Jack Welch, Larger-Than-Life CEO Of GE, Dies At 84
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One of America's best-known corporate leaders died yesterday, longtime General Electric CEO Jack Welch. He was 84. Welch turned GE into one of the world's most valuable companies while building a reputation for himself as a management guru. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Jack Welch was one of only a handful of celebrity CEOs, the kind of business leader who was known even by people who don't ordinarily read the business pages. In the 20 years he ran General Electric, the company's value jumped more than 30-fold. Noel Tichy, who ran GE's Leadership Center and wrote a book about the CEO, says Welch quickly sold off underperforming businesses like small appliances.
NOEL TICHY: His whole mantra was, No. 1 or No. 2, fix, close or sell. If you can't be No. 1 or No. 2 in your business, you're going to get clobbered.
HORSLEY: At the same time, Welch pushed GE aggressively into new industries, like medical devices, broadcasting and especially finance. Today on CNBC, a network once owned by General Electric, the company's current CEO, Larry Culp, said Welch was a role model for a generation of corporate leaders.
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LARRY CULP: Jack was, first and foremost, about talent in the team, and he had a deep passion for winning.
HORSLEY: Welch grew up in Salem, Mass., the son of a railroad conductor. He was picked on as a kid for stuttering, but Tichy says that just gave him a thick skin.
TICHY: His mother told him early on, don't worry about your stutter. Your brain just works faster than your tongue.
HORSLEY: Trained as a chemical engineer, Welch started his career at GE's plastics division and quickly climbed into management. Tichy says GE, like a lot of big American companies at the time, was smothering under slow-moving layers of corporate bureaucracy.
TICHY: It's like having four sweaters on, and you go outside. You don't know it's cold. You start peeling the sweaters off, and you finally get a sense of the temperature.
HORSLEY: Under Welch's leadership, GE peeled off a lot of corporate layers to become a leaner and more nimble company. In 1999, Fortune magazine crowned Welch manager of the century. He was the focus of a "60 Minutes" profile the following year.
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JACK WELCH: We had to get competitive. The Japanese were eating our lunch in the '70s. As a country, we had gotten too sloppy. The whole system didn't work. It was a command and control system and layers and bureaucrats and parking spaces, trimmings of office.
HORSLEY: In his first five years as CEO, Welch cut GE's workforce by more than 100,000 people, earning another title - Neutron Jack. Welch hated that label, but he made no apologies for a personnel rating system that "60 Minutes" called Darwinian, with the bottom 10% of performers quickly shown the door.
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WELCH: The best thing you can do to an employee is early on, as early as you know they're the bottom 10, let them know so they can go on and adjust their life.
HORSLEY: Welch retired from GE in 2001 just days before the 9/11 attacks. In the decades since, GE has struggled financially, and today it's worth only about a quarter of what it was at its peak. Charles Elson, who's a professor of corporate governance at the University of Delaware, says that casts a shadow over how much value Welch really built.
CHARLES ELSON: The question that we have to look at today - was the value short term value, or was it real value that was ultimately mismanaged?
HORSLEY: Welch also triggered an SEC investigation with his multimillion-dollar retirement package, which included country club memberships and use of a corporate jet. He ultimately gave up those perks, but Elson says asking for them in the first place betrayed a lack of judgment.
ELSON: It was overreaching and not only, I think, offensive to the investors in GE but, I think, offensive to the public in general.
HORSLEY: Still, Welch will be remembered as someone who rewrote the handbook for American business in the late 20th century. President Trump, who launched his reality TV show when NBC was part of the GE empire, called Welch a business legend and a corporate leader like no other.
Scott Horsley, NPR News, Washington.
(SOUNDBITE OF NIKLAS AMAN'S "BOARDWALK") Transcript provided by NPR, Copyright NPR.