John Francis "Jack" Welch, Jr. is an American business executive, author and chemical engineer.
He was chairman and CEO of General Electric between 1981 and 2001.
During his tenure at GE, the company's value rose 4000%.
In 2006, Welch's net worth was estimated at $720 million.
When he retired from GE he took a severance payment of $417 million, the largest such
payment in history.
Early life and education Jack Welch was born in Peabody, Massachusetts
to John, a Boston & Maine Railroad conductor, and Grace, a homemaker.
Jack is Irish American.
His paternal and maternal grandparents were Irish.
Welch attended Salem High School and University of Massachusetts, graduating in 1957 with
a Bachelor of Science degree in chemical engineering.
He is a member of the Phi Sigma Kappa fraternity.
Welch graduated in 1960 from the University of Illinois with a Master's degree and a PhD
in chemical engineering.
General Electric Welch joined General Electric in 1960.
He worked as a junior chemical engineer in Pittsfield, Massachusetts, at a salary of
$10,500.
In 1961, Welch planned to quit his job as junior engineer because he was dissatisfied
with the raise offered to him and was unhappy with the bureaucracy he observed at GE.
Welch was persuaded to remain at GE by Reuben Gutoff, an executive at the company, who promised
him that he would help create the small company atmosphere Welch desired.
In 1963, an explosion at the factory under his management blew off the roof of the facilities,
and he was almost fired for that episode.
Welch was named a vice president of GE in 1972.
He became senior vice president in 1977 and vice chairman in 1979.
Welch became GE's youngest chairman and CEO in 1981, succeeding Reginald H. Jones.
By 1982, Welch had dismantled much of the earlier management put together by Jones and
led an aggressive simplification and consolidation initiative.
One of his primary leadership directives was that GE had to be No. 1 or No. 2 in the industries
it participated in.
CEO Through the 1980s, Welch sought to streamline
GE.
In 1981 he made a speech in New York City called "Growing fast in a slow-growth economy".
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 closed factories, reduced payrolls and cut lackluster old-line units.
Welch's public philosophy was that a company should be either No. 1 or No. 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, irrespective of absolute
performance.
He earned a reputation for brutal candor in his meetings with executives.
He rewarded 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" 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 businesses that GE sold, and 81,000
were reduced in continuing businesses.
In return, GE had increased its market capital tremendously.
Welch reduced basic research, and closed or sold off businesses that were under-performing.
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
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 Sigma quality program in late 1995.
In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion.
By 1999 he was named "Manager of the Century" by Fortune magazine.
In 2000, the year before he left, the revenues increased to nearly $130 billion.
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 company in the world.
There was a lengthy and well-publicized succession planning saga prior to his retirement between
James McNerney, Robert Nardelli, 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, while McNerney became CEO of 3M until he left that post to serve
in the same capacity at Boeing.
Welch's "walk-away" package from GE was not valued at the time of his retirement, but
GMI Ratings estimates its worth at $420 million.
He served as Chairman of The Business Council in 1991 and 1992.
Criticism According to Businessweek, critics of Welch
have questioned whether the pressure he places on employees may have led them to "cut corners",
which may have contributed to controversies over defense-contracting, or the Kidder, Peabody
& Co. bond-trading scheme in the early 1990s.
Welch has received criticism for a 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 keeping only the "good" units of your company can maximize ROI in the short term.
Welch has 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 said that such allegations
are "outrageous" and has vehemently opposed proposed SEC regulations affecting executive
compensation.
Countering the public uproar over excessive executive pay, Welch stated that CEO compensation
should continue to be dictated by the free market, without interference from government
or other outside agencies.
Welch's income and assets came under scrutiny during his divorce from his second wife Jane
in 2001, after she included details in divorce papers of what she said he received as benefits
from GE.
Welch's contracts with GE were subsequently investigated by the U.S. Securities and Exchange
Commission.
The retention package, worth $2.5 million, agreed upon by Welch and GE in 1996 promised
him continued access after his retirement to benefits he received as CEO including an
apartment in New York, baseball tickets and use of a private jet and chauffeured car.
These benefits were agreed upon in lieu of a more traditional stock package because,
according to Welch, he did not want more money, preferring instead to retain the lifestyle
he had enjoyed as CEO once he retired.
According to an interview with Welch in 2009 this agreement was filed with the SEC.
As a result of the media attention his divorce proceedings brought to his retention package,
particularly claims that such a package made him look "greedy", Welch chose to renounce
the benefits.
After GE Following Welch's retirement from General
Electric, he became an adviser to private equity firm Clayton, Dubilier & Rice and to
the chief executive of IAC, Barry Diller.
In addition to his consulting and advisory roles, Welch has been active on the public
speaking circuit, and co-wrote a popular column for BusinessWeek with his wife, Suzy, for
four years until November 2009.
The column was syndicated by The New York Times.
In 2005, he published Winning, a book about management co-written with Suzy Welch, which
reached No. 1 on The Wall Street Journal bestseller list, and appeared on New York Times' Best
Seller list.
Since January 2012, Welch and Suzy Welch have written a biweekly column for Reuters and
Fortune, which they both left on October 9, 2012, after an article critical of Welch and
his GE career was published by Fortune.
On January 25, 2006, Welch gave his name to Sacred Heart University'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 Management
to a hand-picked group of 30 MBA students with a demonstrated career interest in leadership.
In 2009, Welch founded the Jack Welch Management Institute, a program at Chancellor University
that offered an online executive MBA degree.
The institute was acquired by Strayer University in 2011.
Welch has been actively involved with the curriculum, faculty and students at the online
business school since its launch.
In September 2004 the Central Intelligence Agency published a parody of Jack Welch applying
his management skills while serving as imagined Deputy Director of Intelligence.
Personal life He had four children with his first wife,
Carolyn.
They divorced amicably in April 1987 after 28 years of marriage.
His second wife, Jane Beasley, was a former mergers-and-acquisitions lawyer.
She married Welch in April 1989, and they divorced in 2003.
While Welch had crafted a prenuptial agreement, 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 around $180 million.
Welch's third wife, Suzy Wetlaufer, co-authored his 2005 book Winning as Suzy Welch.
Wetlaufer served briefly as the editor-in-chief of the Harvard Business Review.
Welch's wife at the time, Jane Beasley, found out about an affair between Wetlaufer and
Welch.
Beasley informed the review and Wetlaufer was 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.
On March 11, 2010, Welch appeared as himself in the fourteenth episode of the fourth season
of the hit NBC sitcom 30 Rock.
In the episode, he governed the sale of NBC Universal to a fictional Philadelphia-based
cable company, Kabletown, a parody of the actual acquisition of NBC Universal from General
Electric by Comcast in November 2009.
Opinions Jack Welch identifies as a Republican.
He agrees with the view that global warming is "...the attack on capitalism that socialism
couldn't bring," and that it is a form of "mass neurosis."
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".
In an interview with the Financial Times 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".
After the Bureau of Labor Statistics released employment data in October 2012 claiming that
the U.S. unemployment rate had dropped from 8.1% to 7.8%, Welch tweeted, "Unbelievable
jobs numbers...these Chicago guys will do anything...can't debate so change numbers".
See also Vitality curve
Steve Jobs References
Further reading Jack: Straight From The Gut,
Winning by Jack and Suzy Welch – HarperCollins, Winning: The Answers by Jack and Suzy Welch
– Harper 2006, Jack Welch and the GE way : management insights
and leadership secrets of the legendary CEO by Robert Slater
The New GE: How Jack Welch Revived an American Institution,
Jacked Up: The Inside Story of how Jack Welch Talked GE into Becoming the World's Greatest
Company by Bill Lane – McGraw Hill, At Any Cost: Jack Welch, General Electric,
and the Pursuit of Profit, "Control Your Destiny or Someone Else Will:
How Jack Welch is Making General Electric the World's Most Competitive Company" Doudle
Day 1993 by Noel Tichy and Strat Sherman External links
jackwelch.strayer.edu, official website of the Jack Welch Management Institute
welchway.com, official website of Welch Way Management Training
Jack Welch at the Internet Movie Database Works by or about Jack Welch in libraries