In Winning author and legendary General Electric’s CEO Jack Welch teaches all he knows about running a record-breaking corporation. Welch shares how to be a great people leader, and how to establish a corporate culture that encourages innovation and team-spirit.
- Foster a culture where people feel free to contribute their ideas and speak their mind
- Organizations have top, bottom and average performers: know who stands where and treat them accordingly
- Make your mission concrete and measurable; embody and enforce the values to accomplish your mission
About the Author: Jack Welch is the legendary CEO of General Electric (GE).
In his 20 years tenure from 1981 to 2001 he increased GE’s evaluation by 4.000%.
And when he left the company he received a severance package of 417 million. To this date, that’s the biggest payment anyone has ever received.
But it’s not just the amount which is astonishing. It’s that, given how GE developed with Welch at the helm, it was well deserved.
This is the kind of guy you should be listening to, and Winning is also Warren Buffet’s highest-rated management book.
Foster Culture of Candor
Jack Welch says that most of us have a culture of telling small lies for a quieter life.
For example, we don’t tell our friend he’s getting too chubby, or we wouldn’t say that our mother’s cooking was terrible.
But that culture of small lies for a quieter living can be destructive in an organization.
An organization should have a culture of free talking.
Unluckily that’s not the case for most businesses. In most businesses, people hold back and don’t voice their opinions and ideas.
And that’s an immense waste of brainpower.
Jack Welch says that it’s the boss who must talk about candor, demonstrate it himself first, and reward it.
He did so by instituting what came to be called “work-out” sessions.
GE would organize groups of 30 to 100 employees to discuss opportunities and better ways of doing things.
The key? They were anonymous employee meetings without bosses.
Bosses would only show in the beginning, and promise that they would give an immediate answer, on the spot, to 75% of the recommendations and ideas.
And they would resolve the remaining 25% within a month.
Basically, GE would force bosses to address the proposals of their employees and allowed employees to speak without fear of retortions.
Work-outs sessions led to an explosion of productivity, says Welch.
Don’t just pay for hands when you can also have brains – for free
Human Resources: The 20-70-10 Approach
Jack Welch says that people’s management is one of the most important tasks of any manager and organization.
The “20-70-10” rule refers to percentages of the total workforce, and it means that:
- 20% are start performers, give them recognition, training and compensation
- 10% are poor performers and should go
- 70% are average, you should strive to keep them motivated and lift them into the 20%
Welch encourages managers to differentiate employees according to the 20-70-10 rule and manage them accordingly.
At GE, managers actually had to rank employees on the 70-20-10 scale. “Managing accordingly” means to promote and reward the top 20% and fire the bottom 10%.
Develop A Rigorous Evaluation System
Jack Welch says it’s paramount that evaluations are not done subjectively and on an ad-personam basis.
You must establish an objective evaluation system and rate your employees against it.
Sure, coming up with an evaluation system won’t be easy, but that’s not an excuse not to do it.
Flat Organizational Chart
Everyone should know fully well who they report to and what their responsibilities are.
But also go for as flat an organizational chart as you can afford.
Welch says that the more layers, the more vices, bureaucracy, and issues you will have.
Hire Well, Fire Fair
There is an abundance of good people around, but you must make sure you’re able to spot them.
Welch says that the very first test is making sure that candidates possess the following three traits:
- Integrity: they must be candid, honest and reputable
- Intelligence: doesn’t mean Ivy League, but you want a smart workforce
- Maturity: ability to cope with failure, and that mix of confidence and humility that comes from experience
Once you make sure a candidate possesses the three traits above, you should hire people who are positive and optimistic. People who are excited about working for you and can lift people’s moods up.
I found particularly interesting that Welch adds more crucial traits for senior management hires. One is “authenticity”, or being who they are without wearing a mask. And the other is “heavy-duty resilience”.
Heavy-duty resilience means that someone has been knocked down and beat up badly, but bounced back to run even harder.
Welch has been criticized for instilling a very competitive culture.
When every year the bottom 10% performers are let go, there is naturally some fear in some employees.
But Welch says that firing staff instead should be done on the basis of performance evaluation systems. With a fair and objective evaluation system, it should come as no surprise to anyone that someone is being let go.
How to Be a Leader
Winning by Jack Welch has very good recommendations on how to be a good leader.
Here are some that I particularly liked:
- Develop people: leadership is about developing people
- Exude contagious positive energy: be a shining beacon of inspiration, help people stay optimistic and confident
- Gain people’s trust: give credit, act fairly and honestly
- Make the tough call: sometimes leadership means making tough and unpopular calls. Don’t shy away: you’re not a politician up for re-election
- Rock the boat: it’s your duty to chase possible issues and to push people to action
- Celebrate: make a big deal out of wins and achievements, give credit and celebrate celebrate
- 13 laws of leadership, based on sound social-psychology
Concrete Mission and Values
The mission statement is your goal, and the values refer to how you plan on achieving your goals.
Many companies have vague mission and values that mean nothing, while Welch says both need to be crystal clear.
For example, GE’s mission was to be number one or two in every business they operate in. That’s clear, descriptive, and measurable.
Values need to reinforce your mission and make it possible you will achieve it.
In GE two of them were: “be intolerant of bureaucracy” and “see change for the growth opportunity it brings”.
To show that you truly value your values, reward people who live by them, and punish those who don’t. People will respect that you are serious about them and you will attract and retain people who live your values, instituting a self-reinforcing cycle.
Above all, make sure your leaders live and breathe the vision.
Strategy is Following Through Your “Aha Moments”
Welch says that your strategy is not a complex academic matter or rocket science.
It’s all about coming up with “aha moments” and following through them with the right people.
Coming up with aha moments is the senior management’s responsibility. The best way to come up with the strategy is to gather the senior management and analyzing the market, the competitors, and the current trend.
Once you decide on a course of action, it’s all about putting the right people behind to make it happen.
For example, you need dreamers and visionaries for innovation and you need efficiency experts to cut costs.
- Look for “aha moments”
- Staff the best people to realize your “aha moments”
- Relentlessly chase the execution of your “aha moments”
Always Look For Best Practices
To always keep improving Welch recommends you are always on the lookout for best practices whenever you can spot them.
And even when you implement them, make it the company’s religion to always keep working and tweaking them.
How to Change
Sometimes change is easy, like in death or glory cases.
But most of the times, most people naturally resist change.
To make change easier you should make a business case of why change is necessary or why it makes sense to do it now. Then communicate it relentlessly.
You could still have people resist change, and that’s something you can’t accept because resistance can kill your efforts.
As an employee, resisting change is one of the biggest political mistakes you can make. As a manager, says Welch, you must get rid of the people who resist change as early as possible.
Put in charge of the change those who are enthusiastic about the idea and promote and hire the people who will get behind them.
- Make sure everyone knows why you’re changing
- Hire, promote and put in charge those who are excited about the change
- Get rid of those who resist change
- Always look and see new opportunity for change
Dealing With a Bad Boss
First of all, Welch recommends you ask yourself if the problem is you or the boss.
Ask yourself if your boss is a jerk only with you, or with everyone else.
I was surprised to read Welch saying that 9 times out of 10 sitting with your boss to talk about your issue will only hurt you.
He is right indeed, and when I read that part my respect for Welch went up: this guy doesn’t dole platitudes and says it how it is.
Lastly, ask yourself if the boss will be around for the foreseeable future. If he is, it might be good for you to change job.
But if you decide to stay, then stop complaining: you are there by choice.
- How to manage your boss for your own career advancement
- Dealing with a bad boss
- Signs of a bad boss
- What to do when a boss yells at you
Jack Welch Criticism
Jack Welch has been a controversial CEO.
In my opinion, a lot of the criticism comes from a few factors:
- Welch is very direct and opinionated
- Welch is a free-market supporter
- Welch is a staunch Republican, sometimes also a vocal voice against Democrat leadership
Couple that with his “hack and slash” approach to making corporations lean, and you are bound to have a controversial leader.
Anyway, here are a few criticisms which have been leveled on Jack Welch:
John Maxwell in 21 Irrefutable Rules of Leadership says that the true measure of a leader is how well the organization fares after the leader has departed.
Welch seemed to embrace that rule when he said that his work should be evaluated 20 years after he left GE. But so far GE hasn’t been doing that well.
Much of GE’s growth came from the involvement in financial services, and that, of course, didn’t fare well during the financial crisis.
Simon Sinek in Leaders Eat Last makes the case that leaders should care about employees, and he’s very critical of Welch.
First of all, he puts Welch’s performance in perspective. He says that during the 20 years of Welch’s tenure the whole S&P 500 enjoyed a huge bull market, and all companies grew a lot.
Second, Sinek points out, Welch fostered a culture focused on short term gains to appease Wall Street. He would push employees for continuous earning’s growth, and that pushed employees to cut corners.
That’s a culture very effective for short term gains, but a recipe for long term disaster.
- Fire Publicly When You Need to Send a Message
Jack Welch says that when someone embroils you in a scandal because of unethical behavior you want to send a strong message to say that type of behavior is unacceptable. Instead of letting them go for “personal reasons” you should fire them publicly.
- Don’t Set Goals At The Beginning of The Year: You Don’t Have Enough Information Yet
Don’t set growth goals in stone at the beginning of the year.
You want to measure results compared to your market and the competition -stretch goals-, and you want to leave budget for possible opportunities which arise along the way.
You can use the same principle for your personal goals: my goals indeed are in constant motion.
- Assume The Crisis is Worse Than it Seems
Skip the denial phase and imagine the crisis is worse than what you imagine. That way you make sure you will tackle it appropriately. You want to expose and define the problem before anyone else does.
- Try Different Jobs to Find One You Like
Doing what you like has a huge positive impact on your life.
Think of what matters to you, then try a few jobs you think might fit. Keep iterating until you’re happy with what you found.
- Money Is The Main Motivation?
Winning seems to consider money as the main driver to reward and motivate people. While money is important, many people -most?- are actually not primarily motivated by money.
You can read more in Drive by Daniel Pink.
- Most Suited For Big Corporations
This is not necessarily a con, but just to make you aware: Winning is mostly tailored to winning in big corporations. The rules can be different in start-ups and one-man show.
- Great Wisdom on Leadership
- Awesome How-To Guide
Winning is not just filled with lots of wisdom, but it also provides an how to guide for managing for results.
And it’s not just useful to CEOs, but also for people who want to understand what they need to do and provide to move up the corporate ladder of effective organizations.
- Great Wisdom on Politics & Career Strategies
Warren Buffet says that Winning is the only management book you’ll need.
I don’t particularly vibe with Welch’s “up or out” policy, I can see a point in which heavy turnover hampers team cohesiveness. And I can see how it might start poisoning the work environment with fear and individualism (VS team-spirit).
But I can see why Buffet lauded Winning so lavishly.
I thoroughly enjoyed Winning and found much, much wisdom in it.
This book is really, really good.
If you want to build a business, if you want to be a leader, or if you are looking to learn more about what you must do to rise through the ranks, I can only recommend this book.