Jack Welch: History, Accomplishments, FAQ

Jack Welch was the chair and chief executive of General Electric (GE) from 1981 to 2001. Welch dramatically increased the market value of GE from $14 billion to $410 billion. He had a reputation as one of the top CEOs of all time. Fortune dubbed him "Manager of the Century" in 1999. When Welch retired, GE awarded him a severance of about $417 million, the largest ever at the time. Welch died on March 1, 2020, at the age of 84 from renal failure.

Early Life and Education

John Francis Welch Jr. was born in Peabody, Massachusetts, on Nov. 19, 1935, to John and Grace Welch. He graduated from the University of Massachusetts, Amherst, with a bachelor's degree. He earned his doctorate in engineering from the University of Illinois, Urbana-Champaign.

Welch began working for GE as a junior engineer in 1960. He rose through the ranks to run the company as chair and chief executive officer (CEO) between 1981 and 2001. Welch threatened to leave the company in his early years of employment on a number of occasions due to bureaucratic inefficiency. He worked to eliminate bureaucracy and increase growth as the company's leader.

Notable Accomplishments

Jack Welch streamlined GE's sprawling businesses during the 1980s. He fired unproductive managers and eliminated whole divisions then acquired other companies and drove them to adopt better management models and increase profits for GE.

He closed factories, laid-off workers, and presented a vision of "growing fast in a slow-growth economy," which was the title of a speech he gave in 1981, soon after he became chair. This included cutting fat from what began as a nine-level layer of management. He also worked to establish an air of informality. The aim was to make GE seem as though it were a small company rather than the amalgamated corporation it became during Welch's tenure as leader.

Welch's core management belief was that high-performing managers could turn around almost any business, so GE experimented with everything from television to synthetic diamonds. Ironically, this led to an expansionary phase, making GE once again a conglomerate by nature—even if it was a more aggressively managed one.

Jack Welch, who was dubbed Manager of the Century in 1999 by Fortune, retired from GE in September 2001. His severance package was estimated to be $417 million.

Published Works

In retirement, Welch was active as a writer and public speaker. In 2005, he penned and published his memoir, Winning. The book focuses on management and business. It was co-authored by Welch's wife, Suzy. It sold more than 10 million copies worldwide, according to a 2020 report from The New York Times. The husband-wife duo also co-wrote another book called The Real Life MBA. Published in 2015, the book focuses on business, leadership, management, and career development.

Legacy

Welch's leadership remains his greatest legacy. He promoted the idea that GE (and other companies) should lead a particular industry or leave it completely. He led the adoption of Motorola's Six Sigma program for increasing productivity in manufacturing, applying it to GE as a whole. He developed a rank-and-yank style of dealing with underperforming employees and managers by making clear cuts from staff based on their rankings against other employees and divisions.

But Welch's legacy is somewhat complicated by GE's fate since his departure. Welch left the company just as the dotcom bubble burst, damaging some of GE's expanding business lines. His successor, Jeffrey Immelt, was forced to exit many businesses that were considered a distraction from GE's major profit centers.

Immelt also presided over a drop in GE shares as the 2007-08 Financial Crisis hit GE's financial operations. The model Jack Welch left behind was good at squeezing profits from top businesses. However, it left GE ill-equipped to survive outside shocks and grow new businesses and innovations that would carry the company into the future. In short, GE's success was very much a product of great timing that was difficult to sustain over the long term.

Welch was perhaps the first CEO whose performance was seen mainly through the lens of share performance. While investors generally appreciate this view of corporations, it led managers to focus on short-term performance. This short-term performance focus can have a long-term detrimental impact on the sustainability of a company when taken to an extreme.

Personal Life

Jack Welch was married three times. In 1959, he married Carolyn B. Osburn. The two, who had four children, divorced in 1987. He married Jane Beasley in 1989 and divorced her in 2003. He married his third wife, Suzy Wetlaufer, in 2004. Welch died in 2020 of renal failure.

The Bottom Line

Jack Welch was considered a powerhouse in the corporate world. Taking control of GE in 1981, he transformed the company by focusing on short-term gains using very aggressive strategies. Welch is credited with turning GE into a powerful conglomerate by reducing inefficiencies and making acquisitions. Under his leadership, GE's shareholders saw the company's market value increase. Welch retired in 2001 and handed the reins to Jeffrey Immelt. Although Welch died in 2020, his leadership at GE remains his greatest legacy.