What kind of a leader Jack Welch is?

        John Francis Welch Jr. (born November 19, 1935) had worked for General Electric for a year in 1961 when he wanted quit his $10,500 job as a junior engineer in Pittsfield, Mass. He want to did that because he felt stifled by the company's bureaucracy, underappreciated by his boss, and offended by the civil service-style $1,000 raise he was given. Welch wanted out, and to get out he had accepted a job offer from International Minerals & Chemicals in Skokie, Illinois. But Reuben Gutoff, then a young executive a layer up from Welch, had other ideas. He had been mightily impressed by the young upstart and was shocked to hear of his impending departure. Desperate to keep him, Gutoff asked Welch and his wife, Carolyn, out to dinner that night. For four straight hours at the Yellow Aster in Pittsfield, he made his pitch: Gutoff swore he would prevent Welch from being entangled in GE red tape and vowed to create for him a small-company environment with big-company resources. These were themes that would later dominate Welch's own thinking as CEO.The next day, Welch gave him his answer. He will stay with the company and Welch's future management style manages a small company environment with big company resources.


Through the 1980s, Welch worked to streamline 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" 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 Sigma 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.

Welch launched the effort in late 1995 with 200 projects and intensive training programs, moved to 3,000 projects and more training in 1996, and undertook 6,000 projects and still more training in 1997. So far, the initiative has been a stunning success, delivering far more benefits than first envisioned by Welch. Last year, Six Sigma delivered $320 million in productivity gains and profits, more than double Welch's original goal of $150 million.

While analysts on Wall Street or GE's own investors view Welch's likely legacy as creating the world's most valuable company in stock market terms, Welch himself sees things quite differently. The man who spends more than 50% of his time on people issues considers his greatest achievement the care and feeding of talent. He believes he has to know people well enough to trust them and their judgments. Welch knows by sight the names and responsibilities of at least the top 1,000 people at GE. ''He knows their names. He knows what they do. That's an incredible reinforcement to the individual that he or she counts,'' says Dunham of GE's Medical Systems business.

According to the informations that Jack Welch can streamline GE’s manager and he had a nick name ‘Neutron Jack’, in my opinion he is a leader which arrive at decision primarily on his own with little input from others. But considering his concern about minimize the bureaucracy in the company, his leadership type is transformational leadership, because his eager to transformed each members to becoming more aware of the importance of their tasks, inspire members by giving a ‘dream’ or ‘vision’ in higher order and stretching member’s self confidence.

References:

1. http://www.businessweek.com/1998/23/b3581001.htm

2. http://en.wikipedia.org/wiki/Jack_Welch


note: this is one of 12 assignments on my strategic management class and this one had a good grade from my professor, so I felt confident to share it with you :) :)