CEO’s favourite word was ‘candour’, but he wasn’t so happy about ‘Neutron Jack’
When the UK’s Financial Times asked its readers to pick which historical figure, living or dead, they would most like on their boards, the three clear winners were Winston Churchill, Bill Gates and Jack Welch, who has died aged 84.
When Welch took over as chairman and chief executive of General Electric in 1981, the company was in good health, having posted profits of US$1.5 billion on sales of US$25b, making it the ninth most profitable business in the Fortune 500. When Welch left 20 years later he had increased GE’s value by 4000 per cent to US$410b.
The diminutive son of a train conductor had looked across the
Pacific and eyed the eversharpening threat from Japan. He realised that GE simply could not compete with it in manufacturing the electrical appliances that had become the company’s stock in trade.
‘‘I came into a company that had at least an extra 100,000, maybe 150,000 extra people. It was the early 80s. We were making television sets in Syracuse, New York, and the Japanese were selling them at the mall cheaper than we were making them,’’ he said. He shut down the operation, earning a nickname that he did not care for – ‘‘Neutron Jack’’ – after the bomb that could wipe out populations while minimising damage to buildings.
Welch diversified GE into financial services. As the sector began to power the US economy in the 1980s, GE Capital began to make huge profits. At the GE factories still making jet engines, power station turbines and medical equipment, Welch introduced lean manufacturing practices, such as the Six Sigma quality control system.
Welch was short, squat and gravelly voiced with a piercing blue-eyed stare and a reputation for volatility. He did not allow a stammer to dampen his appetite for debate. One former colleague, Ralph D Ketchum, recalled: ‘‘You can’t even say hello to Jack without it being confrontational.’’
The man himself liked to think he was approachable. His favourite word was ‘‘candour’’. He said: ‘‘If people are open, upfront, the team rallies around it.’’
The workplace, Welch said, had to be so informal that ideas would be listened to from the humblest worker on the shopfloor and shared throughout the company. He was liable to swoop on any GE plant, factory or office to talk to employees. Good ideas were acted on fast.
In the relentless pursuit of targets, nothing was sacred at a company with a venerable past, founded by JP Morgan in 1889 to finance Thomas Edison’s projects in electricity. Welch’s favourite slogan was that if it was not a market leader, it had to be ‘‘fixed, closed or sold’’. In his first four years as GE’s chief executive, 112,000 people were sacked. Welch measured the performance of every employee. The top 10 per cent were given stock options. The poorest 10 per cent were sacked each year regardless of how well the company was doing.
When he retired in 2001 his severance payment, reportedly worth US$417 million, was the biggest in business history.
John Francis Welch Jr was born into an Irish-American family in 1935 in Peabody, Massachusetts. His mother, Grace (nee Andrews), was a housewife and his father, John Sr, a conductor on the Boston and Maine Railroad.
From an early age, John Jr lived to win at games and sport. Once after losing an ice hockey match, he hurled his stick across the rink in disgust. His mother burst into the changing room and shouted: ‘‘You punk! If you don’t know how to lose, you’ll never know how to win!’’
He attended Salem High School and studied chemical engineering at the University of Massachusetts Amherst and University of Illinois before joining GE in 1960 as a chemical engineer.
In 1971 he became vice-president of GE’s metallurgical and chemical departments. A decade later he was appointed GE’s youngest chief executive at the age of 45.
Welch married his first wife, Carolyn Osburn, in 1959. They divorced in 1987 and he is survived by their four children. In 1989 he married Jane Beasley, a mergers and acquisitions lawyer. The marriage ended when she discovered that he was having an affair with journalist Suzy Wetlaufer after she interviewed him for Harvard Business Review. He married Wetlaufer in 2004.
Welch established the GE management academy, where he would lecture to future corporate leaders, and later communicated his ideas to a global audience in his 2001 book Jack: Straight From the Gut. The book sold 10 million copies.
A Republican whom Donald Trump claimed as a close friend, Welch once declared that global warming was a ‘‘mass neurosis’’ and ‘‘the attack on capitalism that socialism couldn’t bring’’. However, he was ever alive to opportunities. As global moves to cut carbon emissions gathered pace, he counselled all businesses to go green ‘‘whether you believe in global warming or not . . . because the world wants these products’’.
One former colleague recalled: ‘‘You can’t even say hello to Jack without it being confrontational’’.