ALLSTON, Mass., June 6, 2001 — Outgoing General Electric Chairman Jack Welch today called on almost 1,000 aspiring corporate leaders to remember that “the role of a manager is to build self-confidence in the people around them.”
Speaking at Harvard Business School’s 2001 Class Day ceremony here, Welch told the graduates that as they begin to manage, they should “make those people feel 12 feet tall.”
Contrasting GE culture to the culture in many bureaucratic organizations like governments, Welch said the proble is that “people end up managing, not inspiring.”
Overall, Welch attributed much of his success as a manager to “common sense,” and told the graduates to recognize the opportunities for success they will have as a result of their HBS training, and be careful not to squander them.
“You know when you’ve been a jackass … Remember the things you did that you wished you didn’t do. Leave all that stuff here,” Welch advised. “You can take the world by the tail, as long as you’re not a jerk.”
His remarks came in an unusual format, in which he was interviewed by Nigel Killick, OD, rather than delivering prepared remarks. In addition to management advice, Welch commented on his reputation as a strict cost-cutter and heavy proponent of tough annual reviews, as well as making a strong statement on the need to foster ethical behavior in the business world.
In response to questions from Killick about Welch’s early years at GE, when he slashed the payroll and earned the nickname “Neutron Jack,” Welch defended the moves, and urged the audience to see them in the context of the early 1980s, when U.S. industry was suffering under the weight of an inefficient bureaucracy that had built up in the post-World War II years.
“Nobody likes doing these things, but if there’s one thing we’ve learned, it’s that no one can guarantee lifetime employment,” Welch said, adding that managers should seek to give employees “lifetime employability” by providing them with training and skills that would allow them to flourish outside their current company, if necessary.
“Our company had 400,000 people and was doing one-seventh of the work it does today with 300,000,” Welch said.
“We had to do it. As a result of that, a lot of people suffered pain, but a lot of people won, because the company flourished.”
Welch also addressed allegations that the company’s review system, in which the bottom 10% of employees are expected to leave, is inappropriate, arguing that they represent “weeds” among a garden of flowers.
“In an organization, you have to be constantly raising the bar,” Welch said. “I think it’s the craziest thing in the world to day that once you leave university, you never have to be graded again.”
And Welch made a forceful statement to the graduates about the need for top managers to remain vigilant for unethical practices within their companies.
“It is ludicrous to think that with 300,000 people — the size of Tampa, Fla. — we don’t have any bad apples,” he said. “But we work every day to find them, and when we do, we make an example out of them.
“This idea of companies saying someone ‘left for personal reasons’ is ludicrous. Teaching is about examples, and we are constantly holding up role models, both good and bad,” he said.
Questioned by Killick about whether he was concerned about helping the dismissed employees’ maintain their dignity and chances for future employment, Welch responded firmly: “If they’ve cheated, I’m not interested in their dignity.”
Welch, who became GE’s chairman and chief executive officer in 1981, is scheduled to retire later this year, once the industrial giant’s merger with Honeywell Corp. is completed.