MNO2007 Leadership and Ethics

Group Assignment: Jack Welch

Ang Peijing A0073613L
Koh An Sheng, Anson A0067345B
Ngo Duy Nam A0074998A
Rico Joto Purnomo A0073825B
Tan Cheng Yong Joilette A0073687N
Tutorial Group: A5




Executive Summary
We humbly present our group project on John Francis (Jack) Welch, the former Chief
Executive Officer (CEO) of General Electric (GE). He served as CEO for 2 decades, from
1981 to 2001. In this time, he led GE into one of the most successful periods in the
companys history.
In this report, we will explore Welchs personality traits, influence tactics and empowerment
methods. We will also demonstrate that Welch is a transformational leader who
revolutionized corporate management.
For this project, we spent many hours reading biographies, articles and papers in detail to
give a thorough analysis of the abovementioned sections. The three main biographies used
were:
Jack Wealth and the 4Es of Leadership (HD57.7Kra2005)
Jack Welch Speaks Wit and Wisdom from the Worlds Greatest Business Leader
(Completely Revised and Updated)
Jacked Up
We believe a focus on these three biographies and other miscellaneous articles will give us an
accurate and balanced portrayal of Jack Welch as a leader, and most importantly, as a person.
Direct quotes from him on his beliefs were mostly ignored as we focused on short incidents,
events and biographers observations.
Jack Welch displays high extraversion and conscientiousness. His personality manifests
through his high energy, hyper-competitiveness and overall intensity. Welch also come up
low on agreeableness. As a result, he might give off a first impression that is abrasive and
adversarial; not ideal for Asian cultures or Generation Y workforce. Nonetheless, it worked
in his favour.
His leadership style guided GE through a period of rapid change and corporations began to
face the effects of globalization. In GEs case, competition came from the high-tech
manufacturing and electronics industries in Japan. GE overcame this by leveraging on its
greatest resource: people. Welch took advantage of his employees by releasing their full
potential through various methods which will be discussed later in this report.
Initially, this project seemed futile and redundant. However after reading through his
biographies, we realised that Jack Welchs term as CEO was marked with many fascinating
and remarkable events, incidents and grand schemes which we could dissect and analyse.
It is only through this kind of close scrutiny and analysis that we could truly see the practical
implications of theories learnt in the classrooms. In doing so, we make up for our
inexperience as leaders by learning from a great leader of our time. Hopefully, through this
exercise, we can strive to become better leaders ourselves.





Table of Contents
1 Biographical Sketch ........................................................................................................... 1
2 Personality Traits ............................................................................................................... 3
2.1 Extraversion ................................................................................................................ 3
2.1.1 Outgoing .............................................................................................................. 3
2.1.2 Sociable ................................................................................................................ 3
2.1.3 Dominating .......................................................................................................... 3
2.1.4 Competitive .......................................................................................................... 4
2.1.5 Decisive................................................................................................................ 4
2.2 Conscientiousness ....................................................................................................... 5
2.2.1 Responsibility ...................................................................................................... 5
2.2.2 Achievement-Oriented ......................................................................................... 5
2.2.3 Perfectionism ....................................................................................................... 5
2.2.4 Diligence .............................................................................................................. 6
2.2.5 Dedication ............................................................................................................ 6
2.3 Agreeableness.............................................................................................................. 6
2.3.1 Sensitivity (Negative Evidences) ......................................................................... 6
2.3.2 Cooperativeness (Negative Evidences)................................................................ 7
2.3.3 Politeness (Negative Evidences) .......................................................................... 7
2.3.4 Compassionate ..................................................................................................... 7
2.3.5 Approachability.................................................................................................... 7
2.4 Emotional Stability ...................................................................................................... 8
2.4.1 Ability to Handle Criticisms ................................................................................ 8
2.4.2 Ability to Accept Mistakes/Failures .................................................................... 8
2.5 Openness to Experience .............................................................................................. 8
2.5.1 Intellectual Curiosity ............................................................................................ 8
2.5.2 Strategic Thinking ................................................................................................ 8
2.5.3 Willingness to Consider New Ideas ..................................................................... 9
3 Influence Tactics .............................................................................................................. 10
3.1 Soft Tactics ................................................................................................................ 10
3.1.1 Rational Persuasion ............................................................................................ 10
3.1.2 Inspirational Appeal ........................................................................................... 11
3.1.3 Consultation ....................................................................................................... 11




3.1.4 Ingratiation ......................................................................................................... 11
3.2 Hard Tactics .............................................................................................................. 12
3.2.1 Exchange ............................................................................................................ 12
3.2.2 Pressure .............................................................................................................. 12
4 Empowerment .................................................................................................................. 13
4.1 Mechanistic Approach............................................................................................... 13
4.1.1 Clarify Organisations Mission, Vision and Values .......................................... 13
4.1.2 Specify Tasks, Roles and Rewards for Employees ............................................ 13
4.1.3 Accountability of Results ................................................................................... 14
4.2 Organic Approach ..................................................................................................... 14
4.2.1 Understanding Needs of Employees (Bottom Up Approach)............................ 14
4.2.2 Building Teams to Encourage Cooperative Behaviour ..................................... 14
4.2.3 Encouraging Intelligent Risk Taking ................................................................. 15
5 Transformational Leadership ........................................................................................... 15
5.1 Idealised Influence .................................................................................................... 15
5.1.1 Set Example to Follow ....................................................................................... 15
5.1.2 Demonstrate High Moral and Ethical Standards ............................................... 15
5.1.3 Show High Level of Motivation ........................................................................ 16
5.2 Inspirational Motivation ............................................................................................ 16
5.2.1 Articulate Compelling Vision of the Future ...................................................... 16
5.2.2 Show How Vision Can Be Achieved ................................................................. 16
5.2.3 Show Confidence in Reaching Goals ................................................................ 16
5.3 Individual Consideration ........................................................................................... 16
5.3.1 Paying Attention to Development Needs of Followers ..................................... 16
5.3.2 Supporting and Coaching Development of Followers ....................................... 17
5.3.3 Delegating Assignment as Opportunities for Growth ........................................ 17
5.4 Intellectual Stimulation ............................................................................................. 17
5.4.1 Help Followers Become more Innovative and Creative .................................... 17
5.4.2 Get Followers to Look at Problems from Different Perspectives ...................... 17
5.4.3 Challenge Followers to Re-Examine Critical Assumptions .............................. 18
6 Analysing the Impact of Leadership Style ....................................................................... 19
6.1 Impact on Employees ................................................................................................ 19
6.1.1 Gaining Trust and Commitment ........................................................................ 19




6.1.2 Creating World Class Leaders ........................................................................... 19
6.2 Impact on Organisation ............................................................................................. 20
6.2.1 Impact on Organisations Profitability and Growth ........................................... 20
6.2.2 Impact on Organisation Culture ......................................................................... 21
6.3 Impact on GEs Business Environment .................................................................... 21
7 Conclusion ....................................................................................................................... 21
7.1 Organisation Culture ................................................................................................. 21
7.1.1 Achievement Culture ......................................................................................... 21
7.1.2 Adaptability Culture........................................................................................... 22
7.2 Servant Leadership .................................................................................................... 22
7.2.1 Listening ............................................................................................................ 22
7.2.2 Stewardship ........................................................................................................ 22
7.2.3 Foresight ............................................................................................................ 22
7.2.4 Building Community ......................................................................................... 22
7.3 Organisational Change .............................................................................................. 23
7.4 Recommendations ..................................................................................................... 23
Bibliography


1

1 Biographical Sketch
Born on 19 November 1935, in Salem, Massachusetts
1
, John Francis Jack Welch Jr.
2
was
the only son to his parents; John and Grace Welch
3
.
Because Jack Welch was the only son, he received much nurturing, praise and affection from
his parents
4
. They were always positive, constructive and uplifting
5
; which developed Jacks
strong sense of self-confidence.
Jack would later on reveal that his mother had a great deal of influence on him and taught
him the facts of life. Grace Welch taught Jack three lessons; to communicate candidly, to face
reality and to control his own destiny
6
. These lessons would manifest in Jacks leadership
style and go on to serve him very well later in his career.
Jack Welch grew up in a middle class neighbourhood and attended Salem High School
7
.
There, he developed his leadership skills and reinforce his self-confidence while organising
basketball and baseball games
8
. His friends would recall him as being brash, competitive,
relentless and aggressive on the courts
9
. He was also voted most talkative in his class
10
.
In 1953, Jack Welch entered University of Massachusetts, Amherst to read Chemical
Engineering
11
. He was influenced by his uncle, who was also an engineer
12
, and inspired by
the 1967 film The Graduate
13
.
During his time there, Jack Welch performed extremely well academically and achieved the
deans list for all 4 years of his education
14
. He subsequently graduated with honours in 1957
and went on to pursue a Masters degree and doctorate at the University of Illinois and
graduated in 1960
15
. Thereafter, he joined General Electric (GE) as a junior chemical
engineer
16
.
As an employee at GE, Jack Welch contributed much to the field of plastics. One could argue
that he revolutionised the industry and made plastic viable
17
.
Yet Welch was unhappy with the meagre annual salary of $10,500, the $1000 bonus at the
end of his first year, the bureaucratic organisation and the fact that reward was not linked to
performance
18
. Ruben Gutoff, then vice-president, managed to retain Welchs talent by
increasing his salary and responsibilities
19
.
Jack Welch would go on to work his way up the various departments while consistently
demonstrating his drive, determination and unmatched zeal to excel in his work. It was at this
period where he further developed his leadership skills and recognised that bureaucracy is a
huge impediment to innovation. The then GEs CEO Reginald H. Jones started to notice these
qualities and found a suitable match for running the business
20
.
In 1977, then CEO Reginald H. Jones transferred Welch to the company headquarters in
order to prepare him as a contender for the position of CEO
21
. Eventually, Jack Welch beat
his competitors for the top spot to become the 8
th
CEO of GE in 1981
22
.
In the 2 decades as CEO, Jack Welch led GE into one of the most successful period in the
companys history. Under his watchful leadership, revenues increased five-fold to $130
billion, profits increased ten-fold to $15 billion and market capitalisation increased thirty-fold
to a whopping $400 billion
23
. As a result, return to shareholders averaged 23% per year and


2

the performance of GE shares was 50% and 76% higher than that of Dow Jones and S&P
Index respectively
24
.
Arguably, Welchs biggest impact on GE was the two-phase Hardware and Software
Revolution that he launched.
The hardware revolution was marked by a major restructuring and focusing of the companys
business; from over 300 to just 11 core businesses categorised under Manufacturing,
Technology and Services
25
. These 11 core businesses aimed to be the top two in its respective
industries globally. After having faced bureaucracy as a mid-level manager, Welch
aggressively slashed red tape as CEO and kept hierarchical levels to a minimum.
The software revolution was led by changes in the organisational culture at GE. Welch
wanted innovation, openness, adaptability and creativity to run at break-neck speeds
26
. This
was done by putting focus on simplicity, speed and self-confidence. Firstly Welch clearly laid
out new core values to guide GE staff. The methods of bringing about innovation were also
changed. A notably activity is the Workout sessions whereby GE employees of all ranks
come together to brainstorm and debate ideas
27
.
Another characteristic that contributed to success is Welchs ability to borrow best practices
from various companies and synergise it into GE. A perfect example would be the Six Sigma
Program, developed by Motorola, which ensures quality control
28
. Six Sigma came to be
implemented in GE after Vice Chairman Larry Bossidy pointed out that they were losing out
to other companies on quality, and hence losing competitive advantage as well
29
.
Overall, Welchs leadership style was heavily influenced by Sam Walton and Peter
Drucker
30
. Similar to Walmart, managers claim that they were in the maturing stage and
hence growth will be stagnant
31
. However, both Walton and Welch proved them wrong by
focusing on innovation and customer satisfaction
32
. Welch was also influenced by concept of
participative management and laser-like focus on quality found in most Japanese
organisations
33
.
Combining all these factors, it is no wonder GE could boast of such astonishing performance.
Late into Welchs term as CEO, he went through a triple bypass heart surgery
34
. Although
Welch went back to work after a speedy recovery, this incident sparked concern for
succession planning at GE
35
. In September 2001, Jack Welch retired from an illustrious and
successful career
36
. Jeffrey R. Immelt took over the helm as the Chairman and CEO of GE
37
.
Even though Jack Welch has officially retired, he is still conquering and achieving much
more. Welch is currently a consultant for G100, a CEO club; an adviser to a private equity
firm; a Professor of Management in the Massachusetts Institute of Technology, a columnist
for two publications and has speaking engagements around the world
38
. He also holds a
position as GE ambassador and advisor
39
.
Jack Welch is also involved in philanthropy, giving much of his time and resources to
education. The college of business at Sacred Heart University was named after him in
January of 2005. He also retains his teaching position in Massachusetts Institute of
Technology, Sloan School of Management
40
.
Welch is currently married to Suzy Wetlaufer, his third wife and has four children from his
first marriage. He has proudly declared himself as a republican. He is truly a legendary leader
of our time; an inspiration and role model to us all.


3

2 Personality Traits
2.1 Extraversion 5 Points
2.1.1 Outgoing
Jack Welch has been described by many as a ball of energy and he has consistently shown as
having an outgoing nature. In high school, he was voted as the most talkative and noisiest boy
in class
41
. During his reign as CEO, he attended dinner parties regularly to mingle around
with his employees. In addition, the fact that Jack Welch invited many people to a big
retirement party of his own further showed his outgoing nature
42
.
GE has an educational facility at Crotonville, New York and Jack Welch could often be
found there to speak to virtually every mid to upper level manager. He made a genuine effort
to interact with his managers and to stay in touch with what was going on in the company,
though he had to be slightly more proactive to squeeze out truthful insights and answers
43
.
Even after retirement, Jack Welch still embodies the energy that helped build GE. Welch is
currently a consultant for G100, a CEO club; an adviser to a private equity firm; a Professor
of Management in the Massachusetts Institute of Technology, a columnist for two
publications and has speaking engagements around the world
44
. People at Welchs age tend to
lead a mellower and less active live, however, this was not the case for Welch. His
continuous active participation in holding various advisory roles in various companies further
strengthened the evidence of his outgoing nature, despite his advanced age.
2.1.2 Sociable
Jack Welch is also known for being friendly and sociable. He likes to engage in informal
conversations with his employees, to understand their needs and thinking so that he can get
the best out of them
45
. For example, there was once Welch engaged in an informal
conversation with a GE officer located in Europe. The topics of their conversation ranged
from family, marriage to health
46
. Such example of informal dialogues between Welch and
his employee strongly reflected his sociable personality.
Jack Welch also showed his sociable side, even towards his enemies. For example, even
though the union leaders were deemed as enemies, Jack Welch took time to hang out with
them when he visited a plant in Louisville, Kentucky. He took the opportunity to mingle with
them
47
. This again reflected his sociable responsibility.
Another evident of Welchs sociable personality was his tendency to joke around with his
employees. Despite the fact that Welch was extremely serious when it comes to work-related
matters, Welch would still joke around with his employees. For example, he once read a
funny letter written by one of his officers which cause all the senior managers to end up in
bursting out in laugher
48
.
2.1.3 Dominating
Jack Welch showed his dominance through the interference of the way people carry out their
job. For example, before his annual meetings with management staff, he reviewed every
detail of the various presentations that managers were about to make. Those managers whose
presentations were not up to his standards would be given a dressing-down by him, even
before they started their presentations.
49



4

This trait is further evident in his control over the sales pitches made by his employees. Jack
Welch dictated every detail, right from the tone to the substance of the presenters speech.
For example, in reviewing a presentation by one of his employees, Charlie, he very much
control the way Charlie carried out the sales pitch
50
. Even though such was a display of
dominance, it was understandable that Welch was merely trying to perfect the sales pitch
conducted by his employee, which is critical to the organisation.
Another of such display of dominance by Jack Welch was the way he even demanded control
over the design use in GEs annual report. Welch personally went down to the graphics
department during the designing of the annual report to oversee the editing
51
.
2.1.4 Competitive
Welchs competitive streak started very early in life. His high school friends recall him as
extremely competitive and relentless, to the point of being slightly abrasive
52
. The fact that
Welchs competitive personality was shown in the very early stage of his life, inference could
be made that such competitive nature was innate within Welch.
Another piece of evident which showed the competitive nature of Welch was during one
particular talk show with Herb Kelleher, CEO of Southwest Airline, in front of the employees
of GE. Herb Kelleher, who was also known to be a boisterous character, started to grab the
attention of the audience with his shouting, joking and flirting; even taking shots at Welch.
Welch decided he was not to be outdone and will not give up top honours. Both of them
ended up competing for the attention of the audience like school children
53
. Even though this
was a talk show with no real significance, Jack Welch still did not want to lose out to a fellow
CEO in terms of the amount of attention given to him. Thus this strengthened the fact that
Welch was competitive in nature.
The third piece of evidence which indicates his competitive trait was his interaction with
another business leader, Warren Buffet, CEO of Berkshire Hathaway. Buffet was set to
introduce Welch at a convention and Welch was extremely worried about what Warren
Buffet would say about him. Due to such a reason, Welch spent weeks agonising every angle
and thinking of a counter-attack
54
.
2.1.5 Decisive
The first piece of evidence which shows the element of decisiveness within Welchs
Extraversion personality was when a group of students at GEs business management class
were tasked to investigate a plant in Mexico. They returned to share unfavourable findings
with Welch, and after briefly consulting with his Vice-President, Welch decided to shut the
plant down on the spot. He did so even though the investment was worth tens of millions and
the recommendations came from mere students
55
.
Welch also showed his decisiveness through his quick judgements on employees. Welch was
known for remembering which employees impressed him and who did not. Those who did
not must work quickly to get back on his good books before they get were dismissed due to
Welchs poor impression about them
56
.
Last but not least, during GEs restructuring phase carried out by Welch, he decisively laid
off more than 100,000 workers
57
. Welch argued that such an action was necessary as
organisations need to be shrunk before expanding, and that was what exactly Welch had
done. Laying off of a number as large as 100,000 workers was always going to be tough for
any CEOs, however, Welch was still decisive in carrying out such action even though be


5

might not feel good about it. Such action of his, nevertheless, portrayed his trait in being
decisive.
Analysis
Jack Welch scores extremely high in extraversion; this trait influences heavily on his
leadership style and subsequently sets the direction for GEs culture and financial
performance as an organisation. It is obvious that this trait started very early in life and can be
attributed to his mothers upbringing. While mentors have warned Welch that his aggressive
style might be detrimental to his career, he has claimed otherwise.
2.2 Conscientiousness 4.4 Points
2.2.1 Responsibility
After every annual Boca meetings, it had become a habit for Jack Welch to send letters to his
managers to re-emphasize certain points. Often, he had these notes handwritten in pen
because he wanted his personal touch to be conveyed in the message
58
. Such an act was
clearly a display of responsibility by Welch, in ensuring that points and messages that were
discussed during meetings were clarified and reiterated to his managers. This helps to ensure
that things were able to be done correctly and according to his expectations.
2.2.2 Achievement-Oriented
The biographer noticed how Welch frequently uses the words game, speed, performance
and winning. Competition and winning is a core value within him. This is even more
evident when he titled his autobiography Winning
59
.
In addition to the inference made on Welch being achievement oriented through his
biography, another evidence of his achievement oriented trait was his implementation of the
performance-based reward system. Welch believed that a reward system based on
performance will better motivate his employees. Hence, he revamped the system to suit a
more achievement oriented style
60
. Employees were differentiated into distinct percentile
groups, with each group receiving its respective rewards. The bottom 10% was dismissed
61
.
2.2.3 Perfectionism
Welch is a perfectionist and strives to do the best in whatever he does. One such example was
the writing of an annual letter to shareholders in a particular year, together with Bill Lane
(Welchs head speechwriter). Everything was finalised but right on the verge of printing out
the annual letters, Welch realised that the flow of the letter was not good enough and
demanded changes to be made to the letter. He was not at all concerned about the cost
involved in such a last minute change of decision. All that Welch was concerned, was to
perfect the letter before sending it out to the shareholders
62
. His strive for excellence
regardless of cost was a clear evidence of Welchs perfectionism personality.
Another piece of evidence which showed the perfectionism trait in Welch was when he
hunted Bill Lane persistently in order to take a sneak peek at the draft Lane had written for
him
63
. He did all these to ensure that the speech would be perfect and up to his standard,
before he would deliver it to the audiences. This further strengthened Welchs trait in striving
for perfection.
The perfectionism within Jack Welch can also be observed through his meticulous attention
to detail. He once spent around 8 hours personally preparing an 8 minute Bechtel sale pitch;


6

refining the tempo, tone and exact word phrasing.
64
The proportion of time that Welch spent
in preparing for a short sale pitch was a clear indication of his perfectionism personality.
2.2.4 Diligence
Jack Welch had an extremely busy term as CEO. He oversaw 300,000 employees in 15 core
businesses and many acquisitions; averaging more than 2 per month. He usually stayed way
past working hours in the company to get a clear knowledge about the operations
65
. Such
evidence was clearly a display of diligence by Welch.
Another display of Welchs hardworking personality was when Welch, together with his head
speechwriter Lance, spent three hours and made over one hundred drafts on a speech. Upon
close to completion of the letter, Welch even goes to the extent to work on which punctuation
marks to use
66
.
Last but not least, Lane also described how Jack Welch could have replaced any presenter
who did not turn up because he essentially went through every single one of them
67
. This
shows that Jack Welch would always make preparations diligently by going through the
information and presentation materials before the presentation. Such was the level of
diligence as displayed by Jack Welch.
2.2.5 Dedication
To Welch, work and life is synonymous; there was no such thing as work life balance. He
once told an employee, Charlene Begley, that she cannot have any more babies after her
previous one. As much as it is ethically incorrect, Welch believes that the job has to be the
primary focus and companies which overindulge in work-life balance will become
uncompetitive
68
.Welch admitted it never came across his mind that his subordinates might
have rather been somewhere else. Such was his single-minded focus
69
.
Additionally, Welchs dedicated personality was also demonstrated in his belief in absolute
commitment. Welch once got very angry at Bill Lane for taking the day off to play golf. Even
though Lane had finished a particular speech, Welch expected him to be constantly working
on it till the very end
70
. Such was the kind of commitment and dedication displayed by
Welch, in ensuring that all works are being done to perfection.
Jack Welchs dedicated personality was also evident in his detailed knowledge about the
organisation and the research that he would conduct before sitting in for any presentations. In
one particular presentation, an employee raised questions on why the corporate research
department did not support a specific project. Welch immediately countered with statistics
that proved the fault was with his team of engineers
71
. Such dedication to his work was one of
the reasons Jack Welch was one of the best, if not the best, CEO around.
Analysis
Jack Welch scores high in conscientiousness; similar to extraversion, this trait influences the
direction for GEs culture and performance heavily. His conscientiousness stems from strong
beliefs that hard work and perseverance pays off.
2.3 Agreeableness 2.2 Points
2.3.1 Sensitivity (Negative Evidences)
In the personality trait of agreeableness, Jack Welch displayed the negativity aspect of
sensitivity. There was one such ad presentation by an external agency. Jack Welch and his
group of vice-presidents present at the presentation to not like the idea proposed by the


7

agency. While one of the marking presidents tried to reject the idea politely, Welch simply
threw the storyboard on the floor and rejected the idea outright
72
. Such action was no doubt
an act of insensitivity and a lack of respect to the presenters.
2.3.2 Cooperativeness (Negative Evidences)
Welch once criticised a social group that was formed by GE Management as not achieving
anything useful or substantial, other than organising dinner parties and rubbing elbows.
During a dinner party organised by a social group formed by GE Management, Welch
criticised them for not achieving anything substantial other than rubbing elbows with each
other. A month later, they transformed into a group of community volunteers
73
.
2.3.3 Politeness (Negative Evidences)
Welchs was infamous for being profane and this shows the negative aspect of a good natured
personality. For instance, when he once sat for an uninteresting presentation rehearsal, he left
halfway blurting profanities
74
. Such lack of respect and the use of profanities undoubtedly
further portray the negative aspect of Jack Welchs agreeableness personality.
2.3.4 Compassionate
Despite the negative evidences gathered above, Welch has shown a huge capacity to be
compassionate. When Jack Welch once saw a football player getting severely injured through
the television in a Manhattan store, Welch worried the entire day him
75
. The fact that Welch
was concerned about a football player whom he personally did not had the acquaintance with,
showed lengths of Welchs compassion.
Another piece of evidence found relating to Welchs compassionate personality was when his
speechwriter wife was diagnosed with brain tumour; Jack Welch showed his entire support to
both Lane and his wife. He called Bill Lane frequently to ask on her condition and gave him
day off when necessary. Welch also ensured that he would get a generous stock option
76
. By
showing his support morally as well as financially, it was indeed evident that Welch does
possess compassion, and this contributed to his agreeableness personality.
2.3.5 Approachability
Despite the tough outwardly appearance Welch might have portrayed, he genuinely wants to
be liked and have tried to close the power distance by being on a first name basis with
subordinates. He also took interest in the welfare of the staff by constantly sounding out the
comforts of his employees at work, in order to ensure that his employees were working in a
comfortable and conducive environment
77
.
Apart from showing his interest on the welfare of his employees, Welch was also opened to
clarifying any doubts and uncertainties that his employees might face. For example, Bill Lane
once describes Welch as accessible, and that any manager who wanted to clarify something
should just call him up and do so before the actual presentation
78
. Thus, this shows his
openness to clarifications, but such clarifications had to be done before the actual
presentation to Welch.
Analysis
Jack Welch scores very low in agreeableness. Infamously one of the toughest bosses in the
world, this is no surprise. He often interrupts and raises his voice at people he works with.
However, it must not be mistaken for a tendency to lose control in a fit of rage. Instead, his
low agreeableness is a result of demanding for excellence and not settling for mediocrity.
Despite his toughness in business, he does care for the people he works with.


8

2.4 Emotional Stability 3 Points
2.4.1 Ability to Handle Criticisms
Jack Welch was known for his ability to handle criticisms. This was evident during one of a
particular corporate dinner, when one of Welchs friends made a drunken remark about his
hair on stage. Although he was known to be sensitive on that topic, he did not react furiously
but instead just pretended to be busy taking a phone call
79
. Despite the fact that he was
sensitive to topics regarding his hair, he acted calmly and did not lose his cool under the
context of a corporate dinner, as he do not want to create a scene at the dinner which could
reflect badly on him.
Another piece of evidence which reflected Welchs ability to handle criticisms was when GE
first acquired the National Broadcasting Company (NBC). One of the talk show hosted a
segment to poke fun of GE as an organisation. David Letterman, the host of the talk show,
went on to call GE executives pinheads. Despite so, Welch did not mind as long as the
ratings kept rising
80
. This further reflected his emotional stability and his focused on the
objective of the organisation.
In addition to the two pieces of evidence mentioned above, Jack Welchs ability to handle
stress was reflected in his self-awareness. For instance, Jack Welch has long been criticised
as Neutron Jack for massive discharging of employees for restructuring. In an interview,
Welch accepted those criticisms as something that came with the job and did not show much
concern about the nickname
81
.
2.4.2 Ability to Accept Mistakes/Failures
Despite the legendary status that is usually conferred to Jack Welch, he had made a few
mistakes along the way. However, he did openly admit and acknowledge mistakes. For
example, he admitted that he postponed the removal of sector executives longer than he
should have because he felt that they were good people and liked them
82
.
Another mistake which he had acknowledged was the $1 billion investment in Montgomery
Ward & Co., a U.S. pioneer retailer. After poor performance, despite restructuring under
bankruptcy laws, the acquisition was sold off. The company, however, opened an online
retail operation that turned out to do well. Jack Welch admitted that he should not have taken
too long to agonise over difficult decisions and should have been tougher and done things
faster
83
.
2.5 Openness to Experience 3.4 Points
2.5.1 Intellectual Curiosity
A piece of evidence which shows that Welch was opened to experience in terms of
intellectual curiosity was when he was invited to give a speech on What have we learned
over the past 100 years that will help us face the next 100? Welch spent much time preparing
and researching for it and was genuinely fascinated because it gave him an intellectual
challenge
84
.
2.5.2 Strategic Thinking
Jack Welch was able to think strategically. This was evident when he wanted GE to be
adaptable and respond quickly to changes. Hence, he led a two pronged revolution across GE;
the Hardware and Software phase. Firstly he restructured the company from 350 to 11 core
businesses within three main business segments; namely manufacturing, technology and


9

services. He further demanded that these businesses be the first or second in the industry. On
the software aspect, he created values such as passion for excellence, hating bureaucracy and
enormous energy for employees to follow
85
.
In the process of restructuring, Welch also eliminated much of the bureaucracy by trimming
hierarchical levels from 29 to six. The structure of the company changed from a tall structure
to one that resembles a flat structure. He also cut filters of communications via the Corporate
Executive Council
86
. All these trimming and de-layering no doubt provide GE with the much
needed flexibility and responsiveness in a business environment, especially the environment
in which GE resides.
In addition, Jack Welch also strategically initiated a cultural revolution called Workout. It
was an informal and creative way for employees of all ranks to brainstorm, discuss and
review numerous businesses and processes in teams under the guidance of facilitators. This
innovative method quickly caught on and was an integral part of the strategic change of
culture. The Workout imitative proved pivotal in actively engaging employees to
participate in improving the organisation.
2.5.3 Willingness to Consider New Ideas
When Jack Welch was told of how students in the business management school of GE often
threw paper balls, projected pornographic videos on the screen and threw popcorn all over the
place, he welcomed such behaviours as a sign of departure from the norm. His reaction to
such behaviours indicated his willingness to accept a little quirkiness and disorder
87
. Such
acceptance could be inferred in a way that Welch perceived such behaviours as a form of
creativity and risk-taking exhibited by these students. Creativity and risk-taking are important
elements in the creation and implementation of new ideas.
In addition to the actions exhibited by the students, there was another piece of evidence
which we could make inference to Welchs willingness to consider new ideas. On Martin
Luther King Jr. Day, two managers decided to try something radical in the cafeteria. It turned
out to be slightly offensive to the African Americans and received many complaints.
However, Welch intervened and used the opportunity to communicate to his employees that
they should not be afraid of trying something edgy even if it might lead to disaster
88
. Through
such an incident and the reaction shown by Welch, it could be inferred that he was willing to
consider and to implement new ideas, even if it involves risk-taking and potentially
undesirable outcomes.
Last but not least, the fact that Welch was also willing to borrow best practices from other
companies and apply it to GEs context, provided further evidence on Welchs willingness to
consider new ideas. For instance, the implementation of the Six Sigma quality control
programme (a programme that was not originated by GE but was made famous by them) is a
good example of such practices that ensured GEs competitiveness even till this day
89
.
Analysis
We were unable to find more evidences relating to his personal interests and creative
pursuits, hence the unremarkable score for Welchs trait on openness to experience.
However, we could still make inferences from his leadership style and work-related incidents
that he was rather opened to new experiences, based on the limited evidences which we had
gathered. His leadership style, strategic decisions and actions were revolutionary in his era.
He was bold in exploring and applying different models and tactics; which many were
considered unorthodox during his time.


10


In conclusion, Jack Welch is an extremely extraverted and conscientious person. These two
traits have influenced his leadership style and contributed much to his success. While he does
not suffer fools gladly, it does not prove emotionally instability. His openness to experience
can be seen from his revolutionary and innovative management style.
3 Influence Tactics
3.1 Soft Tactics 4.24 Points
3.1.1 Rational Persuasion
At the age of 33, Jack Welch became GEs youngest general manager of a department which
produced and marketed plastics, Lexan and Noryl. At that time, the use of plastics as a
material was not popular until Welch persuaded researchers and manufacturers the benefits of
using it. He convinced the manufacturers that by using plastics, it is able to produce lighter,
cheaper and more durable products. Furthermore, he even came out with an advertisement to
show the benefits of using plastic. As a result, plastic was quickly adopted in everything from
automobiles to airplanes to soft drink bottles
90
.
In addition, Welch recognized that the world was rapidly changing with numerous
unpredictable incidents. His perception of the growth in Japanese and European enterprises,
made him classified them as potential competitors. Hence, he persuaded managers and
subordinates that speed was the only solution for GE to compete and triumph others in the
worldwide competition
91
. Thus, this evidence shows that Jack Welch uses rational persuasion
to influence employees to accept his strategy to develop GE as a world class organisation.
Furthermore, Jack Welch knew the high cost induced by low-quality ones after GEs
dishwasher and washing machine line lost 18% and 16% of its market share respectively after
a year. Hence, at GEs 1996 annual meeting, Jack Welch explained the Six Sigma program
and demonstrated its effectiveness by showing the impressive performance of the industries
which had less than one-half failure per million flights. As a result, audiences were persuaded
5
4.4
2.2
3
3.4
0
1
2
3
4
5
Extraversion
Conscientiousness
Agreeableness Emotional Stability
Openness to
Experience


11

that it was necessary to implement it and two years later a total of 6000 projects applied Six
Sigma
92
.
3.1.2 Inspirational Appeal
When Jack Welch restructured the company to make it focused and stronger, it deeply
affected the employees and weakened their morale. They felt insecure due to the restructuring
and massive laying off of employees. When Welch successfully acquired RCA in 1986, he
called it a quantum leap that lifted the spirits, energized employees and united the
company. During the announcement, 500 managers stood up in approval. The acquisition
profoundly impacted the aspiration and emotions of all staff and made them feel that the
company was worth working for
93
.
In addition, Welch never liked to set small target for the company such as increasing
inventory turnover from 4.73 to 4.91 or operating margin from 8.53 to 8.92. He believed that
those petty numbers would only give space for bureaucracy and more time consumption.
Instead, he will set challenging long-term goals and celebrate the achievement of those goals
as a way to inspire employees, and to encourage imagination and creativity. Hence, with this
celebration, it motivates employees to accept the impossible goals set and to think critically
on ways to meet those goals
94
.
3.1.3 Consultation
Prior to Welchs tenure, GEs managers felt that top rank employees, the management, had
all the answer to most problems and non-managerial employees could not contribute.
However, Welch felt that it was important to get all employees involved in the process of
seeking new ideas to innovate. To achieve this, a Cultural Revolution was carried out through
a program called Workout in March 1989
95
.
All employees were excited to raise their ideas despite some reluctance in the beginning.
Moreover, they could protect their own ideas and subsequently, the champion whose idea
was chosen would become the person responsible in the execution. With this tactic of
allowing all employees to participate in the process of planning, initiating and executing, Jack
Welch was successful in energizing his followers and making them feel more self-confident
and respected, which in turn encouraged them to commit themselves for the benefit of the
company.
Besides Workout approach, Jack Welch also organized meetings for senior managers
where they would initiate ideas together. Welch usually threw out one or several topics for
the managers to derive the best ideas instead of setting rigid agendas. By doing so, the
managers were more actively involved in leading GE, giving them a sense of ownership in
the decisions made for GE, and this served as a motivation for them to strive for the best
96
.
3.1.4 Ingratiation
Jack Welch shows his concern to business leaders and his managers by establishing close
working relationship and providing them with the support that they required. For example, he
travelled to Europe to visit GE facilities once a year and spend several weeks in the Far East
to tour plants and review operations in Asia. Moreover, he showed his concern towards the
business leaders by calling to them once a week to ask about how they are doing. By
establishing a good relationship with his employees, they will feel favourably towards him
and aspire to contribute more to the company
97
.


12

Furthermore, when Bill Lane just joined GE as the Communications Manager, Welch told
everyone that Bill represented the total candour that everyone in GE needs. This greatly
boosted Bills confidences and his status within the company. As a result, Bill was enthused
to work diligently Welch
98
.
Analysis
Based on the evidences, Jack Welch used four out of five soft influence tactics; all except for
personal appeal. He usually uses rational persuasion, inspirational appeal and ingratiation to
influence his employees. These tactics appear to be very effective in convincing and
influencing others as seen from his successful attempts.
3.2 Hard Tactics 4 Points
3.2.1 Exchange
Welch developed a new mindset in employees by encouraging them to work for themselves.
Welch changed performance evaluation methods to a performance based system that relied
on concrete evidences, instead of arbitrary managerial benchmarks. This way, it reflected
their efforts better and motivated employees to put in more effort in their work. GE provided
employees with opportunities, resources and a supportive environment as an exchange for
their skills and energy. In exchange for employees skills and contribution to GE, the
company provides them support for individual development prospects
99
.
3.2.2 Pressure
In the process of implementing Six Sigma across GE as well as its suppliers, Welch realized
that a few of them were reluctant to improve the quality of their products. Hence, Welch
pressurized those reluctant suppliers by charging them an additional fee if the components
supplied were of lower quality. As a result, they had no choice but to adopt Six Sigma in
order to avoid unnecessary costs
100
.
In addition, a handful of GE employees were unwilling to attend Six Sigma training
campaign. Welch sent repeated warnings to them that they had to volunteer for the Six
Sigma program, otherwise they will face dismissal. Unsurprisingly, the number of applicants
for training programs dramatically rose
101
.
While choosing his successor, Jack Welch made it clear to the contesters that if they were not
chosen they will be forced to leave GE immediately. Although this term of the competition is
seemingly unethical, but it guaranteed that GE could avoid conflicts that might arise if the
contesters were all working together
102
.
Analysis
As seen from the evidences, Jack Welch used two out of four hard influential tactics:
exchange and pressure. He was known as one of the toughest CEOs in history, so it is not
surprising that he uses pressure to influence others. Pressure was necessary in the beginning
as employees might not be able to realize the benefits of the changes and they might be
resistant to changes. Welch also effectively used exchange in encouraging employees to work
harder. There are no evidences of Welch using coalition and legitimizing. This is so as the
two tactics are mostly used in a lateral and upward direction while Welch was already at the
top of GE.
In conclusion, soft tactics were used more frequently by Welch. The reason is that soft tactics
appear to be more effective in energizing the target and it leads to greater compliance from
the employees. As the CEO, Jack Welch tends to inspire employees and create a supportive


13

environment for them to express their ideas and creativity rather than setting rigid
frameworks. As a result, he was able to win over his stakeholders more easily and reduced
the level of resistance. The use of hard tactics can be seen as inevitable at that point in time as
soft tactics failed to achieve Jack Welchs objectives.
4 Empowerment 4 Points
4.1 Mechanistic Approach 4 Points
4.1.1 Clarify Organisations Mission, Vision and Values
During one of his first few speeches as CEO, Jack Welch indicated clearly to employees that
he would only keep businesses that were market leaders; businesses that were the best in the
sector/industry. The fact that he clarified the organisations mission right at the start provided
the company, and most importantly towards the employees, with a sense of direction as to
where the company is heading to To becoming the best
103
.
Instead of using conventional top-down ways to create the companys mission, vision and
values, Jack Welch allowed his employees to create the companys values, with inputs from
him. This method made the company values more relevant to employees and convinced them
to adhere to it by actively practicing behaviours guided by the values
104
.
From the very start, Welch set very unambiguous visions in which the entire company, top-
down to bottom up, was primarily focused on providing the best service to customers. He
also wanted a vision that built a culture of competitiveness within the company; whereby
everyone would enjoy winning and sharing rewards
105
.
However, despite Jack Welch having such visions right from the start, he did not manage to
communicate his vision promptly and successfully to the entire company. Instead, it took a
several years for the entire organisation to understand his visions. Welch greatly
underestimated the sheer size of the company. Hence, communication of his vision to
everyone in the company took longer than expected and undermined the effects of his
unambiguous visions which had been set earlier
106
.
4.1.2 Specify Tasks, Roles and Rewards for Employees
Employees were segregated into groups based on their performances; namely Group A, B and
C. Welch specified that 100 percent of the strongest performing group, dubbed the role
models, and the 100 percent of the next best group, dubbed the strong performers will be
rewarded with stock options in addition to their pay raises. 60 percent of the B players,
dubbed the highly valued will also be given stock options. By specifying such rewards
upfront, he provided motivation for employees to work towards their individual goals, while
aligning their goals to the organisation
107
.
Welch specified the tasks of his leaders by de-layering the company and providing them with
a wider span of control. In other words, it was impossible for the leaders to micromanage
their subordinates, given an increase in the number of employees reporting to each manager.
Essentially, Welch forced the managers to delegate tasks and responsibilities to their direct
employees
108
. This was further supported by the fact that Welch was an advocate of the best
managers managed less, and not more concept
109
.
Welch also specified the roles of his business leaders by giving the planning decision back to
them. Initially, planning was done by the companys strategic planners. However, Jack Welch


14

removed the strategic planners and placed planning back into the hands of his leaders. By
doing so, Welch successfully empowered his leaders to conduct planning for their respective
units/departments
110
.
4.1.3 Accountability of Results
At GE, managers had to differentiate their direct subordinates by placing them into one of the
3 categories; the top 20 percent, the vital 70 percent and the bottom 10 percent. This is known
as the vitality curve within GE. Most importantly, he ordered the bottom 10 percent to be
dismissed unequivocally. By implementing such vitality curve, Welch created a competitive
environment which essentially empowered his employees to take necessary actions to avoid
being the bottom 10 percent
111
.
Analysis
On average, Jack Welch scored 4.2 points in Mechanistic Approach of Empowerment. He did
a good job in clarifying the organisations mission, vision and values and providing goals and
guidelines to achieve targets. In addition, Welch also brilliantly specified tasks, roles, and
rewards; providing the platform and scope to empower his managers by preventing
micromanagement, while at the same time forcing them to delegate (and thus empowering)
responsibilities to their direct subordinates. In addition, by specifying the rewards clearly, he
was empowering employees to take the necessary course of actions to achieve their
individual goals, and thus the organisations goal.
4.2 Organic Approach 4 Points
4.2.1 Understanding Needs of Employees (Bottom Up Approach)
Welch is keen and willing to fully understand the needs and views of his employees; the
implementation of the Workout initiative is the best evidence. Workout is an
organisation-wide forum which provides employees with a platform to contribute their ideas
directly to their bosses, and bosses are expected to accept or reject the ideas on the spot. This
initiative empowered the employees by providing them authority to express their views and
ideas directly to managers. Doing so could result in better decisions, which would eventually
benefit the organisation
112
.
In addition to Workout, Welch also encouraged leaders to engage employees in interactive
dialogues to understand their needs and concerns. Welch stressed that through the use of
interactive dialogue, managers or leaders would be able to uncover the secret behind
unlocking their employees potential. However, Welch also stressed that these interactive
dialogues should be held frequently for the benefits and effects to be seen. Similarly to
Workout, the interactive dialogues also empowered employees by giving them the
authority to voice out their needs and concern directly to their managers. Only by doing so,
the managers would be able to create an environment where employees can focus on
performing their work objectives and contribute to the overall organisations goals
113
.
4.2.2 Building Teams to Encourage Cooperative Behaviour
Welch stated that in order to improve situations and encourage innovation, the creation of
cross functional teams were critical. This could be due to the difference in perspectives that
different people in different department have. Cross functional teams created synergy and
provided a platform for empowered employees to innovate
114
.
Moreover, employees were separated into groups and given problems to solve. Through such
activities, employees would be able to develop their teamwork and tackle problems from


15

different perspectives. As such, employees were able to tackle and solve problems better as
empowered teams
115
.
In addition to cross functional teams, Welch also incorporated customers and suppliers into
their GE Quality Improvement Program teams. By doing so, employees were be able to
understand the needs and wants of customers better and, at the same time, liaise with their
suppliers to offer better products and services. This essentially allowed Welch to empower
employees to make better and more accurate decisions in satisfying the needs of their
customers
116
.
4.2.3 Encouraging Intelligent Risk Taking
Jack Welch encouraged his managers to take intelligent and calculated risks, without having
to worry about the consequences for undesirable results. By doing so, he was essentially
empowering them to make decisions and giving ownership of the problem
117
.
Analysis
Jack Welch scored an average of 4 points in his organic approach. The implementation of
Workout and his encouragement towards holding interactive dialogues demonstrated his
strong beliefs in a bottom-up approach. At the same time, he also encouraged the formation
of cross-function teams to innovate and provide better customer service. In addition, Jack
Welch also empowered his employees to take intelligent risks by withdrawing the
consequences of a failure from the equation.
In conclusion, Jack Welch scored an average of 4 points for empowerment, which is
moderately high. Even though Welch scored 4 points on average for both approaches, more
substantial evidences were found in the use of mechanistic approach. The fact that Jack
Welchs GE era was radically different from the current business context could be an
explanation. Despite Jack Welchs conscious efforts to hear the voice of his employees, the
use of mission, values and visions, and the specifying the tasks, roles and rewards of
employees still form stronger claims in his empowerment tactics.
5 Transformational Leadership 4 Points
5.1 Idealised Influence 4 Points
5.1.1 Set Example to Follow
Jack Welch would personally attend and give lessons at Crotonville, the companys
management training facility. Hence, he sets an example for his follower by constantly
learning from his employees despite being the CEO
118
.
Furthermore, Welch ensured that there is a system for converting ideas into actions. Upon
knowing one of his managers inventions Trotter Matrix, he walks the talk by promoting
the best practices, through dissemination of the knowledge across the company and
implementing it in GE. Along with that, Trotter Matrix became one of the best known
management tools now
119
.
5.1.2 Demonstrate High Moral and Ethical Standards
Jack Welch showed integrity by admitting that neither he nor GE invented Six Sigma. He did
not take credit for things that were not originated by him
120
.


16

5.1.3 Show High Level of Motivation
Once Jack Welch was convinced that the Six Sigma program will succeed, he launched the
project in full force with strong determination to integrate it well in all parts of GE
121
.
Furthermore, Welch showed strong determination in reducing costs for GE by restructuring
and closing down plants even though there were strong opposition from employees
122
.
In addition, Jack Welch showed no hesitation in retaining or dismissing GE employees. There
was no room for negotiation or empathy; a clear cut system that rewards and punishes
performance respectively was strictly enforced
123
.
Analysis
From the evidences, Jack Welch demonstrated high level of idealised influence. His followers
respect and trust him as he will always practice what he preached. He is exudes high integrity
and confidence which resulted in high cooperation from his followers. Thus, employees are
committed to achieve the goals in bringing new level of achievements to GE.
5.2 Inspirational Motivation 2.67 Points
5.2.1 Articulate Compelling Vision of the Future
Jack Welch will grab every opportunity he has to articulate the vision of GE; formal and
informal meetings, letter to shareowners
124
, and handwritten notes to managers
125
. He does so
to reiterate the importance of initiatives, and current and future focus of the company.
5.2.2 Show How Vision Can Be Achieved
Even though Welch articulated a compelling vision to his followers, he did not ensure that his
vision was comprehensive to all. He failed to show neither how the vision can be achieved
nor make sure his follower understood him. Hence, it took several years for the employees to
fully understand his vision
126
.
5.2.3 Show Confidence in Reaching Goals
Jack Welch used personally handwritten notes to encourage and praise employees for their
hard work and achievement. It also showed his confidence in his employees to achieve their
targeted goals
127
.
Analysis
Based on the evidences, Jack Welch has demonstrated moderate inspirational motivation
(2.67 points). He would always envision a desirable future and articulate it to his followers.
Hence, his followers would know what the top and current priority of the organisation was. In
addition, he showed high level of confidence in him and his employees. He would always
encourage his followers personally be it in a meeting or through letters. However, Jack
Welch failed to elaborate on how the vision could be achieved.
5.3 Individual Consideration 5 Points
5.3.1 Paying Attention to Development Needs of Followers
Jack Welch set up a training institute for his employees at Crotonville. It is a place where
employees were trained and developed on various skills
128
. Furthermore, he will try to ensure
that the environment in the organisation is good for growing and learning for his followers
129
.
In addition, he built facilities such as gym and guestrooms for his employees
130
. These
evidences showed that Welch cared about the development needs of his employees.


17

5.3.2 Supporting and Coaching Development of Followers
Jack Welch would always support and coach his followers to take appropriate risks in
decision making. He would not punish them even if they failed to achieve the goals set
131
.
Hence, his followers were stimulated to take intelligent risks and learn from their
experiences.
On top of that, he made sure that GE developed more experts through Six Sigma training
programs. This resulted in his followers picking up new skills and it increases their ability to
take on new assignments
132
.
Lastly, Jack Welch would gather advice from successful executives and include it into his
presentations. By so doing, employees were able to learn the secrets to success from those
executives
133
.
5.3.3 Delegating Assignment as Opportunities for Growth
Jack Welch made sure the ownership of each of the business units was given back to the
businesss leaders, rather than the strategic planners. Thus, the leaders are given the
autonomy to make decisions for their respective units
134
.
Furthermore, Welch believes that managing less is managing more. Hence, he would give
opportunities to his followers to manage the organisation without interfering
135
. Through
these opportunities, the leaders would be able to learn management skills.
Lastly, even the lower level employees in the organisation can also take on the role of a
mentor. Learning within GE is not confine to one direction, the employees learn from their
superiors but also vice-versa. This provided the lower level employees to exchange their
knowledge and experience with their superiors and peers
136
.
Analysis
The evidences showed that Jack Welch demonstrated high level of individualized
consideration (5 points). He was willing to delegate his authority and assignments in order to
stimulate and create learning experiences. In addition, he promoted a strong level of learning
and would want everyone to learn either from one another or attend Workout sessions.
5.4 Intellectual Stimulation 4.33 Points
5.4.1 Help Followers Become more Innovative and Creative
Jack Welch developed his followers by providing them the opportunity to be more innovative
and creative. He initiated Workout, which is a town hall-style meeting to give employees a
forum for speaking out. Through Workout, employees were able to share their ideas
without fear of consequences. This has helped employees developed on their skills of
innovation and creativity
137
.
In addition, Welch will not set agendas for his meeting; instead he will throw a topic to his
followers and ask them for their ideas towards the project
138
.He also held informal meetings
which encouraged employees to speak out and to think out of the box
139
. These activities
helped to cultivate creativity and innovation within GE.
5.4.2 Get Followers to Look at Problems from Different Perspectives
Jack Welch let his followers understand that someone with great titles or promotions will not
be better off than someone with knowledge. It is not the titles that matters but it is the
knowledge of individuals that contributes to the company. Hence, this encouraged employees


18

to be more inclined to learn and develop themselves
140
. Position within GE will not impede
employees from participating in decision making.
5.4.3 Challenge Followers to Re-Examine Critical Assumptions
Jack Welch will urge his followers to make things happen rather than sitting back and wait
for things to happen
141
. This challenged his employees to think of solutions or new ideas to
implement.
In addition, he will force his managers to group with people whom they do not know; this
will help the managers to understand other viewpoint
142
.
Furthermore, Welch will challenge his employees through stretching their goals. By having
ambitious goals, employees will put in more effort and energy to try to reach their target.
Hence, once they are able to take up the task, they will be able to do the impossible
143
.
Analysis
Jack Welch has demonstrated high level of intellectual stimulation (4.33points). He will
provide opportunities or idea that will result in a rethinking of old patterns of behaviour, and
enable followers to look at the problems from different angles. Jack Welch emphasizes on
creative thinking from his followers and trigger employees to think of the box.

In conclusion, Jack Welch is a transformational leader (average of 4). He has scored full
marks in individualised considerations. It could be seen that he pays attention to his
employees needs. He treats all employees with respect and he believes that employees play
an important role in the achieving success in an organisation. Hence, Welch trains and
delegates authority to his followers to nurture them into the future leader. Next, he focuses on
intellectual stimulation (4.33). He will frequently challenge and encourage his employees to
be innovative and creative. In addition, he will increase followers interest and awareness of
problem. After which, he demonstrated idealized influence (4). He plays attention in
embodying the organisational values and mission. Jack Welch holds high moral and ethical
conduct. Furthermore, he would set examples for his followers. This helped to gain trust and
respect from his followers. Lastly, Welch scored the least (2.67) for inspirational motivation.
The reason why he fared the lowest for this segment is because he articulated his vision but
4
4.33
2.67
5
0
1
2
3
4
5
Idealized influence
Intellectual
stimulation
Inspirational
motivation
Individualized
considerations


19

he did not show how the vision could be done. This could be due to the fact that he was
focused on a learning organisation; he wanted his followers to engage in learning themselves
rather than telling/showing them what to do. However, he still painted a desirable future for
his followers and showed confidence in achieving it. Therefore, Jack Welch is a
transformational leader that leads his followers beyond immediate self-interests.
6 Analysing the Impact of Leadership Style
6.1 Impact on Employees
6.1.1 Gaining Trust and Commitment
Jack Welch has managed to gain the trust and commitment of his employees with his
leadership style. The use of soft influence tactics encouraged a higher level of commitment
from his employees, instead of resistance. It also motivated employees to put in their best
effort to accomplish their goals and carry out their responsibilities whole-heartedly.
As a transformational leader, Jack Welch is highly committed in the development of his
employees. Workout has helped to improve employee participation in decision making
and encouraging creativity and innovation in work processes. Employees will be more
willing to voice out their thoughts and also any unhappiness or improvements that can be
implemented for the benefit of GE. In addition, employees will be nurtured to develop
creative ways to execute their daily job tasks which might even improve internal productivity
and increase job satisfaction as each of them is accountable for their performance.
The development of leadership skills will increase the satisfaction of those employees who
wish to be groomed into a leader within GE and also the level of confidence when sharing
their ideas with their colleagues and superiors. As employees realize that the CEO cares for
them, respect each of them and acknowledges their importance, they will in return commit to
his leadership and respect the decisions that he made for GE.
Although Jack Welch adopts the mechanistic approach in empowering his employees, he has
managed to gain their respect and compliance with the direction set for GE. In view of the era
Welch worked in, it is inevitable to have a slant towards mechanistic approach. Yet, Jack
Welch has managed to balance it with the use of organic approach in order to successfully
empower his employees. Thus, his employees actively participate in decision making and
carry out intelligent risk taking. He also empowered employees by restricting micro-
management and putting pressure on managers to entrust their subordinates with more
responsibilities.
6.1.2 Creating World Class Leaders
In addition, Jack Welchs leadership has been accepted by several of his employees and has
even led to the cultivation of other world class leaders. Their aspiration to be like him has
resulted in them adopting his style of leadership when they move on to lead other
Organisations.
James Mcnerney, CEO of 3M until 2005, is a good example. He was one of the candidates
competing to succeed Jack Welch. After he had lost the successor seat to Jeff Immelt,
Mcnerney took the CEO position in 3M. As a result, the 3Ms market value rose by about
$4.5billion when its stocks have been unattractive for the past five years
144
.


20

Mcnerney felt that 3M had a collegial culture which was uncontrollable and undemanding.
Thus, he set out to make it more disciplined with greater emphasis on executing strategies
and the performance of the company
145
. He did so by insisting that employees be graded on a
vitality curve
146
similar to the one used in GE. In addition, Mcnerny practices what he preach
by being actively involved in the training programs when he declared that it is essential for
the CEO to adopt a leading position in developing its people
147
. Apart from that, he employed
some initiatives of GE into 3M like the Six Sigma
148
.
Another example is Larry Bossidy, who was once a vice-chairman of GE and later became
the CEO of Honeywell. Similarly, Bossidy integrated Six Sigma into the company and did it
as fervently as Jack Welch in order to develop leaders
149
. He announced to stakeholders of
Honeywell that Six Sigma will be the main driving factor to ensure a continuous six percent
growth in productivity
150
. This initiative has helped to improve Honeywells profits and grow
the value of its shares
151
.
6.2 Impact on Organisation
6.2.1 Impact on Organisations Profitability and Growth
Apart from the impact on employees, Jack Welchs leadership has also created significant
impact on GEs organisational performance. When Welch took over as CEO, GE was not an
Organisation in decline, but an Organisation that had stagnating profits and growth. However,
they were able to achieve sustainable double digit growth under Welchs leadership. This
strong financial growth was no doubt related to the leadership style that Welch adopted.
Firstly, Welchs style of fierce intensity, influenced by his high dominance extraversion and
conscientiousness led to an aggressive and constant strive for excellence in the company.
Hence, the organisation was able to obtain such remarkable results.
He also implemented several changes including Workout, Six Sigma, and many other
significant initiatives. He was able to successfully implement such changes by utilising
influence tactics to manage the resistance and negative reactions to change. As a result, these
changes moved the Organisation towards profit and growth maximization.
In addition, the empowering of his employees created an impact on the organisations
profitability and growth. For example, encouraging managers to take more intelligent risks
helped them break free from their comfort zone and explore the unexplored. Without such
empowerment of intelligent risk taking, managers would be afraid to try out new way of
doing things or explore new markets. This would then lead to stagnation of growth or even
maintaining status quo.
The impact Welch had on the organisations growth and profit was also evident in the high
level of determination he exhibited in idealised influence of transformation leadership. Jack
Welch believed that in order for the organisation to grow, the organisation would have to
regain its focus and reduce its size of operation. With such belief, he embarked on the mass
laying off of about 118,000 employees, which was a tough decision made even for Welch.
However, he showed his grit and determination to stick to his belief, despite opposition from
employees, as well as bad press. Persevering through all the negativity eventually paid off as
GE managed to achieve years of sustainable growth, a feat rarely replicated by other
organisations.


21

6.2.2 Impact on Organisation Culture
The personality of Jack Welch in being competitive, coupled with his leadership tactics and
style (influence tactics, empowerment and transformational leadership) which he had adopted
during his reign as GEs CEO, had shaped GEs organisation culture into one that was closely
aligned to his leadership philosophy. Further elaborations on the organisation culture will be
covered in the Conclusion section.
6.3 Impact on GEs Business Environment
On top of that, Jack Welch has had an impact on the business environment GE operates in.
GEs massive expansion through acquisitions allowed GE to be the best in many different
industries. However, GE is still a quintessential manufacturing company. Jack Welch
implemented Six Sigma to focus on production efficacies. Even though GE was not the only
company to implement Six Sigma, Welch made sure that GE was the company which made
the best use of Six Sigma.
This was evident in the fact that GE had the most number of black belts (experts in Six
Sigma) amongst his competitors. Welch also pushed his employees to pick up new skills,
above and beyond their expertise in their core functional areas
152
. With GE setting a new
level in Six Sigma, it brings quality and production efficacies to a whole new level; industry
competitors strived to follow the footsteps of GE.
However, it was not all about ensuring production efficiencies for Jack Welch. He also
created a different picture of the manufacturing industry through innovation and creativity.
This was evident in his organic approach in empowerment; building teams and creating an
innovative environment. In addition, the use of intellectual stimulation provided further proof
on Welchs emphasis on innovation and creativity. He aimed to develop new and better ways
to improve effectiveness and efficiency. GE indisputably sent a message to industry
competitors to place more emphasis on innovation and creativity.
Jack Welchs leadership style was also highly suited to the organisation. GE, one of the top
global MNCs, has some of the best talents. The management of such knowledge workers
required the use of an approach away from bureaucracy. This was one of the reasons that
made Jack Welch put in consistent efforts to drive bureaucracy out of GE
153
.
7 Conclusion
7.1 Organisation Culture
From what we have discussed about Jack Welchs personality, as well as his leadership
approaches, it can be deduced that GE possessed a combination of an adaptability culture and
an achievement culture, which is externally focused.
7.1.1 Achievement Culture
As discussed earlier in Big Five personality traits, Jack Welch exhibited high levels of
competitiveness and ambition. These two traits had an immense impact on GE culture. In
addition to Welchs personality, his implementation of Workout also contributed to the
value of personal initiative in an achievement culture. Through the implementation of
Workout, Welch expects his employees to contribute ideas to their leaders to make GE a
more productive and efficient Organisation.


22

7.1.2 Adaptability Culture
On the other hand, Welchs used of organic approach in empowerment also contributed to
GEs adaptability culture. Welchs creation of teams provides strong evidence of instilling
the value of creativity within the Organisation
154
. Similarly, he also used the organic
approach of empowerment to support and encourage his leaders to take intelligent risks
155
.
This contributes to the value of risk-taking within the adaptability culture as well. Without
creativity and risk-taking, employees would be unwilling to try new ideas. As a result, GE
would not be able to devise new and better ways of doing things, undermining the growth
potential greatly.
In addition, Jack Welch also created a value of autonomy within GE by discouraging his
leaders from micro-managing. He enlarged the span of control for leaders so as to make it
impossible for them to micro-manage each of their followers. Welch also developed their
responsiveness by de-layering and decentralising decision making. By doing so, decisions
can be made faster and thus, making GE more responsive to changes. These values of
autonomy and responsiveness are especially important in a fast-paced and dynamic business
climate in which GE operates
156
.
7.2 Servant Leadership
Apart from being a transformational leader, Jack Welch also portrayed certain aspects of
servant leadership.
7.2.1 Listening
Before implementing Six Sigma, a survey was conducted on GE employees. The survey
results showed that employees also urged for quality to be improved. On top of that, Welch
saw that their competitors are gaining competitive advantage by producing high quality
products with the Six Sigma program. This made him determined to ensure that Six Sigma is
integrated into GE as well
157
. Based on this evidence, we can see that Jack Welch listens to
employees and competitors, and also act on their suggestions.
7.2.2 Stewardship
Before Jack Welch became the CEO, he already valued prudence by praising agents who
managed to reduce the cost of materials, which helps GE to cut down expenses
158
. In
addition, he did not hesitate to close down operations that are not cost effective or not
contributing significantly to the profits of GE
159
. Therefore, this shows that he assumes the
role of a steward in managing people and resources to achieve what is best for GE.
7.2.3 Foresight
Jack Welch did not believe that operating in a mature industry signifies stagnant growth for
GE. He foresaw opportunities beyond the boundaries of US, expanding towards countries
recovering from the cold war, which are developing their economies
160
. As a result of his
foresight in the globalisation phenomenon
161
, about half of GEs profits are derived from
other countries
162
. This shows that Jack Welch has the ability to identify opportunities. Thus,
his foresight has brought about the development of GE as a global Organisation.
7.2.4 Building Community
Welch feels that being a good team player is essential in determining a ones value to GE
163
.
He tried to change the culture within GE by incorporating the idea of working in teams as he
believed that it can help to generate ideas. The idea of working in teams does not only restrict
to within GE, but also with its stakeholders like its customers to improve on the quality of


23

their products
164
. This establishes a sense of community within and outside of GE, in terms of
sharing ideas and working in teams.
7.3 Organisational Change
During Jack Welchs tenure as the CEO of GE, he had directed many significant changes. In
addition, the reward system was changed from seniority or job ranking based pay to
performance based pay
165
.
Of the major changes that Welch had successfully implemented was moving GE away from
bureaucracy. He recognised that there were too many layers between the ground employees
and the upper management
166
, which led to ineffectiveness and inefficiencies. Hence, Jack
Welch recognised that it triggered the need to transform GE into a boundary-less
organisation. He started off by communicating his goals with his employees. After which he
tackled the change by incorporating it into the companys shared values
167
. Next, he
implemented the change by de-layering the structure into a flat organisation. During the de-
layering process, he also fired the strategic planners and put the decision making authority
back to those managers who were running the business
168
. Through restructuring, efficiencies
and responsiveness between employees and top management could be enhanced, thus
benefiting GE as a whole.
In addition to improving efficiency and responsiveness of the organisation, Welch also
strived to get employees to contribute ideas, while at the same time ensuring that his
managers were willing to accept ideas contributed by their followers
169
. Thus, Welch
implemented Workout as part of the restructuring, to encourage employees to share their
ideas. The Workout sessions helped in building trust and allowed managers to empower
employees
170
. This has brought GE a step forward towards Welchs objective of changing GE
into a boundary-less organisation, and at the same time, bureaucracy within the organisation
has been reduced.
7.4 Recommendations
Jack Welch introduced the vitality curve to measure employees performance and those that
were classified as the bottom 10 percent, were dismissed without any chances given. In
todays organisation, this move can lead to the company incurring greater costs than benefit.
Employees are assets of the firm, which costs have been incurred on these assets since the
day the recruitment process begins. This is so, as the firm allocates its resources to conduct
such processes and also the amount of time spent to orientate new employees, to provide
them with on-the-job training if required, specifies high investment in each individual
employee. At the end of each year, firing the bottom 10 percent signifies that GE is foregoing
the amount of time and resources dedicated to those employees and intends to incur another
set of cost to rehire new employees.
Furthermore, in the 21
st
century, organisations are also faced with the issue of a talent crunch
within the labour markets
171
. Thus, ranking and firing employees year after year might result
in greater loss of talents, who could be developed further to achieve greater contribution to
the company if they were retained.
On top of that, this performance evaluation system has its disadvantages. The ranking is
carried out by superiors of respective employees and it points out the subjectivity of how the
employees were ranked. It is also possible for managers to abuse the system by removing
employees that they dislike. Also, employees may feel that they were dismissed based on
discrimination, and this might lead to the company taking on numerous lawsuits
172
. Apart


24

from that, employees who belong to the middle category (within 70 percent), will feel
demoralised as their performances are considered to be average and in the following year,
they might even end up as the next bottom 10 percent.
Thus, we would like to recommend what Jack Welch could have done to complement with
the use of the vitality curve. He should give employees of the bottom 10 percent a chance to
improve on their performance. Apart from determining that they are poor performers,
managers should assist in identifying the gap between the actual and expected performance
level. Once the gap has been identified, the managers can then determine if the gap can be
closed through training or reallocation of job due to mismatch or even other issues.
On top of that, the ranking of employees should not be done based solely on the managers
discretion. Instead, they can incorporate the 360-degree appraisal system which includes self
reflection, feedback from customers, managers, colleagues and even subordinates. This will
reduce the biasness of the performance evaluation
173
. Records of the appraisals and steps
taken to assist the employee in improving performance should be kept. In the event of a
lawsuit, employers are able to justify the dismissal of the employee with such evidences.











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53
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55
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56
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64
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65
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72
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73
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74
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75
Ibid. p. 173.
76
Ibid. p. 229.
77
Ibid. p. 57.
78
Ibid. p. 123.
79
Ibid. p. 99.
80
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81
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82
Ibid. p. 139.
83
Ibid. p. 200.
84
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85
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Ibid. p. 139.
87
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88
Ibid. p. 226.
89
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90
Ibid. p. 39.
91
Ibid. p. 159.
92
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Hill.
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100
Ibid. p. 186.
101
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102
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105
Ibid. p. 94.
106
Ibid. p. 95.





107
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Hill.
108
Ibid. p.106.
109
Ibid. p.52.
110
Ibid. p. 106-107.
111
Ibid. p. 82-83.
112
Ibid. p. 35-37.
113
Ibid. p. 60-61.
114
Ibid. p. 156.
115
Ibid. p. 152.
116
Ibid. p. 178.
117
Ibid. p. 113.
118
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Hill.
119
Ibid. p. 56.
120
Ibid. p. 51.
121
Ibid. p. 42.
122
Ibid. p. 77.
123
Ibid. p. 107.
124
Ibid. p. 42.
125
Ibid. p. 52.
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128
Ibid. p. 29.
129
Ibid. p. 50.
130
Ibid. p. 77.
131
Ibid. p. 86.
132
Ibid. p. 98.
133
Ibid. p. 97.
134
Ibid. p. 27.





135
Ibid. p. 77.
136
Ibid. p. 99.
137
Ibid. p. 35-37.
138
Ibid. p. 52.
139
Ibid. p. 108.
140
Ibid. p. 98.
141
Ibid.
142
Ibid. p. 99.
143
Ibid. p. 70.
144
Ibid. p. 143 - 147.
145
Ibid. p. 148.
146
Ibid. p. 81 - 82.
147
Ibid. p. 147.
148
Ibid. p. 149.
149
Ibid. p. 171.
150
Ibid.
151
Ibid. p. 172.
152
Ibid. p. 98.
153
Ibid. p. 13.
154
Ibid. p. 35-37.
155
Ibid. p. 113.
156
Ibid. p. 172.
157
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158
Ibid. p. 41.
159
Ibid. p. 116.
160
Ibid. p. 86.
161
Ibid. p. 70.
162
Ibid. p. 69





163
Ibid. p. 138
164
Ibid. p. 195
165
Ibid. p. 107.

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Krames, J. A. (2005). Jack welch and the 4e's of leadership. (p. 33). New York: McGraw-
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169
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170
Ibid.
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