In writing The Leading-Edge Managers Guide to Success, I analysed some famous leaders, Including Jack Welch.
JACK WELCH, THE CEO who led GE (General Electric) from being worth $10 billion to $500 billion, had a long and distinguished career. He passed away in 2019, aged .We can learn a lot from his management and leadership practises.
Care enough to be candid
Caring for people did not mean hiding behind reality. He believed in candor, being honest with underperformers. He candidly told people how they were doing, what they should improve, and how they could improve performance. His candor enabled more people to participate in the conversation; it generated speed, cut costs, encouraged people to reflect and impelled them to perform to their potential. He created the 20/70/10 “differentiation” rule where the top 20 percent of performers would be promoted into jobs that fit their strengths, 70 percent be assisted to better meet their potential, and 10 percent be told that their future lies elsewhere. He realized that under-performers may be in the wrong place at the wrong time and encouraged them to follow their passion and find a place where they could excel—it is the kindest thing a leader can do.
Master communication and PR
Anybody lucky enough to attend a Jack Welch presentation witnesses one of the best management communicators. His secret is in his no-spin approach. Also, in this writing, he hits the nail on the head time after time. He developed phases and stories that sum up perfectly what he wants to get across. Hundreds of his one-liners will outlive him: Get better or get beaten. If you are big enough you can go to bat often, take a swing and miss a few and still be in the game. Emotional maturity, integrity and intelligence are tickets to the game. Never buy a company with a culture that does not match yours. Use every brain in the game. Ponder less and do more. Use every encounter with staff as an opportunity to evaluate, coach and build confidence.
Face a crisis head on
He handled each crisis on these assumptions:
- The crisis will be worse than it first appears.
- The bad news will come out sometime so may as well face the music now.
- The situation will be portrayed in the worst possible light by the press.
- There will be carnage.
- The organization will survive.
Create a ‘band of brothers and sisters’
The aim of any leader is to create a band of brothers and sisters feeling within the organization. Welch created an inclusive oneness in GE teams with a shared goal and vision. Team members knew intuitively the correct action to take, requiring little guidance but much trust. This led naturally in creating protégés who were capable to be Welch’s successor.
Recognise the significance of recruiting
Welch saw recruiting or promotion activity as one of the most important things you ever do. He sees recruiting and promoting people who are more skilled than yourself as a positive thing. Jack Welch calls it laying the “golden egg”. During interviews Welch would get “into the candidates skin to find out what they were really made of, to find out if they had a passion for the business, and what their values really were. It was imperative that the candidate’s values were in line with GE values.
Welch excelled in abandonment— letting go of the past. Peter Drucker said, “The first step in a growth policy is not to decide where and how to grow. It is to decide what to abandon.” Welch knew when to cut the losses, admit when he had made a mistake, and move on. He saw that many of GE investments did not make sense. He was ruthless with his view of either fix it, sell it or close it when a business did not meet the strict criteria of being either number one or two in that particular sector.
Exude energy and passion
As Jack Welch says it is important that a leader “has positive energy, the capacity to go-go-go with healthy vigour and an upbeat attitude through good times and bad”. Welch was a ‘never say die’ leader. Jack Welch says great leaders celebrate more. As he points out “work is too much a part of life not to recognise moments of achievement”. The key for leaders is to ensure that you are in a business sector that you are passionate about. Jack Welch, throughout his life, has always exuded passion from all his pores.
Welch realized that a decision, even if wrong, is often better than no decision. Welch would make the unpopular decision and the hard calls even where not all information was available. Welch says that leaders have to rely on their gut instinct. They have to realize they have been appointed to the position because of their experience and history of making more right decisions than incorrect decisions. In the decision- making process, great leaders have the “curiosity that borders on scepticism” making sure all the stones have been turned over. Getting a proposal approved by Jack Welch was a baptism of fire. He would try to pull it down from all directions; once the team showed they understood all the issues and could answer all the concerns, Welch then gave the thumbs up and was the keenest supporter.
Always seek opportunities
Welch spent much time looking into the future. He was involved early with the rise of India and China. Opportunities were embraced and managed to fit both GE needs and local conditions and values. He said: “Control your destiny, or someone else will”; “Change before you have to”; “If you don’t have a competitive advantage, get out of the game.” He is often talked about for his skilful and intuitive gift in managing a portfolio of strategies.
Welch was at the fore front of many of the moves GE made under his leadership. He saw change as opportunity. He led the Ecommerce and the six sigma revolutions that were to have such a profound impact on GE. He also challenged many established practices in performance management. The annual planning process, which cripples most organizations by taking organizations into some incremental change and a “spend it or lose it process”, was thrown out along with poorly designed reward schemes. Welch saw that the annual planning process lead to a “splitting the difference negotiation—a target that would minimize risk and maximize bonus and one that looked merely at some small incremental improvement on last year’s performance. This was not the stretch environment that Peter Drucker or Jack Welch thought appropriate for GE. Instead of setting a fixed target in the future, Welch introduced relative measures—bonuses would be assessed after the year when results could be assessed against market conditions and market share.
Execution, execution, execution
There are countless stories of his focus on execution. In one meeting, managers were explaining to Jack about the lack of progress in a project. He stopped the meeting and reconvened it four hours later. In that time, the team did more on the project than in the previous three months. Peter Drucker said that execution was always the benchmark to evaluate a leader. Great leaders finish what they start. Many initiatives fail because the leader does not get behind the projects and see them through. Welch had the tenacity to see his initiatives through.
Energize your staff
Energizing others is one of Welch’s 4 Es in Leadership. Welch would instil confidence in those he came in contact with. With the many take-overs GE achieved with Welch there was a major opportunity to utilise the talent acquired in the take-over. He saw take-overs as a talent grab and wanted to use “every brain in the game”. Welch had a manner that staff warmed to. Everybody felt they could have a chat, challenge a process, ask a question. By being a patient listener Welch got to know his staff better than most CEOs. Jack Welch sees the HR team as vital to the organisation, The head of HR being on the same status as the CFO. Jack Welch’s aim was always to have the flattest structure as possible. He saw this as a way to avoid the silo mentality of large multinationals. He set up a guide of ten direct reports to a manager. Welch liked to set goals that mixed the possible and the impossible. He said, “Effective leaders envision big results.” By raising the bar, managers were forced to rethink the route plan and find new ways to succeed.
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