1. Welch practices a hard-nosed management style. How can such a no-nonsense approach create a motivational atmosphere? Does Jack Welch use negative reinforcement, goal setting, or behavioral selfmanagement? Or does he use a combination of techniques?
2. Jack Welch has set goals to be number one in various markets. Assume that it’s both a difficult and an assigned goal. What does goal-setting research say about the effect of such goals on performance?
3. Why does Jack Welch value self-confidence so highly? Does his style of management inspire it in others?
4. What actions does Jack Welch take to encourage employee self-management?
Jack Welch, now the ex-chairman of General Electric (GE), has been referred to as “Neutron Jack”—when he enters a GE facility, the building remains standing, but the workers are wiped out. Welch picked up the nickname by cutting more than 100,000 workers from GE’s payroll in his first five years (1981–1986). He eliminated the jobs through layoffs, attrition, and the sale of businesses. When Welch took over at age 45 in 1981, he was GE’s youngest chairman. GE was referred to as a “GNP company,” one whose growth and prosperity never exceeded that of the overall economy. By the time Welch stepped down in the fall of 2001, he had devastated 289 lackluster businesses such as consumer electronics. He bought companies worth $19 billion and sold companies worth $10 billion. Welch set out to create a company that could outpace the economy and thrive even in the toughest times. He utterly transformed GE, reshaping the corporate culture to reflect his relentless energy and informal but rigorous style. Welch sorted operations according to a simple criterion: to keep from being sold or shuttered, each had to be No. 1 or No. 2 in its market. He grouped businesses that he said met the test into a number of groups: services, such as GE Credit Corp. and a unit that maintains nuclear power plants; technology products in high-growth markets, such as jet engines and plastics; and what Welch calls the core businesses. These are the classic big players in such mature industries as light bulbs and electric motors. Currently, GE is a global market leader in 12 large-scale businesses. Welch is a sensitive but no-nonsense man who views the world as competitively tough. He sees global markets coming to be dominated by a few powerful steam-rollers like Philips, Siemens, and Toshiba. To compete, a firm like GE must be bold, free of bureaucratic red tape, and staffed by self-motivated, proud, and quick-moving managers and employees. People who don’t personally know Welch may fear his blunt, somewhat abrasive style. But those who spend time around him tend to like his intelligence, humor, and openness. GE can be enormously exciting for those in the right places or attuned to the Welch mentality. By all accounts, Welch has transformed the company’s bureaucratic culture to an astonishing degree. In eliminating managerial layers, Welch moved authority for most decisions down to the operating division level. He promotes a feeling of what he calls ownership, urging managers to act like entrepreneurs instead of hired help. Welch says he also promotes free communication: “We are out to get a feeling and a spirit of total openness. That’s alien to a manager of 25 or 30 years who got ahead by knowing a little bit more than the employee who works for him.” Welch says he wants to instill in managers “the confidence to lead and the confidence to share.” Welch’s emphasis on communication and camaraderie is demonstrated by the long hours put in by GE’s corporate officers commenting on drafts of a statement of corporate values that Welch titled, “What We Want to Be.” These values—such as breaking down boundaries within the company, sharing good practices, emphasizing ownership—are more than just paperwork, however, as managers at GE are evaluated using the “Welch matrix”—namely, assessing the attainment of bottom-line results and the level of commitment to these company values. Greater weight is given to the values dimension, as these are difficult to teach and will ultimately produce the numbers desired.