04/12/2005 12:00 PM Wong
Jack Welch, Founder Jack Welch Management Institute

Description: When Jack Welch was a young manager, he blew the roof off one of General Electric's factories in a chemical accident. Summoned to a company VP, Welch received comfort rather than harsh words and a pink slip. This episode proved seminal to Welch's philosophy and subsequent corporate career, and serves as one of many pithy lessons he offers in a lively conversation at MIT Sloan. "From that day forward, I never berated anybody when they were down," says Welch. Other lessons learned from his life at GE: Never hire people (or acquire other companies) whose corporate culture doesn't match your own. "No matter how good the numbers look, culture matters as much as financial profile." He advocates frequent employee evaluations -- he gave his own division heads four reviews a year. "Never give anyone a raise (or stock option or bonus) without a small sheet of paper on how well they did or how they can improve," says Welch. He admits some of his personnel ideas make people uncomfortable: in particular, his notion that 10% of employees will never succeed, and should be shown the door as expeditiously as possible. "You've got to believe that the team that fields the best players wins. If you tell the bottom ten where they stand, that it's time to look for something else, that's considered cruel management." But, says Welch, it's far crueler to let people hang on and then get cut later in their careers when they're less likely to find other work. His ultimate advice to wanna-be managers: "Err on the side of the bold. ' Take swings, have fun."

About the Speaker(s): Jack Welch received a B.S. in chemical engineering from the University of Massachusetts in 1957, and his M.S. and Ph.D. in chemical engineering from the University of Illinois. He joined General Electric in 1960 as a junior engineer. He became a vice-president of GE in 1972, senior vice-president in 1977, vice-chairman in 1979 and became the corporation's youngest Chairman and CEO in 1981. During his 20-year tenure, the company's market value grew from $12 billion to $280 billion. He was known for eliminating red tape and bureaucracy. Welch has written two books, including Jack: Straight from the Gut (2001), and his most recent, with wife Suzy Welch, Winning (2005).

Host(s): Sloan School of Management, MIT Sloan School of Management