Jack Welch

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For other people named Jack Welch, see Jack Welch (disambiguation).
Jack Welch
JackWelchApril2012.jpg
Born John Francis Welch, Jr.
(1935-11-19) November 19, 1935 (age 78)
Peabody, Massachusetts
Residence Boston, Massachusetts
Education 1957, University of Mass., BSc
1960, University of Illinois, MSc, PhD
All in chemical engineering
Occupation
  • 1960, Engineer, GE Chemical Development Organization
  • 1972, GM & VP, GE Plastics
  • 1979, Vice Chairman, GE
  • 1981, Chairman & CEO, GE
  • 2001, Resigns from GE
Home town Salem, Massachusetts
Net worth Increase $750 Million (2012)[1]
Political party
Republican
Spouse(s) Carolyn B. Osburn (1959-87)
Jane Beasley (1989–2003)
Suzy Wetlaufer (2004–present)

John Francis "Jack" Welch, Jr. (born November 19, 1935) 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%.[2] In 2006, Welch's net worth was estimated at $720 million.[1] When he retired from GE he took a severance payment of $417 million, the largest such payment in history.[3]

Early life and education[edit]

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.[4]

Throughout his early life in middle school and high school, Welch found work in the summers as a golf caddy, newspaper delivery boy, shoe salesman, and drill press operator.[4] Welch attended Salem High School, where he participated in baseball, football, and captained the hockey team.

Late in his senior year, Welch was accepted to University of Massachusetts, where he studied chemical engineering. During his summers in college, Welch found work in chemical engineering at Sunoco and PPG Industries.[4] In his sophomore year, Welch became a member of the Phi Sigma Kappa fraternity.[4]Welch graduated in 1957 with a Bachelor of Science degree in chemical engineering, turning down multiple corporate offers to attend graduate school at the University of Illinois.[4]

In 1960, Welch graduated from the University of Illinois with a Master's degree and a PhD in chemical engineering.[5][6]

General Electric[edit]

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.[7] 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.[8]

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[edit]

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".[9] 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.[10] 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.[citation needed]

During the early 1980s he was dubbed "Neutron Jack" (in reference to the neutron bomb) 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.[11] 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.[12]

He served as Chairman of The Business Council in 1991 and 1992.[13]

Criticism[edit]

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.[7]

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.[14] 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 (including backdating stock options, golden parachutes for nonperformance, and extravagant retirement packages), Welch stated that CEO compensation should continue to be dictated by the free market, without interference from government or other outside agencies.[15]

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 (SEC).[16][17] 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.[16][18] 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.[18]

After GE[edit]

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.[19][20] 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.[20][21]

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.[22]

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,[23] and appeared on New York Times' Best Seller list.[19][20]

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".[24] 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.[25]

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.[26] Welch has been actively involved with the curriculum, faculty and students at the online business school since its launch.[27][28][29] The Jack Welch Management Institute MBA program was unranked by the U.S. News due to the fact it is not the typical academic college. However it is seen as gaining reputation in the online education community.[30] Gaining in reputation only helps because it aligns with the mentality of the institution when starting was not to expand rapidly or do anything drastic. Its focus is not to make money it is to build over time focusing on the quality of the program and increase the number of students enrolled year after year. This institution has what many other institutions have as well but what sets this university apart is Jack Welch’s personal real time successful insights. [31]

Since January 2012, Welch and Suzy Welch have written a biweekly column for Reuters and Fortune,[32][33] which they both left on October 9, 2012, after an article critical of Welch and his GE career was published by Fortune.[34] The criticism of Welch followed the release of the jobs report in September 2012, when Welch publicly criticized the United States Labor Department, by way of a 'tweet.' [35]

Personal life[edit]

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.[36]

Welch's third wife, Suzy Wetlaufer (née Spring), 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[37] 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.

Personal Opinions[edit]

Jack Welch identifies as a Republican.[38] 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."[39] 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".[40]

In regards to shareholder value, Welch said in an interview with the Financial Times on the Global financial crisis of 2008–2009, “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".[41]

After the Bureau of Labor Statistics (BLS) 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".[42] His tweet drew widespread criticism especially noting General Electric's long reputation for earning manipulations and fixed numbers. [43] Yet, Welch has stood by his tweet stating if he could write the tweet again, he would add question marks at the end to make it clear that his intention was to raise a question over the legitimacy of the job numbers. [44] In a Wall Street Journal Opinion piece, Welch wrote that the debate has led to people looking at unemployment data more carefully and skeptically. Referencing his original tweet, he stated "Thank God I did," in a Squawk Box appearance [44] and also wrote, “The coming election is too important to be decided on a number. Especially when that number seems so wrong.” [43]

See also[edit]


References[edit]

  1. ^ a b Storrs, Francis (March 2006). "The 50 Wealthiest Bostonians". Boston Magazine. Retrieved 2008-10-03. 
  2. ^ "Jack Welch: 'I Fell In Love'". CBS News. 
  3. ^ Green, Jeff (June 6, 2013). "Jumbo Severance Packages for Top CEOs Are Growing". Business Week. Retrieved 2014-07-10. 
  4. ^ a b c d e Jack: Straight From The Gut, (ISBN 0-446-69068-6)
  5. ^ John F. Welch, "Microscopic Study of Dropwise Condensation", PhD Thesis, University of Illinois, 1961
  6. ^ "Past Leaders". Retrieved 2014-05-14. "Past Leaders". Retrieved 2014-05-14. 
  7. ^ a b "How Jack Welch Runs GE". Businessweek.com. May 28, 1998. Retrieved 2010-07-12. 
  8. ^ "Failure 101: A class students could use". New York City: MSNBC. November 5, 2009. Retrieved 2009-11-09. 
  9. ^ Betsy Morris, 'Tearing up the Jack Welch playbook' (11.7.2006) Fortune at CNNmoney.com
  10. ^ "Jack Welch's Encore". Businessweek.com. June 14, 1997. Retrieved 2010-07-12. 
  11. ^ "FORTUNE – GE's Jack Welch Named Manager of the Century – November 01, 1999". Timewarner.com. April 26, 1999. Retrieved 2010-07-12. 
  12. ^ Twenty-One U.S. CEOs with Golden Parachutes of More Than $100 Million| GMI| January 2012 |By Paul Hodgson, Senior Research Associate, and Greg Ruel, Research Associate
  13. ^ The Business Council, Official website, Background
  14. ^ O'Boyle, Thomas F. (1998). At any cost : Jack Welch, General Electric, and the pursuit of profit (1. ed. ed.). New York: Knopf. p. 456. ISBN 0-679-42132-7. 
  15. ^ "'Hardball with Chris Matthews' for July 12, 2006". MSNBC. July 13, 2006. Retrieved 2010-07-12. 
  16. ^ a b Gow, David (September 17, 2002). "SEC inquiry as Jack Welch gives up freebies". The Guardian (London). 
  17. ^ Mark Lewis (September 16, 2002). "Welch Walks Away From Perks". Forbes. Retrieved July 23, 2012. 
  18. ^ a b Rebecca Leung. "Jack Welch: 'I Fell In Love'". February 11, 2009. Retrieved April 3, 2012. 
  19. ^ a b Rachel Layne; John Lauerman (August 4, 2009). "Former GE Chief Jack Welch Expects Full Recovery From Discitis". Bloomberg. Retrieved May 23, 2012. 
  20. ^ a b c Landon Thomas Jr. (November 2, 2006). "On the Road With Jack and Suzy". New York Times. Retrieved May 23, 2012. 
  21. ^ Keith J. Kelly (November 13, 2009). "Jack Welch ends BusinessWeek column". New York Post. Retrieved May 23, 2012. 
  22. ^ Zefram Cochran (September 2004). "When Jack Welch Was Deputy Director for Intelligence: Remembering an Imagined DDI". Retrieved May 31, 2013. 
  23. ^ "Jack Welch". WSJ.com. Retrieved May 25, 2012. 
  24. ^ "Sacred Heart University Names College of Business for Legendary GE Chairman Jack Welch". Sacredheart.edu. Retrieved 2010-07-12. 
  25. ^ "Corporate icon Jack Welch to teach at MIT Sloan". Mitsloan.mit.edu. March 9, 2006. Retrieved 2010-07-12. 
  26. ^ Melissa Korn (November 11, 2011). "Welch to Move School Out of Chancellor University". Wall Street Journal. Retrieved March 15, 2012. 
  27. ^ Geoff Gloeckler (June 22, 2009). "Jack Welch Launches Online MBA". Bloomberg Businessweek. Retrieved March 15, 2012. 
  28. ^ Paul Glader (November 9, 2011). "Exclusive: Management Guru Jack Welch Talks About Digital Education, Online MBAs & Modern CEOs With WA.". Wired Academic. Retrieved March 19, 2012. 
  29. ^ "Executive MBA – Jack's involvement". Jack Welch Management Institute. 
  30. ^ Byrne, John. "Kelly Tops New Online MBA Ranking". Beat the GMAT. Retrieved 24 September 2014. 
  31. ^ Gloeckler, Geoff. "Jack Welch Launches Online MBA". Bloomberg Businessweeek. Education Business. Retrieved 24 September 2014. 
  32. ^ Jon Bershad (January 27, 2012). "Jack Welch: The GOP Needs To Be Nice To Ron Paul When He Drops Out Because They Need His Followers". Mediaite. Retrieved May 23, 2012. 
  33. ^ "John F. Welch". Women in the Economy: An Executive Task Force. The Wall Street Journal. April 30 – May 2, 2012. Retrieved May 25, 2012. 
  34. ^ Tim Sprinkle (October 9, 2012). "Jack Welch Takes His Column and Goes Home". Yahoo News. Retrieved October 9, 2012. 
  35. ^ Schlesinger, Jill (10/9/2012). "Is Neutron Jack Welch not so tough after all?". CBSNews. Retrieved 25 September 2014. 
  36. ^ Bertaccini, Donna (November 8, 2004). "Lovers seek lawyers as divorce booms". BBC News. Retrieved 2010-07-12. 
  37. ^ http://www.observer.com/2004/04/suzy-wetlaufer-preparing-to-be-neutron-jackie/
  38. ^ kimball, Joe. "Former GE Chairman Jack Welch on CNN says he likes Pawlenty". Retrieved 25 September 2014. 
  39. ^ MSNBC: Morning Joe. July 2, 2008.
  40. ^ "Fresh Dialogues Interview with Alison van Diggelen, May 2009". Freshdialogues.com. May 12, 2009. Retrieved 2010-07-12. 
  41. ^ Guerrera, Francesco (March 12, 2009). "Welch rues short-term profit 'obsession'". Financial Times. Retrieved 2009-03-12. 
  42. ^ Malone, Scott. "Jack Welch sets Twitter ablaze with Obama job jab". Chicago Tribune. Retrieved October 6, 2012. 
  43. ^ a b Bradford, Harry. "Jack Welch On CNBC: 'Thank God' I Questioned The Jobs Numbers (VIDEO)". Huffington Post. Retrieved 14 September 2014. 
  44. ^ a b Welch, Jack (11 October 2014). "I Was Right About That Strange Jobs Report". Retrieved 14 September 2014. 

Further reading[edit]

  • Jack: Straight From The Gut, (ISBN 0-446-69068-6)
  • Winning by Jack and Suzy Welch – HarperCollins (April 2005), (ISBN 0-06-075394-3)
  • Winning: The Answers by Jack and Suzy Welch – Harper 2006, (ISBN 0-00725264-1)
  • Jack Welch and the GE way : management insights and leadership secrets of the legendary CEO by Robert Slater (ISBN 0070581045)
  • The New GE: How Jack Welch Revived an American Institution, (ISBN 1-55623-670-0)
  • Jacked Up: The Inside Story of how Jack Welch Talked GE into Becoming the World's Greatest Company by Bill Lane – McGraw Hill (2008), (ISBN 978-0-07-154410-8)
  • At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, (ISBN 0-375-70567-8)
  • "Control Your Destiny or Someone Else Will: How Jack Welch is Making General Electric the World's Most Competitive Company" Double Day 1993 by Noel Tichy and Strat Sherman (ISDN 0-385 24883-0)

External links[edit]

Business positions
Preceded by
Reginald H. Jones
Chairman & CEO of General Electric
1981–2001
Succeeded by
Jeffrey Immelt