Jack Welch, seen here on Jan. 16, 2009, joined GE as a chemical engineer in 1960 and was named chairman and chief executive in 1981.Joe Raedle/Getty Images North America
Superstar CEO Jack Welch passed away on Sunday, leaving a “complicated legacy” that reflects his influential leadership during two decades at the helm of General Electric Co. as well as the conglomerate’s weak performance following his departure in 2001.
Mr. Welch, a railway conductor’s son, joined GE as a chemical engineer in 1960 and was named chairman and chief executive in 1981. Over the next 20 years, he remade the manufacturer, relentlessly stressing efficiency and moving into sectors where he believed the Connecticut-based company could be a global leader, including finance and entertainment. On his watch, GE’s stock price increased by 3,000 per cent and the CEO became a role model to a generation of managers.
After Mr. Welch departed, GE stumbled, owing in part to the company’s reliance on a financing unit that made loans on real estate, aircraft and industrial equipment. The division became a liability during the global financial crisis in 2008 and was largely sold by Mr. Welch’s successors. GE’s stock price is still down by 80 per cent since peaking 20 years ago. According to his family, Mr. Welch died of renal failure at his apartment in New York, at the age of 84.
“Jack Welch leaves a complicated legacy. I would describe it as favourable, overall,” said Roger Martin, former dean of University of Toronto’s Rotman School of Management. Mr. Martin hosted the GE leader on a number of occasions and said: “First, he loved his people and his people loved him. In an era of the distant, regal American CEO, he was the opposite. Second, he loved customers. He spent disproportionate time with customers, again in an era when many CEOs thought of that as someone else’s job. Third, he tackled bureaucratic mediocrity. The GE he inherited had lots and lots of it and he was willing to take it on, which is an utterly thankless task that gets many CEOs fired.
“The negative aspect would be the key role he played in the doctrine of shareholder value maximization, which is a perfectly good thing if it is done over the long term in a balanced, not extreme fashion,” Mr. Martin said. "However, Welch helped usher in an era during which CEOs committed untold long-term sacrifices for short-term stock appreciation.”
When he took the top job at GE, Mr. Welch stressed the company needed to be globally competitive – one of the top two players in its chosen sectors. He sold divisions that didn’t make the grade, while acquiring businesses such as the NBC television network, since sold to Comcast Corp. He also attempted to purge mediocre talent, at one point insisting that managers rank employees and fire the bottom 10 per cent each year. The approach earned GE’s boss the nickname “Neutron Jack” in 1982, a moniker that Mr. Welch said he disliked.
“Jack Welch re-wrote the rules on what it is to be a CEO. Everyone is now following his example as a business leader, whether or not they realize it,” said Jim Fisher, professor emeritus of U of T’s Rotman school. Mr. Fisher said the GE executive’s last contributions include stressing the CEO’s role in developing talent and showing that “the job of the leader is to articulate and sell the vision of the company.”
Mr Welch was married three times. He and his first wife, Carolyn Osburn, had four children before divorcing in 1987. He was married to corporate lawyer Jane Beasley for 13 years. They divorced in 2002, an acrimonious split that changed corporate attitudes toward executive perks when court filings revealed Mr. Welch’s retirement package from GE included an apartment in New York, use of a private jet, a leased Mercedes-Benz, country-club fees and sports tickets. Mr. Welch subsequently agreed to pay for many of the perks himself. Mr. Welch then married former Harvard Business Review editor Suzy Wetlaufer in 2004, a relationship that began when he agreed to an interview. The pair published books and articles on management, ensuring Mr. Welch stayed top-of-mind in business circles long after he left GE.