy. It’s important to walk in others’ shoes and find ways to stay optimistic from their point of view at all times. Everybody beneath you will have doubts during struggles, and they need to see you being confident in your choices and decisions.

4.     Leaders establish trust with candor and transparency. It’s important to be as open and honest with people so they return the favor to you. This generates genuine conversations that productively move the company forward.

5.     Leaders have courage to make unpopular choices. Sometimes a leader has to stop being everyone’s friend and do what’s right for the company. There are some things that need to be done, like firing an employee, that are for the greater good. You can’t hesitate to do what’s right.

6.     Leaders probe with curiosity. They border on skeptical, but that’s an important step, so long as the resolution leads to actionable takeaways. Looking to point fingers without taking responsibility for improvements has no value.

7.     Leaders set examples to inspire risk. It’s hard to lead people from the back. Instead, you should foster a culture of risk taking by taking your own risks. This fosters an environment where employees aren’t afraid to fail and are more likely to speak up.

8.     Leaders celebrate. Sometimes we focus on punishing failure, and that’s a valid motivation. However, people work harder when motivated by good things. Celebrating everyone’s wins will keep people celebrating you.

With these key ingredients in place, you can foster a successful environment in any company. Of course, it’s a lot easier said than done.

Jack Welch Leadership Lessons

There are plenty of lessons to takeaway from Jack Welch’s leadership. The biggest points are to focus on your people. The measure of a great leader isn’t a direct measurement of individual merits – it’s in the success of the organization as a whole.

And it’s important to remember that we celebrate Welch’s success, but he also experienced plenty of losses. Not every idea is a guaranteed winner.

He doesn’t represent the only way to lead, but Welch is known throughout business as one of the greatest business minds. Following his lead lays a solid foundation for successes in your own business. But fit it into your own style so you’re remaining authentic to yourself.

Whether you agree with him or not, be aware of Welch’s leadership styles, as it created waves that still reverberate today.

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