John Francis "Jack" Welch, Jr. (born November 19, 1935) is an American
chemical engineerIn the field of engineering, a chemical engineer is the profession in which one works principally in the chemical industry to convert basic raw materials into a variety of products, and deals with the design and operation of plants and equipment to perform such work...
, business executive, and
authorAn author is broadly defined as "the person who originates or gives existence to anything" and that authorship determines responsibility for what is created. Narrowly defined, an author is the originator of any written work.-Legal significance:...
. He was Chairman and
CEOA chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of
General ElectricGeneral Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
between 1981 and 2001. In 2006 Welch's net worth was estimated at $720 million.
Early life and career
Jack Welch was born in
Salem, MassachusettsSalem is a city in Essex County, Massachusetts, United States. The population was 40,407 at the 2000 census. It and Lawrence are the county seats of Essex County...
to John, a Boston & Maine Railroad conductor, and Grace, a homemaker.
Welch attended
Salem High SchoolSalem High School is a four-year public high school in Salem, Massachusetts. It has an enrollment of approximately 1,400 students and is accredited by the Massachusetts Department of Education and by the New England Association of Schools and Colleges....
and later the
University of Massachusetts AmherstThe University of Massachusetts Amherst is a public research and land-grant university in Amherst, Massachusetts, United States and the flagship of the University of Massachusetts system...
, graduating in 1957 with a
Bachelor of ScienceA Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
degree in
chemical engineeringChemical engineering is the branch of engineering that deals with physical science , and life sciences with mathematics and economics, to the process of converting raw materials or chemicals into more useful or valuable forms...
. While at UMass he was a member of the Alpha chapter of the
Phi Sigma Kappa-Phi Sigma Kappa's Creed and Cardinal Principles:The 1934 Convention in Ann Arbor brought more changes for the fraternity. Brother Stewart W. Herman of Gettysburg wrote and presented the Creed, and Brother Ralph Watts of Massachusetts drafted and presented the Cardinal Principles.-World War II:The...
fraternity.
Welch went on to receive his
M.S.A master's is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice...
and
Ph.DDoctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...
at the
University of Illinois at Urbana-ChampaignThe University of Illinois at Urbana–Champaign is a large public research-intensive university in the state of Illinois, United States. It is the flagship campus of the University of Illinois system...
in 1960.
Welch joined General Electric in 1960. He worked as a junior
chemical engineerIn the field of engineering, a chemical engineer is the profession in which one works principally in the chemical industry to convert basic raw materials into a variety of products, and deals with the design and operation of plants and equipment to perform such work...
in
Pittsfield, MassachusettsPittsfield is the largest city and the county seat of Berkshire County, Massachusetts, United States. It is the principal city of the Pittsfield, Massachusetts Metropolitan Statistical Area which encompasses all of Berkshire County. Its area code is 413. Its ZIP code is 01201...
, at a
salaryA salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
of $10,500 annually. While at GE, he blew off the roof of the factory, and was almost fired for doing so. Welch was displeased with the $1,000 raise he was offered after his first year, as well as the strict bureaucracy within GE. He planned to leave the company to work with International Minerals & Chemicals in
Skokie, IllinoisSkokie is a village in Cook County, Illinois, United States. Its name comes from a Native American word for "fire". A Chicago suburb, for many years Skokie promoted itself as "The World's Largest Village". Its population, per the 2000 census, was 63,348...
.
Reuben Gutoff, a young executive two levels higher than Welch, decided that the man was too valuable a resource for the company to lose. He took Welch and his first wife Carolyn out to dinner at the Yellow Aster in Pittsfield, and spent four hours trying to convince Welch to stay. Gutoff vowed to work to change the bureaucracy to create a small-company environment.
"Trust me," Gutoff remembers pleading. "As long as I am here, you are going to get a shot to operate with the best of the big company and the worst part of it pushed aside."
"Well, you are on trial," retorted Welch.
"I'm glad to be on trial," Gutoff said. "To try to keep you here is important."
At daybreak, Welch gave him his answer. "It was one of my better marketing jobs in life," recalls Gutoff. "But then he said to me--and this is vintage Jack--'I'm still going to have the party because I like parties, and besides, I think they have some little presents for me." Some 12 years later, Welch would audaciously write in his annual performance review that his long-term goal was to become CEO.
Welch was named a
vice presidentA vice president is an officer in government or business who is below a president in rank. The name comes from the Latin vice meaning 'in place of'. In some countries, the vice president is called the deputy president...
of GE in 1972. He moved up the ranks to become senior vice president in 1977 and vice chairman in 1979. Welch became GE's youngest chairman and CEO in 1981, succeeding
Reginald H. JonesReginald H. Jones was the chairman and CEO of General Electric from 1972 to 1981.-Biography:Jones was born in Stoke-on-Trent, England, United Kingdom....
. By 1982, Welch had disassembled much of the earlier management put together by Jones.
Tenure as CEO of GE
Through the 1980s, Welch worked to streamline GE. In 1981 he made a speech in
New York CityNew York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
called "Growing fast in a slow-growth economy". This is often acknowledged as the "dawn" of the obsession with
shareholder valueShareholder value is a business term, sometimes phrased as shareholder value maximization or as the shareholder value model, which implies that the ultimate measure of a company's success is the extent to which it enriches shareholders...
. Later, in an interview with the
Financial TimesThe Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
on the Global financial crisis of 2008–2009, Welch said, “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.” Welch did not make such a comment while still the CEO of GE.
He also pushed the managers of the businesses he kept to become more productive. 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 shut down factories, reduced payrolls and cut lackluster old-line units. Welch's public philosophy was that a company should be either #1 or #2 in a particular industry, or else leave it completely. Welch's strategy was later adopted by other CEOs across corporate America.
Each year, Welch would fire the bottom 10% of his managers. He earned a reputation for brutal candor in his meetings with executives. He would push his managers to perform, but he would reward those in the top 20% with bonuses and stock options. He also expanded the broadness of the stock options program at GE from just top executives to nearly one third of all employees. Welch is also known for destroying the nine-layer management hierarchy and bringing a sense of informality to the company.
During the early 1980s he was dubbed "Neutron Jack" (in reference to the
neutron bombA neutron bomb or enhanced radiation weapon or weapon of reinforced radiation is a type of thermonuclear weapon designed specifically to release a large portion of its energy as energetic neutron radiation rather than explosive energy...
) for eliminating employees while leaving buildings intact. 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 sold businesses, and 81,000 were reduced in continuing businesses. In return, GE had increased its market capital tremendously. However, Welch eliminated basic research, and had closed or sold off businesses that were allegedly under-performing. These and other moves placed basic research at the bottom of the list with respect to funding and attention.
In 1986, GE acquired RCA. 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 ultimately keeping NBC as part of the GE portfolio of businesses. During the 1990s, Welch shifted GE business from manufacturing to financial services through numerous acquisitions.
Welch adopted Motorola's
Six SigmaSix Sigma is a business management strategy originally developed by Motorola, USA in 1986. , it is widely used in many sectors of industry.Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and...
quality program in late 1995. In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues increased to nearly $130 billion. When Jack Welch left GE, the company had gone from a market value of $14 billion to one of more than $410 billion at the end of 2004, making it the most valuable and largest company in the world.
At the time of his retirement, Welch received a salary of $4 million a year, followed by his controversial retirement plan of $8 million a year, which included GE's $80,000 per month luxury apartment in Trump Tower (New York City), free food and wine, access to a $300,000 per month B737 corporate jet,
VIPVIP and V.I.P. is a three-letter acronym that may refer to:-In general:* Vacuum insulated panel* Values, Influence, and Peers, an anti-crime campaign in Ontario elementary schools* Variable Information Printing, a form of on-demand printing...
tickets to the
Metropolitan OperaThe Metropolitan Opera is an opera company, located in New York City. Originally founded in 1880, the company gave its first performance on October 22, 1883. The company is operated by the non-profit Metropolitan Opera Association, with Peter Gelb as general manager...
, the Knicks,
WimbledonThe Championships, Wimbledon, or simply Wimbledon , is the oldest tennis tournament in the world, considered by many to be the most prestigious. It has been held at the All England Club in Wimbledon, London since 1877. It is one of the four Grand Slam tennis tournaments, the other three Majors...
, the US Open (tennis) and the Red Sox, an office and a secretary in the
GE buildingThe GE Building is an Art Deco skyscraper that forms the centerpiece of Rockefeller Center in the midtown Manhattan section of New York City. Known as the RCA Building until 1988, it is most famous for housing the headquarters of the television network NBC...
and a limousine with driver. In 1999 he was named "Manager of the Century" by Fortune magazine.
There was a lengthy and well-publicized succession planning saga prior to his retirement between
James McNerneyW. James McNerney, Jr, is an American business executive. He is the current CEO of Boeing Company.- Education :...
,
Robert NardelliRobert Louis "Bob" Nardelli 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...
, and Jeffrey Immelt, with Immelt eventually selected to succeed him as Chairman and CEO. Nardelli became the CEO of Home Depot until his resignation in early 2007, and until recently, was the CEO of
Chrysler Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
, while McNerney became CEO of
3M3M Company , formerly known as the Minnesota Mining and Manufacturing Company, is an American multinational conglomerate corporation based in Maplewood, Minnesota, United States....
until he left that post to serve in the same capacity at
BoeingThe Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...
.
Criticism
Some industry analysts claim that Welch is given too much credit for GE's success. They contend that individual managers are largely responsible for the company's success. For example,
GE CapitalGE Capital is the financial services unit of General Electric, one of five major units. Its various divisions include GE Capital Aviation Services, GE Capital Real Estate, GE Energy Financial Services and GE Money....
, under Gary C. Wendt, contributed nearly 40% of the company's total earnings while NBC, and
Robert C. WrightRobert Charles "Bob" Wright was a U.S. television businessman, having served as Chairman of NBC Universal. He graduated from Chaminade High School, the College of the Holy Cross and earned an LLB from the University of Virginia Law School....
worked to turn the network around, leading to five years of double-digit earnings growth. It is also held that Welch did not rescue GE from great losses as the company had 16% annual earnings growth during the tenure of his predecessor, Reginald H. Jones. Critics also say that "the pressure Welch imposes leads some employees to cut corners, possibly contributing to some of the defense-contracting scandals that have plagued GE, or to the humiliating
Kidder, Peabody & Co.Kidder, Peabody & Co. was a U.S.-based securities firm, established in Massachusetts in 1865. Its operations included investment banking, brokerage, and trading....
bond-trading scheme of the early 1990s that generated bogus profits".
Welch has also received criticism over the years for an apparent lack of compassion for the middle class and working class. By his actions during acquisitions and wholesale shutdowns of GE business units Welch proved that his technique of only keeping the units your company is "good" at you can maximize ROI for the short term. In the meantime (as of the 1990) thousands of employees have been removed from the rolls of GE. Welch has publicly stated that he is not concerned with the discrepancy between the salaries of top-paid CEOs and those of average workers. When asked about the issue of excessive CEO pay, Welch has stated that such allegations are "outrageous" and has vehemently opposed proposed
SECThe U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
regulations affecting executive compensation. Countering the public uproar over excessive executive pay (including backdating stock options, golden parachutes for nonperformance, and extravagant retirement packages), Welch stated that CEO compensation should continue to be dictated by the free market, without interference from government or other outside agencies. In addition, Welch is a vocal opponent of the Sarbanes-Oxley Act of 2002.
Personal life
Welch is a person who stutters. He had four children with his first wife, Carolyn. They
divorceDivorce is the final termination of a marital union, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between the parties...
d amicably in April 1987 after 28 years of marriage. His second wife, Jane Beasley, was a former
mergers-and-acquisitionsMergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
lawyer. She married Jack in April 1989, and they divorced in 2003. While Welch had crafted a
prenuptial agreementA prenuptial agreement, antenuptial agreement, or premarital agreement, commonly abbreviated to prenup or prenupt, is a contract entered into prior to marriage, civil union or any other agreement prior to the main agreement by the people intending to marry or contract with each other...
, Beasley insisted on a ten-year time limit to its applicability, and thus she was able to leave the marriage with an amount believed to be in the range of $180 million.
The third wife of Jack Welch is Suzy Wetlaufer, who co-authored his 2005 book Winning as Suzy Welch. Wetlaufer served briefly as the editor-in-chief of the Harvard Business Review before being forced to resign in early 2002 after admitting to having been involved in an affair with Welch while preparing an interview with him for the magazine.
Welch underwent triple
bypass surgeryCoronary artery bypass surgery, also coronary artery bypass graft surgery, and colloquially heart bypass or bypass surgery is a surgical procedure performed to relieve angina and reduce the risk of death from coronary artery disease...
in May 1995. He returned to work full time in September of the same year and also adopted an exercise schedule that included golf. Welch is a member of
Augusta National Golf ClubAugusta National Golf Club, located in Augusta, Georgia, is a famous men's golf club. Founded by Bobby Jones and Clifford Roberts and designed by Alister MacKenzie on the site of a former indigo plantation, the club opened for play in January 1933. Since 1934, it has played host to the annual...
. However, in Winning, Welch acknowledges that back problems forced him to give up playing golf, and that, surprisingly, he doesn't miss it. He acknowledges using his time formerly spent on the golf course to consult with companies and indulge other personal interests such as modern art, international travel, teaching, and attending
Red SoxThe Boston Red Sox are a professional baseball team based in Boston, Massachusetts, and a member of Major League Baseball’s American League Eastern Division. Founded in as one of the American League's eight charter franchises, the Red Sox's home ballpark has been Fenway Park since . The "Red Sox"...
games. Since then, he has picked up his golf game, playing at courses such as Nantucket Golf Club,
Sankaty Head Golf ClubSankaty Head Golf Club is one of the Eastern-most golf courses in the United States, perched on the edge of Nantucket Island in Siasconset, Massachusetts. The course was designed by Emerson Armstrong and opened in 1923. It is one of the few examples of world-class links-style golf outside of the...
, and the Country Club of Fairfield, CT, among others.
On January 25, 2006, Welch gave his name to
Sacred Heart UniversitySacred Heart University is a Roman Catholic university located in suburban Fairfield, Connecticut, United States. Sacred Heart was founded in 1963 by the Most Reverend Walter W. Curtis, Bishop of the Diocese of Bridgeport, Connecticut. Sacred Heart University was the first Catholic university in...
's College of Business, which will be known as the "John F. Welch College of Business".
Since September 2006, Welch has been teaching a class at the
MIT Sloan School of ManagementThe MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts....
to a hand-picked group of 30 MBA students with a demonstrated career interest in
leadershipLeadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task". Other in-depth definitions of leadership have also emerged.-Theories:...
. He is also a
global warmingGlobal warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
skeptic. 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."
Thanks to a donation from Jack Welch, the Jack Welch Management Institute at the Chancellor University in Ohio was founded in July 2009. The institute offers a MBA program based on Welch's management philosophy. Classes are offered both online and at the school’s Cleveland campus.
On March 11, 2010, Welch appeared as himself in the fourteenth episode of the fourth season of the hit
NBCThe National Broadcasting Company is an American commercial broadcasting television network and former radio network headquartered in the GE Building in New York City's Rockefeller Center with additional major offices near Los Angeles and in Chicago...
sitcom
30 Rock30 Rock is an American television comedy series created by Tina Fey that airs on NBC. The series is loosely based on Fey's experiences as head writer for Saturday Night Live...
. In the episode, he governed the sale of
NBC UniversalNBCUniversal Media, LLC is a media and entertainment company engaged in the production and marketing of entertainment, news, and information products and services to a global customer base...
to a fictional Philadelphia-based cable company, Kabletown, a parody of the actual acquisition of NBC Universal from General Electric by
ComcastComcast Corporation is the largest cable operator, home Internet service provider, and fourth largest home telephone service provider in the United States, providing cable television, broadband Internet, and telephone service to both residential and commercial customers in 39 states and the...
in November 2009.
In August 2010, Jack Welch was interviewed by
Bill Hybels on the topic of leadership during
The Global Leadership Summit, which is hosted by
Willow Creek Association.
In June 2011, when Piers Morgan asked him "You’re a Republican, right?" Welch replied "Yes, absolutely."
Further reading
- Jack: Straight From The Gut, (ISBN 0-446-69068-6)
- Winning by Jack and Suzy Welch - HarperCollins (April 2005), (ISBN 0-06-075394-3)
- Winning: The Answers by Jack and Suzy Welch - Harper 2006, (ISBN 0-00725264-1)
- Jack Welch and the GE way : management insights and leadership secrets of the legendary CEO by Robert Slater (ISBN
0070581045)
- The New GE: How Jack Welch Revived an American Institution, (ISBN 1-55623-670-0)
- Jacked Up: The Inside Story of how Jack Welch Talked GE into Becoming the World's Greatest Company by Bill Lane - McGraw Hill (2008), (ISBN 978-0-07-154410-8)
- At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, (ISBN 0-375-70567-8)
Articles
Videos
Other
- Bio for Jack Welch as featured speaker at the 2011 World Business Forum
The World Business Forum is an annual global business summit held in New York City. A 2008 Burson-Marsteller survey ranks the World Business Forum among the world's top five most influential venues for CEO's and C-Suite executives...