THE WEEKEND INTERVIEW
Preacher Man
"I'm not an extremely rich guy," says Jack Welch. "I'm OK."
BOSTON--As he greets me at the front door of his home on Beacon Hill, Jack Welch actually recalls the specific charity event five years earlier when we were introduced for the first and only time. I don't flatter myself that our meeting was that memorable to him. That's organization! He may no longer run an industrial colossus, but Mr. CEO still has his head in the game.
Mr. Welch handed over General Electric's top job in 2001, after a 20-year run that cemented his Rushmore status forever. He's the Wysiwyg guy, everybody's template of how a leader should behave, what his priorities should be. The goal is to "win." The means is the team, and the method is personnel management--hiring, coaching, firing when necessary. We're sitting in his spacious, sunlit home office as he gives me an executive summary of his new book on the subject (written with a new wife): "I believe winning is good. I believe business is at the heart of every successful culture. I believe that I have a way of teaching people how to win. I have a methodology. I believe it works. And I preach it wherever I can."
Mr. Welch surrendered the keys to GE only to find himself a bigger story than ever after a series of, ahem, partly unfortunate incidents. He fell in love with a journalist, Suzy Wetlaufer, then of the Harvard Business Review. He divorced his wife; her lawyers put an eye-popping figure on his GE retirement benefits--including lifetime use of corporate apartments and GE aircraft. The timing was hellacious. Mr. Welch was suddenly hearing himself mentioned in the same breath as Ken Lay, Bernie Ebbers and Dennis Kozlowksi, just another piggy, looting CEO.
He agonized. He knew whether he kept the benefits or gave them back, he'd look like a heel to someone. He gave them back. "Look, if I didn't get divorced and go out for Suzy, those lawyers wouldn't have been involved, and GE would never have been in that position," he says now. "So I put GE in that position, and I should get 'em out." The kick in the head is that Mr. Welch had negotiated the lifestyle bennies himself, in lieu of a retention package dangled by a board that would have been worth, he estimates, $300 million today.
Mr. Welch gives countless interviews about all this, but one question I hadn't seen answered. What if he and Suzy had met while he was still CEO?
"Yikes," he says, and studies the ceiling for an eternity. "I find myself the luckiest person in the world that I met her. But I probably would not have had the courage to put my finger on the nuclear button."
Today Mr. Welch has no formal connection to GE, just a rooting interest and a considerable pile of stock. Yet even the boys and girls on CNBC (a GE property) have lately joked the stock is "a dog." Mr. Welch shrugs. "Multibusiness companies--we won't call them conglomerates--are out of favor right now," he says in a high, raspy voice, laden with his boyhood Boston. "But he's doing all the right things," Mr. Welch says, referring to Jeffrey Immelt, his successor as GE's CEO. "He'll have analysts charging him. 'Bust it up.' But he's got to keep doing what he's doing, delivering the results, delivering cash flow and real earnings, and in time the stock will take care of itself."
Mr. Welch seems frequently to get razzed about "rank and yank," a term popularized by Enron. But he tells audiences that GE's method of systematically evaluating and weeding out employees involved a lot more coaching, and never involved dropping the hammer unexpectedly. OK, but was he really comfortable having those conversations in which he had to tell the laggards they weren't making the grade? "Totally," he says emphatically--"because I never surprised them."
Here, he casts me in the role of underperforming lugnut: "'Your stories are too long, you ramble too much.' I'd edit you and I'd slice a little bit here and there, and I'd give it back to you. And I'd say, 'Look, I'm not going to spend two hours every day because you can't write well enough. So the next time, get it right!' And if I did that two or three times [without improvement], I'd call you in and I'd say, 'Look I'm sick of talking to you.' And you'd know it too. And that's the way it has to be."
He maintains that a real manager has to be comfortable having such conversation, but too many aren't because of a misguided sensitivity to their underlings' feelings. "That's the cruelest form of management," he continues. "You carry these people along. They get to be 50 years old. You have a recession. You say let's cut costs 10%, and you walk down the hall, 'Holman, you're going home.' 'Why me?' 'Because you weren't very good, Holman.' And Holman's reaction is: 'I've been here 25 years. Why didn't you tell me?'"
Now that my professional life is flashing before my eyes, let's change subject. Imagine somebody like Apple's Steve Jobs finding himself, as a youngster, a GE management trainee. Would he have thrived under the Welch system? Wouldn't he have chafed?
"We all chafed! But you gotta say the guy [Mr. Jobs] is remarkable. I think he probably could have done well anywhere. . . . Because I know how to hire great people. It's not very complicated. You don't have to have a big IQ. You don't have to know all these genius things. If you can get great people to stretch and reach their dreams, you will get incredible performance. But you gotta smell 'em, feel 'em. You gotta like people."
How about GM or Ford? Can the Welch system help solve their problems? I remind him of his "Neutron Jack" phase in the early 1980s, getting rid of factories and workers that didn't fit GE's future. The auto makers, most would say, don't have the same freedom because of their deadly embrace with the United Auto Workers.
Mr. Welch responds that whatever their problems, the car companies could benefit from less bureaucracy, more innovation and getting closer to their customers. He praises Pontiac's new Solstice convertible. But he also concedes the point: "I don't have a great magic formula here. Coal, steel, autos--they all went through, if you will, their catharsis." In the case of coal and steel, I point out, "catharsis" meant Chapter 11. Mr. Welch just chuckles.
He doesn't seem the type to spin his wheels on hopeless causes, but one of his projects has been coaching principals at some of the worst-performing New York City schools. He jumps up to fiddle with a computer and print out a table of test scores, which he says indicate progress. But he also fumes about the Democratic Party and its lockstep with the teachers unions. "They fight vouchers. They don't like charter schools. They don't like taking care of these kids. They like bureaucracy. How, morally, can they do it? It shocks me."
One Democrat on his radar screen, for many reasons, is Eliot Spitzer, the scourge of Wall Street and heavy favorite to become New York's next governor. Two years ago, the two bumped into each other at Fox News studios, and after some small talk, Mr. Spitzer launched into a blistering "message" for Ken Langone, a former GE board member who had become a target of Mr. Spitzer's for his role on the board of the New York Stock Exchange. "He met me in the hallway and we started chatting. And then he just started rolling," Mr. Welch recalls. Did he seem like a man possessed? After a pause, Mr. CEO answers with a laugh: "I'd say he felt very strongly."
Well, would it be a good thing for America and the Democratic Party if Mr. Spitzer succeeds in his quest for higher office? "Great question," Mr. Welch says as he proceeds to duck it. "Look, he probably did some good, but he sure as hell took some swings at a lot of people. I'd like to see him go to trial on some of these cases he's got. I'd like to see him really try and win them. He's gone to trial against a couple people that stood up to him and he lost."
It's time to wrap up. We've been at it for an hour. I've met the wife. I sense it wouldn't be too untoward to note that Mr. Welch's reputation now includes the image of man who was willing to be "reckless in love." I don't have the nerve to ask him how much his divorce and remarriage cost him, but it crosses my mind that a man once was listed among Forbes 400 richest Americans probably no longer is. Instead, when I ask if he's sold any of his GE stock, he answers, "Never once." He also adds: "Most of my wealth is there. I'm not an extremely rich guy. I'm OK."
"OK" would be OK for most of us, but still points up something interesting. Despite his amazing success in business and the media's fascination with high CEO pay, the big money in American life still goes to entrepreneurs. He agrees: "I'm a professional manager. I wasn't out in the street with my family and mortgaging my house. I wasn't Dave Packard. I wasn't Bill Hewlett. I had the security of GE."
A day before our interview, Mr. Welch made a sizeable gift to Sacred Heart University, but the gift was occasioned by friendship with the university's president and the school's proximity to GE headquarters, not Mr. Welch's Catholic upbringing. His regular churchgoing nowadays takes him to Boston's Park Street church, reflecting his wife's evangelical background. Maybe that's why, more than once, he has referred to himself as "preaching" the role of winning organizations in making society a better place.
He was 13 years into his own career at GE before he learned what he now preaches as the key lesson of leadership--it's no longer about your success, but about the success of others. He discovered this only when he gave up running GE Plastics to run a whole group of GE businesses. "I realized I couldn't run those businesses myself. I didn't know anything about them. It was up to me to get great people. When I was running my own business, I was way too much of a meddler. I didn't get it," he says.
Now he got it. Seven years later, he was tapped to become CEO.
Mr. Jenkins is a member of The Wall Street Journal's editorial board and editor of OpinionJournal.com's Political Diary. His column, "Business World," appears on Wednesdays.
