The Man Who Pushed Corporate America Back 30 Years - A Life Story
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- Опубликовано: 7 июл 2024
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There’s no middle ground with this CEO.
His legacy ranges from the genius who streamlined corporations through revolutionary management techniques, to the fat cat who destroyed the American business landscape by making life worse for employees. [2]
Then there are those who say he ran a bona fide cult so steeped in capitalistic fever that even Ayn Rand would have cringed.
He retired with a $417 million severance package - the biggest ever at that point in time. That’s enough to raise the eyebrows of even his most dedicated disciples.
Yet, he always saw himself as fighting for the little guy.
He championed the efficient infrastructure of small business over the sluggish mechanisms of big bureaucracy. Yet he never shied away from defending lucrative bonuses for CEOs such as himself.
Not even when firing scores of blue-collar factory workers!
His paradoxes all stem from his expertise as a chemical engineer.
A deep understanding of synthesising opposing elements, creating catalysts, and measuring explosive outcomes explains how his methods for success have split people down the middle.
ou could say his business approach was capitalism’s free radical - reactive, energetic, but short-lived.
Or was it?
Am I just playing devil’s advocate, or should we give the devil his due?
Were his techniques always destined for downfall or have other companies improved his formula?
And did General Electric collapse because of him or in spite of him?
It’s time to learn How History Works as we distil the corporate history of Jack Welch.
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SOURCES
1. www.newyorker.com/magazine/20...
2. www.npr.org/2022/06/01/110150...
3. www.referenceforbusiness.com/...
4. www.investopedia.com/terms/j/...
5. www.aluro.com/blog/noryl-a-so...
6. www.aluro.com/blog/noryl-a-so...
7. www.theatlantic.com/politics/...
8. • From the archives: Jac...
9. factorialhr.com/blog/stack-ra...
10. www.nytimes.com/2022/05/21/bu...
11. www.epa.gov/hudsonriverpcbs/h...
12. www.nytimes.com/1990/07/27/bu...
13. www.justice.gov/opa/pr/justic...
14. www.investopedia.com/insights...
15. www.independent.co.uk/news/wo...
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He removed all safety. He removed all security. He condemned a minimum percentage of every employee group to guaranteed firing, no matter how well they did on their own merits. And he became obscenely rich off of it.
Basically he was a charismatic, steaming pile of shit.
sort of like your comment
Donald Trump without the political ambitions
@@blairbrown4812 at least the GE guy didn't try to destroy AMERICA and didn't storm the US Capital. #wattamoron
@@blairbrown4812 In architecture the design choices have to work lets not insult Donald Trump in this way. George Welch is a slimeball which is a smoothie of Bill Clinton and OG George Bush
Wish we can move your comment to the top so everyone can read it. Jack Welch did do all of these things and it needs to be widely known.
One of his worse legacies was ignoring quality. The U.S. went from having the best products/services to absolute crap. Everything from food quality, products, homes and planes (look at Boeing, whose CEO admired him). Everything is now garbage thanks to Jack Welch.
I don't know how old you are, so perhaps it's possible you're just unaware, but your statement that in some past - which you don't define - U.S. products were universally made to superior quality is provably, verifiably false. That may be true for specific products, from specific companies, for specific periods of time (looking at you Zenith TVs), the idea that it was across the board is laughably false. US steel companies got hammered in the 1970s and 80s by far superior and cheaper Japanese steel. Speaking of the Japanese, U.S. cars in the 1970s were absolute garbage which had not evolved technologically for 40 years and U.S. automakers found themselves rightly getting crushed by cheaper and better Japanese imports. A lot of the poor quality and uncompetitiveness can blamed on labor unions, government interference (like granting monopolies or excessive regulation), and poor management, another culprit was arrogance and complacency. Finally, one of the criticism made about Welch by a clearly biased content creator is that high compensation for CEOs is bad. One of the shake outs that came from the economic upheaval of the 1970s - a period of massive industrial decline in America - was due to management's personal interests not being forcibly aligned with shareholders and the larger economy. The fix that was decided on was high direct compensation for CEO performance. And whatever your politics, that worked.
& Forbes worshipped him.
@@juliancate7089 They never said EVERYTHING was better back in the past.
Also, what US made products aren't absolute trash?
My mother told me, before Welch became GE CEO, not to buy GE products. She thought they were junk in the 1950s, 1960s, and 1970s. Welch didn't become CEO until 1981.
I knew a railroad executive in the 1970s who was not happy with GE locomotives.
A friend of mine is an airline captain. He thinks the GE CF6 jet engine was junky. That was designed in the early 1970s.
How exactly was America supposed to compete with China when it comes to manufacturing?
He sold off successful divisions of General Electric to push up the stock price until he no had no company divisions to sell. It was a house of cards that left the company unrecognizable to the average investor. It was like selling off the bedrooms in your house till you have nowhere to sleep.
It's like selling your neighbors home room by room... Remember he doesn't own the company he was just the leader to drive it into the ground.
@@butwhytharum Welch was not wrong in anything he did. It all made sense in the context of the times. The issue was that Welch did not make as astute a succession decision as his predecessor, Reg Jones, had. Given the emphasis Welch placed on developing his work force, that is very unfortunate.
@@JohnMinehan-lx9ts Welch's business model was *fundamentally* unsustainable. It didn't create profits through slow and steady growth, it created them by devouring other companies, keeping the one time profits, and shitting out the rest. And you can only consume other companies for one time payouts for so long before you run out of companies to consume. Then there was a hiccup in the stock market that knocked the whole ponzi scheme down. Because it was a ponzi scheme.
GE was falling as a company for years under Jack's leadership, he just kept selling off pieces of the largest US conglomerate to fill in the losses and retired just as he ran out of pieces to sell. Then he had the balls to blame the guy at the helm for a few years for sinking the company.
Jack Welch destroyed GE. When I started as an Engineer in the 70's, GE was known as a company that innovated and developed new technologies and produced high quality goods. Working at GE was considered a prize job, and the best and brightest wanted to work there. By the 90's GE had the reputation of being a toxic environment and their products had a reputation for poor quality and unreliability. The economic collapse of GE was inevitable. No, I never worked at GE. I witnessed their collapse from the outside. Very sad.
I am an industrial Electrician, and GE is notorious for being not the best...sometimes straight up garbage equipment, it's insane.
Your story sounds a lot like what happened with Boeing. Boeing used to be a best-in-class aerospace engineering firm, now turned into stockholder sycophants where engineering safety is secondary to corporate profits and stock value. It always seems to be the CEO pushing for ROI as opposed to balancing ROI with innovation, engineering, and technology development. The irony is that Welch has a ChemE background yet I think I'll remember Welch as the guy who destroyed GE.
Replace GE with almost any company, same story everywhere.
@@Aoihoshikage3446 The Boeing story is worse. They used to be an engineering focused company with a group of executives who used to be engineers. Meanwhile, McDonald Douglas (MD) was run by people who idolized Jack, basically the sleeziest Wall St grifters you can imagine. After the finally killed MD by making the DC10 with so many quality issues that the company was on the verge of collapse (but couldn't be allowed to go under because of their military contracts), they were forced to merge with Boeing.
And if you thought, "Capitalism is a meritocracy, they'd never put the guys who *just* exploded a company in charge of the new merged company", boy would you be wrong. The even made jokes in presentations about the Boeing executives getting fucked in the merger. It's only taken those same idiots 30 years to destroy Boeing too. And this is *all* because of Jack's business philosophy.
Jack Welch was a strip miner, not a business man. And guess what? When you run out of things that other people built to mine and destroy for profit, your company goes bankrupt too.
so sad
When he started at GE, it was a huge success. When he left, it was a basket case. I think that says everything there needs to be said about his management ideas. Unfortunately, his ideas and practices provided huge payouts for CEO's and other upper level managers. That's why most other American companies jumped on board.
And that’s also why none of the big corps have changed since, and why only smaller companies and boards who don’t get the luxury do any different
0:36 he was fighting for the little guy
Himself
He also pioneered outsourcing customer service to other counties. 🤯
A Pioneer in outsourcing American jobs. Sounds like he helped in destroying the middle class.
The guy was a genius.
He only severed shareholders as Milton Friedman did to increase profit by any means necessary
This was bound to happen if businesses weren't competitive.
@@gabbar51ngh they were more than competitive, they just weren't delivering ever increasing profits to shareholders. So he sacrificed stable, long term growth for gimmicks that boosted the stock price for (relatively) short periods. He just managed to keep juggling until he retired and the whole thing collapsed. And I guarantee he retired when he did because he knew it was going to collapse so he could attempt to remain blameless.
Always firing the least performing 10% of workers, based alone on relative measurement, independent of the absolute performance is just stupid and brings the firm’s hiring cost way up, hiring is often the most expensive thing for a firm
It also leads to two things:
1. The better employees jump ship because they know their current company's management is going to suck even worse soon and there are companies that will value their skills.
2. The remaining employees learn that the easiest way to avoid being in the bottom 10% is to worry less about their productivity and more about sabotaging their coworkers.
@@foxymetroid So this is the origins of the toxic workplace. The guy was just incredibly short-sighted.
@@foxymetroidthis is what is happening with Amazon. As long as there is growth, they can get away with it. But the moment it shows down…📉
@@Here4TheHeckOfIt Except when it came to his own pay.
This is EXACTLY what enron done
I worked in a senior position for a major utility. Every September, our GE rep would approach us with some "deal" (take delivery of spare turbine parts before year end and get a big discount; place your nuclear fuel order for next spring's refueling outage now and get a discount, etc.) We were never buying more product, rather just shifting timing of the orders and deliveries. We knew the rep was doing this to hit his sales targets and internally we talked about how this would create a bigger and bigger sales hole for him in the future. The sad part was that this man was GE lifer and provided excellent service to us, yet he feared being "ranked and yanked" if he missed his target.
That's really sad to hear. I really hope corporate America sheds the Welchist policies and treat their employees, customers, and the environment more fairly, again.
Gosh, General Electric has been an iconic American Corporation - first bringing the power of electricity into the economy, then being one of the great paternal corporations that was emblematic of the era of The Company Man and a stable economy for the Middle Class, and then turning to the Dark Side by treating its employees like pawns in a chess game to be sacrificed upon the God of Capitalism, and becoming a company that made money via finance, not making stuff. Fittingly, "Neutron" Jack was the prototypical psychopathic CEO to blow it all up; he had probably caused more emotional pain than anyone else in the latter half of the 20th Century.
More pain than _anyone_ in the latter half of the 20th century?
I think Henry Kissinger would like to have words
Or Mao Zedong, who was still in charge until 1979
Or Pol Pot. especially Pol Pot.
You said everything that I thought.
I get what you mean, but you literally had to look at brutal dictators, and war-hungry politicians to find worse examples
I read his book. The facts are he leveraged GE's cash flow from manufacturing to turn it into a bank. A bank with risky assets. All was well on paper until 2008. Then these assets became worthless. The rise of Chinese manufacturing destroyed their bread and butter revenue. GE was left as a shell of it's former self and hasn't recovered yet. One example: GE built and then leased the jet engines to the airlines. Boeing sold or leased the aircraft. Airlines often don't own their planes nor the engines. When the airline industry suffered a big down turn, GE's engine leases became worthless. All those big revenue numbers from the glory years became worthless accounts receivable, big write offs and losses. As Will Roger said: "The return of your money is more important than the return on your money."
You missed the bit where GE almost INVENTED cheap offshore manufacturers. I have heard from MANY high voltage electricians they GE had the junkiest switches and components, you had to wait 6 weeks for everything because it was literally ALL shipped from china NO America warehouses and the chinese would get the order relayed and get ot straight on the next ship NOT plane, the parts were ALWAYS at least double if not triple the price of competitors components with GARBAGE quality compared to competitors and 6 weeks instead of one week. They're a bare existing shell now. Even GE wind turbines are a chinese company who are LICENSED to use the name. Here in Australia we even had GE consumer credit cards! The only thing GE makes NOW is spare parts for their jet engines. Not sure if they even make new jet engines now.
@@OffGridInvestor They just rebranded the Chinese parts with GE stamps. At Lowe's, the GE light bulbs were identical to the generic Chinese lightbulbs, except they were almost 2x as much. If I am forced to buy low quality parts, I'm not paying a premium because it has a different stamp.
Don't feel bad for them, they were huge on the green agenda Obama pushed.
GE forming GE Capital was a page out of the Big 3 automakers playback with their finance divisions, such as GMAC.
Also, when GE formed GE Capital, conglomerates were a favored corporate structure. My father worked for Swift & Co. Swift became Esmark and owned Swift, Hunt-Wesson, Playtex, Vickers Petroleum, insurance (which managed Esmark health care plans), an engineering business (which designed Esmark plants), Vigaro fertilizer, and even the Halston clothing line.
So, for a company that made light bulbs, small appliances, kitchen appliances, locomotives, jet engines, turbines, and healthcare imaging, owning a leasing entity was not a stretch.
Think how retailers and oil companies used to have credit cards that were not farmed out to a bank. The Sears card was once the most widely-held credit card in the U.S. I had credit cards from Marshall Field's, Carson's (another Chicago department store), Baskin (the retailer owned by Hart, Schaffer & Marx), and Shell Oil. Each entity owned what the government described as an industrial bank, meant to finance the needs of customers.
@@OffGridInvestorThe problem was that American business wanted into the Chinese market, trying to beat Europe and Japan. China wanted goods from foreign companies made in China. So, everyone set up Chinese manufacturing. Then, it dawned on them how little Chinese employees are paid.
Of course, the two best-selling car makes in China are VW and Buick.
A town in Mexico has been known for decades about their glass ornaments. Most of that manufacturing has moved to China. That tells you how little Chinese workers are paid, when their wages are lower than Mexican workers.
Jack Welsh's way of doing business is great in the short term but leads to disaster in the long term. Ranking and laying off employees works in the short-term but causes employees to work against each other long term as employees focus on what is best for themselves, not for the business. His business strategy also means far less risk-taking for fear of failure and a focus on short-term gains to boost personal performance rather than investments and ideas that will sustain the company through hard times.
Another CEO, Andy Grove, took a different approach at Intel, and the results could not be clearer. As GE crashed after Jack, Intel continued to survive as Intel was always a little paranoid about the future. Taking risk and encouraging criticism.
Are we talking about the same Intel which remained in 14nm for 10 years because they didn't need to innovate? The same Intel which lost the performance crown in most applications? The Intel which launched a failed gpu division 2 generations behind the competitors? The Intel frauding the consumer by advertising one tdp and using other? The Intel that had to threaten partners not to use the competitor? Who tried to patent troll x86? Yeah, great guys. Next you'll be telling me what an amazing company Microsoft is by strongarming their way into monopoly.
Another side effect of his "fire the bottom 10% no matter how productive they actually are" policy is that the better employees with more marketable skills often see the writing on the wall and jump ship as soon as possible. After all, if you could work anywhere, why would you work in a place that's going to be heck to work for? Heck, they might even accept less pay if it means working under a better boss.
Intel isn’t doing to well though….
That's why it went ass up when he left. You talk to any former GE employees who lasted til the end, they all blame the CEO after Jack but they're ALL MBA snobs, real corporate scum types. And then you look at the structure and the next CEO had NO HOPE of keeping the place going in the long term
@@02nupe Referring to Intel during Andy Grove's tenure.
Even Jack Welch thinks Jack Welch was a terrible CEO.
Reinvesting in your company can and does save huge amounts of money in taxes, so we have this a-hole to thank for focusing on layoffs, bonuses, and running companies into the ground over innovation. Private Equities Philosophical Father
stock buybacks were illegal for a reason then came Reagan and released the monster.
LoL, yeah there are so many notable historical figures that pretty much just looted their countries or companies and then the second they left things fell apart.
It's hard to look at Walsh and think he didn't just hollow out GE. Sure it's still a big firm but it's not like it wasn't a big firm before. That's like saying Louis the XVI. was a good monarch because France still exists.
He didn’t understand that workers are capital to. Even Adam Smith dedicated one book on how to treat workers as capital.
Human capital
I would say he understood that concept. In his 70/20/10 rule there is 20% of the workers who he views as highly valuable and responsible for 80% of business outcomes. He treats that 20% very lavishly. He just doesn’t give a shit about the person themselves but he did prove he could value their labor to a degree
@@mitchellblair3935 I understand you point of view. I work in politics one of my job is developing potential. My experience are from European institutions. In Slovenia we had a problem of 1 persons was capable out of 5 for the job. What we did we was started higgling technical professionals who sucked in technical professionals and grow them from there. Then we choose only average “human studies”. In short time we got 80% efficiency to do their jobs. People ware glad to get opportunity so they worked harder.
Usually if you higher from the “Ivy League colleges” they always came with ego 💼. Impossible to mold.
Workers are a cost. That is not a bad thing, it means workers are free seek new opportunities
@@mitchellblair3935 the added productivity of the 20% he treats greatly is cancelled by the number of new employees joining the workplace.
you need to understand, even though the 10% were not doing well compared to the 20, they were still doing enough to provide value with their training.
the new ones get the excuse of being new for the year they joined, perform bad the next year and leave. and the more it cycles, the worse it gets. you don't plan for one cycle,
plan ahead and think about the effects of the previous cycles to the cycles ahead.
its like overcharging a car's engine, it's going to blow up. welsh enjoyed lavishly until it exploded and ejected cuz he never had longetivity in his mind. the business was not his
child so he just milked it to the brink of death. and other ceo's followed.
business owners with more than 2 brain cells definitely didn't follow along with this dumpster fire and likely have employees working diligently for decades under them.
workers from the era of being loyal to employer and the employer being loyal to the employee, being understanding when the employees in their hardships.
welsh's concept only helped himself and made it easy for him to put his job in autopilot overcharge mode until he's done raking as much as he can.
he didn't care, cuz caring would not let him maximize his profits as an employee. a lot of leaders today are employees working for their own success until they jump ship to some other company with better offer.
I worked for GE Information services in the late 1990's. My team was top ranked. I pulled my weight and improved the knowledgebase to make us even better at our jobs. I got a 2% raise. My next employer a month later gave me 10% on top of that. Asked why I left, i asked if 2% was what a top performer got, what did they give their average employee. I guess they thought I should be scared to keep my job even if I was killing it? 2% isn't a raise, it's a COLA. They weren't just losing C team members. A-listers had a say in their employment too. Welch's cost cutting very likely was at the heart of internal rot of the company. He taught America how to eat seed corn.
Jack Welch popularized thinking of employees as liabilities as opposed to assets. Pretty much the downfall of our economy.
I hope we get rid of a company's legal obligation to "maximize shareholder value" someday. It is what causes companies to rob Peter to pay Paul.
Shareholders/ the Board of directors get too much importance placed on them.
@@onpoint2292 they don't have a legal obligation, it's what they choose to do.
Jack Welch only succeed because strock buybacks were legalized in the 1980s. Thus it was far easier to manipulate the market
Can you explain in layman's terms?
No it's not, it's true that he multiplied GE revenue by a a lot, almost in high teens, now it also true that his methods is questionable. Buyback mean you reduce the amount of share that can be traded in the open market, this mean you give the shareholders more love than stakeholders(employees). You cant increase revenue by using buyback instead the strategy is to go from R&D to just acquired other companies, you might not need as much manpower and the risk is minimal cause you buy an already working product. Again, how is buyback manipulate the market when you just want to own more of your business because you believe in it. Rather then selling your stock, you buy it back. It's by no means easy, cause to do that you need cash, so you first need to generate more cash.
@@bagussriyono874 that's makes a lot of sense 🎯
@@bagussriyono874 Technically a share buyback should not change the total value of a company. It just means each share has more value because there are fewer shares. HOWEVER, the market often rewards companies for buying back shares instead of making investments (which could turn out bad) or raising the dividend (which may have to be cut in the future if there is a cash crunch).
You touched on a very important aspect of what GE and many companies run by former GE managers do: buy established businesses instead of investing in R&D and new product development. Cutting R&D and new product development saves cash, but often ransoms the future.
@@bagussriyono874 But, it can and should be argued that while it's great you believe in your company, you should not be able to buy back market shares (MS) because it's the market that decides if it believes in your company. By buying back MS it artificially elevates any company allowing them access to great financial opportunities, such as better loan rates, higher loan rates even access to better employees...ect.... It's like saying you're really good in bed just because you enjoy your own "handy work".
Please. Welch just adopted the PE mentality. Michael Milken (junk bond king), corporate raiders, and firms like KKR (private equity LBO)broke capitalism. The focus shifted from generational wealth building to cashing out anything that wasn't tied down.
Yeah. I used to be more of a hardcore capitalist until I just saw how hard it was to hold companies accountable for irresponsible decisions.
I am all for property rights for individuals, but corporate entities need to be held to a much higher level of scrutiny. Yes, this will make things move more slowly, but this will greatly reduce the risks that everyone else has to deal with because some rich people never grew up and operate their companies like Pirate ships robbing everyone else blind.
Huge corporations pretend they're still sole proprietorships or private partnerships, or privately traded LLCs, but in reality once a company becomes a Publicly traded, it becomes a whole other kind of entity that needs a lot more regulations, and penalties to prevent it from acting with impunity.
The problem with companies once they reach a certain size is that they think that their purpose is to increase valuation, to become super efficient at cost avoidance and profit generation. That's not why companies exist but if you were to tell a board that you don't give a crap about the stock price of the company and you care about innovating and serving customers with the best products exclusive of other issues but in a reasonably profitable way, they'd never allow you to function. It's not the CEO's to blame (exclusively). It's the CEO's and the boards and shareholders they are pandering to.
The CEO is expected to do a job and do it well and that is having a well functioning company not resell choclate chip cookies with a 25% upcharge. People are capital and a resource, human capital.
You're basically describing publicly traded companies
@@Dakid015exactly when companies start out they don’t start out public traded. They are private and the CEO’s built the company or was someone that was in the company while it was being built. As the company continues and newer CEO come in the disconnect between the founding philosophy and the new CEO becomes more clear and shareholders become the only one they listen to.
Maximizing shareholder value is a terrible business philosophy. Your stock evaluation should not be more important than your obligations to other stakeholders (employees, the local communities the businesses operate in, the governments which oversee the territory businesses operate in, other businesses the company trades with, etc.)
Employees are not a liability. They are an investment: a very good employee is what allows your company to operate. Even the bad, underperforming employees contribute to the company's success (they just provide less value than you pay them).
If we live in a world where "if you don't work, you don't eat"… then of course companies are gonna keep underperformers employed. Do you want them to turn to crime or something? People that are inefficient are still people. There are very negative consequences to treating people poorly without trying to help them meet their needs in some way. Even if a company isn't the best fit for the company they currently work at, helping to increase their competency, helping them find placement in a more appropriate position, or some government income program is a better outcome than creating a jobless, underperformer who becomes resentful towards your society.
We used to invest in the technological innovations we showed the world. Because of Welsh and those like him, we only invest in what we show stockholders. Not the same thing.
He led the financialization of Capitalism, a harsh focus on short-term profits at the expense of long-term viability and innovation. GE, IBM, 3M, and many others are just a husk of their former selves because of it.
Welch had a secret weapon.... GE Capital. As an ex GE'er I hated his MO. I lost scads of money on my GE stock after he was CEO. The company has never been the same since Welch and Immelt.
Jack Welch's style reminds me of those crash diets I used to be so fond of. It works on the short term, but dangerous for your long term health. The best way to go about things is slow and steady with gradual changes.
Nice analogy. Also, focusing on quality ingredients yields good results.
Thank you, this analogy works perfect
I worked for Remington Outdoor Company, the gun and ammunition maker, when it was run by a group of former GE execs. They had big ideas but fundamentally misunderstood the nature of the business. Eventually the company went bankrupt and was sold off in a dispersal sale.
Long story short: The lessons learned in consumer electronics aren’t applicable to an industry where there hasn’t been a significant technological innovation in over 100 years
It really should be considered fraud when top execs treat the company like their personal ATM. The worst part is, there are already plenty of legal precedents to attack this kind of behavior, but it's just not enforced enough.
The main problem was that Welch turned GE into a bank.
Yes, its the great old sucessfull ceo history: does something intresting and ride that wave as far as possible, once you get on the big chair, use you influence to take everything for yourself. The fact that so many admired him is because those were all greedy crooks who wants to do the same.
And the sad thing is that people measure others value by their wallet and then we have more and more like him. Stay humble, the work itself is also important, we only forgot about it because MFs like him stole its value.
He had terrible divorces and spent his last years getting dragged around by his much younger wife.
His last wife I believe was a double divorcee and a widow somehow when she married Welch she became known as Mrs. Welch from there on out.
Reminds me of that trashy woman who married the widow of her friend that was famous for making Rachel names in his drawings. It went like this, this guy was famous for his NY Times drawings and comics.
He sadly lost his wife ironically his best friend also died. What's shocking was both these widows were best friends with their dead spouses and lived in the same building. Well she married this guy despite the 15 year difference and let's not forget the painter was married to his original wife for 45 years.
Well when this guy naturally died 10 years after his 2nd marriage this woman only wanted to be known as the widow of said famous painter. She basically erased her first husband and rode on this dead guy who only was with her for 10 years until his death.
What does it matter. My god, I always amaze how people always bring up personal life to professional life. This topic is about his business method, who the fuck care if he want to have trophy wife.
@@bagussriyono874 when the divorces costs him half a billion dollars - it matters.
@@deeacosta2734 why? It's still irrelevant to his business practices.
@@bagussriyono874this entire video is personal life lol
He said that layoffs are good because they give the person who is subjected to the r.i.f. - "reduction in force" that much of an earlier start in finding their true destiny. Many are regularly laid off with the notion that there are another group of future employees five years younger that need their rotation, starting at the bottom, and moving up until they are then shown the door. Careers become temporary assignments and the worker becomes a 'contractor' without benefits, seniority, health insurance, and paid vacations. He changed the landscape and no, we've never quite recovered, IMO.
Growing up in Schenectady NY, Jack was the villain Lord Palpatine wished to be.
I read 'Jack: Straight from the Gut' (2001) a year or two after it came out. To this day two things stand out for me. First, he really was ruthless when it came to shedding jobs in the 1980s. This video does not mention it but if a manager could not decide the employees in the bottom 10% to let go of then the manager lost his (or her) job. He viewed any manager whom complained as weak. In the book, he refers to reporters who asked him "Okay, is the job cutting over now?". His response in the book was that those journalists did not understand the paradigm. The job cutting... that bottom 10%... is never over.
Second, my mind goes back to when he blew up that lab in the early 1960s. A huge financial outlay to the company. What did his bosses say? "Okay accidents happen; we're just glad no-one was hurt, or worse". That whole experience, according to him in the book, was foundational. Specifically, sometimes it is best to hold on to an employee despite a brief lapse. What a sham. He replaced the discerning assessment/judgement that basically saved him his job with an ideology. By its essence, an ideology is an absence of judgement/discernment.
The above, for me at least, sum up Jack Welsh. A prime illustration of the toxicity which exists within the corporate world.
Not only that but he himself was a giant complainer as a Manager. Hypocrisy knows no bounds for the psychopaths.
@@frevazz3364 My view is that the corporate form itself is toxic, or at the very least has become toxic. Their sole purpose is to maximise quarterly profits. Their concern for us (i.e. human beings) as employees, customers, suppliers, heck even individual shareholders, locals wherever they operate etc. only exists to the extent laws are in place. Not to mention nature i.e. humanity's life-support system. Yet even a national government has limits. Corporations are transnational. Therefore they can, and do, play national governments off one another to minimise labour standards, environmental standards, standards of quality, safety standards. All this has been documented again and again. The documentary 'The Corporation' (2003) is one of the more well known sources.
Corporations metaphorically (and sometimes literally) bulldoze. Bulldoze. Over everything. They don't create value (as today's dominant paradigm claims), they usurp value. That is where we're at in the 21st Century. I dislike it. Yet it takes more than me, or anyone else individually. What is at play here is a global paradigm. Whilst it is in place, people such as Jack Welch will spring up. Why do you think he became GE's longest "serving" Chief Executive Officer? He best fit the bill. He was psychopathic enough (as you say) to best deliver those ever-increasing quarterly profits. It is all part of the system. He himself was massively rewarded for it.
You and I and everyone else may sit here writing our RUclips comments under this video. "Oh how bad is this or he or the system etc." but it is not going to change a darn thing. I'm not merely writing this to you frevazz3364 but to everyone. Heck on my end I am thankful I am able to write it; vast numbers in today's world wouldn't even have RUclips on their fricking radar. This whole situation... the world you and I and all of us were born into... is bad. Real bad. Getting worse as time passes. I have been fighting this shyte for years. With others. I abandoned a stable, well paid career in financial services back in 2007. I have come to realise though that it needs far more. FAR more. It needs a truly massive uprising. I shall not say more in this here comment, but I am open to reading more.
frevazz3364, I appreciate your reply. Your agreement with me i.e. in a human energy sense. I mean it. Thank-you. Sadly, it is totally pitiful when it comes to what all this requires. Removing separate legal personhood for corporations is a key example. Anyway, only so much a person may write in a RUclips comment. I trust I have made myself clear in terms of where I am coming from. At least done that. Thank-you reader(s) for your time and attention. I welcome.. indeed invite.. replies.
It all came down to focusing on short term gains instead of long term success. And now you see the problems with that with all corps that did the same cant weather the storms
He's hugely responsible for our current state, late stage capitalism, which is not sustainable, he killed it, ""The Goose that Laid the Golden Eggs" story. What a greedy a-hole.
Welch, and also Reagan, Murdoch, the Koch brothers, and the GOP generally.
They'd all be in my C tier of society and be in the 10% cut.
Dont forget the Chicago School goofs led by milty friedman, who preached their bullshit theories that by convenience ignore the risks of unrestrained greedy people in the markets.
“Late stage capitalism “ when one uses this Marxist phrase…. Cue the circus music
It wasn't "late stage" anything. That implies Welch was inevitable, when the most successful companies were doing the exact opposite of his stuff before he pioneered this philosophy of artificially inflating the stock price.
The problem is that we got the (lack of) employee protection of the 1910s and the business restrictions of modernity, which are completely incompatible with each other. Less worker protection, "right to work," warrants lower cost of entry into business. Higher business regs warrant lower cost of effort to unionize and ditching "right to work" nonsense. Can't have it both ways, yet that's exactly what's happened.
That is the result of late-stage big government, not late-stage capitalism.
@@1krani we are (now for a few years) in late stage capitalism because of people like him. We're not in this situation because of big gov.
Crazy how knowing his reputation, Strayer STILL added this man's name to their MBA program. Crazier still, it actually gets people jobs (what with Strayer being a for-profit chain and all). Source: someone who I went to undergrad with got his Welch MBA, and is now at Oracle
The fact that this man is celebrated is proof that our culture is sick.
@@personnesenki4521 The sickly obession with greed is creating a sickly obession with greed
Oracle has the same mentality. I remember in the 80s how the business magazines used to slobber over Welch
@@tech9803 Even crazier how regular people were praising this guy. Welch would fire people like that without giving a second thought.
It worked because of lag in the system. When he took control in the 90s, the workforce was mostly Gen-X who were raised by Boomers who taught that hard work made a comfortable life. He exploited that fact but it's been so ingrained in Gen X thinking by then. We started seeing the breakdowns when the Millennials entered the workforce - who saw their Gen X parents not always teach the value of hard work because they got screwed over by people pretending to be Jack. Then add in Gen Z, seeing the remains and raised by Millennials, and we get things like "working your wage", "quiet quitting" and such being the norm - they see there's no point to working hard because you're going to get screwed in the end, there's no point to loyalty because yes, you're gonna get screwed, and yes, you're gonna get screwed. The incentive to work has disappeared between massive layoffs, corporate raiders, and the need to jump every few years to get a pay raise. There are companies run by people who are not in the fan club, and their actions and behavior feels very foreign today (overtime pay? caring about employees? being open about company finances?)
Not to mention this: how often do you see lower employees getting a raise based on performance?
That last group you mentioned, leaders who are not in the Welch club that promote employee fairness and good culture. They do for sure exist. We had a good ambassador for this, Tony Hsieh from Zappos. Sadly he passed a few years ago
Join a union. Get a trade. Have those ceo's begging for your services at a cheaper price.
Why I got a government job. Welch had polluted the air so badly it was the only place to breathe.
I remember him coming on CNBC back in the day and they fawned over him like God.
Clearly a villain. As the adage goes you either die a hero or live long enough to become a villain. For an employee who built his career or making bold moves and railing against corporate mediocrity, he built a culture and infrastructure to ensure others couldn’t do the same…
Worked at GE as eng for 5y. Worst time of my life. It s a management synthesis of all modern day short sightedness. Competence is punished, only way to stay afloat is play the politics game, and so on so forth. Look at GE stock price to find objective evaluations of this management. Managers have squeezed every penny of value out of the company for their own bonuses and hefty paychecks. Self serving parasites who damage the stock holders, the customers, the suppliers, the employees.
Jack Welch is a great example of the business excesses America had in the late 20th century. Welch really did sow the seeds of GEs downfall despite making billions when doing it
Lest make lots of kick bucks with short term profit by sacrificing long term stability. What could possibly go wrong?
20 years later:
The American exec thinks 10 minutes ahead. The Japanese exec thinks 10 YEARS ahead.
- 0:00💼 Jack Welch's legacy is polarizing, viewed as both a corporate genius and a symbol of excess.
- 1:34🚀 Welch's upbringing and early career laid the foundation for his remarkable rise in General Electric.
- 3:32📚 Welch's academic and professional achievements positioned him as a standout in the corporate world.
- 5:11🎯 Welch's tenure as CEO of General Electric was marked by a meteoric rise fueled by radical management strategies.
- 8:07💰 Welch's approach to business included aggressive cost-cutting measures and a ruthless employee ranking system.
- 10:41🔄 Welch's management techniques, though controversial, became influential and are still used in various forms today.
- 13:55👨💼 Welch's leadership style and influence extended beyond business, shaping corporate culture and practices.
- 15:54⚠ Welch's post-retirement legacy is tainted by General Electric's decline, raising questions about the sustainability of his methods.
- 18:02❓ The debate continues over whether Jack Welch's visionary leadership was a success or a cautionary tale.
A major downfall was that he did not understand the GE capital side of the business. Most importantly, much of the profits were "marked to model", meaning that they actual return could be much less. That burned GE in the 2000's along with the worst CEO GE ever had coming on board in 2003
He turned away from GE core business model and made GE a financial company which was horrible for many reasons but the main collapse was the 2008-2012 Great recession that shook and destroyed many financial institutions.
Another how history works banger
"Neutron Jack"....................*Update: Over half way thru video and that term finally shows up...... LOL
I worked in a company that the CEO said he was the greatest inspiration and applied his firing method. In real life if you go through too many employees there's no one left to employ, and to this day the company still suffers from not being able to find employees.
During my career from 1979 through 2023, I witnessed the transformation of American business from emphasis on growth through building value in the marketplace to emphasis on short term gains at the expense of longer term growth. Another toxic influence was the supremacy of the stockholder which led companies to favor short term ROI vs long term growth. Whether he was the architect or prophet (NPI) of this change is debatable, Welch’s legacy can be seen in the scores of disciples who as CEO’s drove high value businesses into the ground over the last 30 years.
Jack welch is a company destroyer as well as a the worst in corporate behavior. We need to undo this persons idealogy and go back to treating workers the right way.
Great report. A+!
I’m a young engineer and I just started a job at GE. Very interested.
please dont go all Thanos on us!
Good luck.
The generational scars are still here, but GE Aerospace is a much more fundamentally sound business than the conglomerate was.
I worked for a man like that. Its a rollercoaster ride. If you have the means, learn how to do the business then start your own company and employ yourself. Working for another will never be profitable for you. The CEO always pockets a bonus for making you work more for less pay.
Welch is to American business what Mitch McConnell is to American politics
Evil is good in the short term, but dooms all in the long term
The perfect example of what a person following almost all the 48 laws of power looks like.
I haven't watched the video yet but I have read a book which has similar title i.e "The Man Who Broke Capitalism: How Jack Welch Crushed the Soul of Corporate America" wHich I guess has inspired this video. Am I correct?
I actually did not see that book, but I will be sure to give it a read. I guess when it comes to catchy titles great minds think alike!
@@HowHistoryWorks Truee!!
I can see in the future a documentary like this on Bobby Kotick and how he destroyed the videogame industry
Funny how Activision kind of followed this same trajectory, ain't it? They were king of the mountain, then kept squeezing their overhead to do more with less, then they had to merge with Blizzard, then they got swallowed up by Microsoft.
His payouts were so immoral
So he's the one responsible for destroying corporate longevity of employees.
When I saw his books occupy a whole section of the bookstore shelf, I immediately know he is full of it.
He laid the template for every single CEO down the line to loot the place
Jack Welch was to corporate governance what Thomas Midgely Jr. was to chemical engineering (the guy that invented leaded gasoline and Freon).
As as chemist, I loved your use of chemistry terms for the chapter headings. Very clever.
For years I heard that Jack Welch was a tough and radical CEO, but I never really heard anything good. I also remember hearing that GE had become mostly a financial services company which just didn't seem right. I don't know, but the whole thing seems rather ugly to me.
He saw that corporate America had problems, and he was right in that. Too bad his ideas to fix it involved hacking off all the wrong bits. I watched Welsh inspired stack ranking absolutely destroy innovation at a large technology company. The company went from fostering innovation to everyone running scared and gaming the numbers to look productive by what the stack ranking criteria measured. We lost all our good collaborative engineers and all we had left were a bunch of back stabbers that were good at playing numbers games. The numbers looked good for a couple years, then started plummeting.
The puns are too much
As a chemical engineer, it’s difficult to have Jack Welch to be considered by anyone as a good business leader. His 70-20-10 process might be okay for a turnaround process, but at some point it has to be about individual multiples of return. His disciples and process have failed so frequently that it is surprising that any former GE people talk up that experience.
My father was one of those blue collar workers
With the state of General Electric today
Was he really all that great of a business leader
Intel, Boeing - a testament to Jack Welch thinking.
Hopefully gelsinger can turn around sales swan thinking at intel
So many more 30 Rock jokes make sense now. thx
Top Grading...
Welch didn't break capitalism, but he did break corporate governance.
He was one of the leading evangelists of the "products cost money to make, we should just shuffle around money to make money" attitude that is rife on Wall St. He was one of the first people to identify employees as a liability to the company's profits as opposed to the assets that they actually are. And another one of his lovely theories that helped to break our economy was that if you have an expense that you can cost shift onto someone else, you do it no matter how completely unethical or illegal it is.
Toxic waste too expensive to deal with properly? Just dump it in that river, I drink bottle spring water, so I don't care.
I remember a "60 Minutes" segment where he stated he was mesmerized by a device that you could put leftover slivers of bar soap in and compress them to make a whole bar of soap saving waste.
You would have thought that he discovered the greatest thing ever. I`m thinkin he probably bought them all.
I see a huge flaw with the 20-70-10. If you fired all the C class employees and only have A and B class ones, would you STILL fire the 10% that performed the least?
He seemed to have started out OK, then started to believe his own BS. Pride comes before a fall.
16:48 damn, my guy must’ve really skipped out maintenance to break a car like that
Jack Welch is himself the ultimate C Class. Toxic as hell.
I've also seen that some companies seem to promote the worst worker who exists to make people lives worse.
Jack was so innovative that he proactively started laying off people at GE’s suppliers. At the time of his death, he was working a law requiring all companies layoff 10% of their staff yearly.
People that got lucky always think that they are the special divinely anointed one!
On 1961 when he threatened to leave, we were still on the gold standard. $10,500 was ~297.775 ozt of gold. $2300 an ozt gold means hes salary today would be ~$685,000.
Median slary 1961 was $5,700.
The last 40 years of corporate America have been a sharp decline in wisdom and quality, across the board. Too much focus on short-term gains for stockholders (of whom CEOs are now a major part) without any thought or consideration to the long-term survival of the company. Basically, CEOs are all trying to siphon off as much money into their own coffers as possible, and don't really care if the corporation survives after they leave. The more they can take with them without getting caught, the better they did as CEO, or so they feel. If this guy is responsible for that culture shift, then a hex on him.
The societal impact of the stock buyback initiatives that were passed in the early 80s and with the help of Jack Welch cannot be understated. They’re negative impact on Work security and ultimately on politicization money elite have created an America. It is tragically split.
For the first time I am seeing Welch listed among the worst CEOs of all time.
To be fair, it was tough to predict what the long term outcome of Welch's ideas would be, and Welch himself has been very public in his criticism of his fmr. ideas, although that now 40yr old way if doing things is still popular.
He was a corporate raider like Carl Icon plain a simple. He didn't add any value he just stripped acquired companies of their value. Proof of this is in his severance package. His goal was to do what he did, he only cared about himself. In his end what good does all that money do for him lying horizontal in a box.
He destroyed GE and that’s not an easy thing to do, but he did it
I think there's a lot of macro economic factors that weren't talked about or correlated to Jack's success, and doing so would be a one hour video, I like to think of Warren Buffet who made his riches exploiting loopholes that have since been closed in a time when there was overall better economic prosperity. In the end I think he went over the hump, he's screwed style worked in a climate of believe and hope and now it's just meaningless saber rattling employees don't care for anymore. As a machinist in MA I talked to a recruiter who said every time they let go of a bunch of machinist the system just absorbs them and everyone is back to work in less than a month.
He was an embarassment to chem Es
During Welch's term as CEO GE's profits averaged over that span of time to about 10%. Return on investment was average as well. Welch wasn't the only one to start the buy and sell routine in corporate business, the Go-Go years of the late fifties and sixties decade saw the likes of Ting and several other corporate buy-out specialists. And during Jack's reign GE appliances became known as junk. Essentially, Welch was running a rigged game on his employees, shareholders, customers, and the general public. In the eighties and nineties the revolutionary idea of removing "excess" staff and pushing command decisions down to the lower lever simply became empty talk. One of those ideas was to have your low level workers sell the company products to friends and family and neighbors without any commission or other financial rewards. Welch was more of the corporate real estate salesman than true innovative business manager.
Once again, showing human bias towards immediate results. Welch understood this bias and used it to his advantage and in the process gutted his company and his country.
he certainly saved GE, but maybe he harmed the MBA education forever.
So a factory he managed blew up and he essentially got promoted. Thats like a microcosm of modern day business. Blow things up, screw people, get rewarded.
Please do Cuthbert Heath - Francis Baring - Benjamin Graham.
Love those. Especially Benjamin Graham
Nice
I think Jack Welch's biggest sin was destroying the concept of good blue-collars. By constantly demanding the better workers do more with less, he chased them away, too. The people who got laid off had made the more productive workers more productive, by virtue of doing things those more productive workers weren't the best at or wouldn't add value at doing.
Plus, CEOs who follow in his footsteps seem to adhere to this mindset of "Anyone can do it, so anyone can do it well." It makes sense, given that Welch never worked unskilled labor before moving up, unless he worked as a dishwasher or something to pay his way through college like Ronald Reagan did.
Compare that to Henry Ford, who nearly cornered the auto market by attracting "good grunts" through his innovative 40-hr work week deal, or modern UPS, who have 340 different points for their drivers to implement in order to maximize their profitability, thust justifying their high compensation. Not even big things; little things like buckling the seatbelt and turning the key at the same time. Those 3 seconds saved per trip add up over the quarter.
In the 1970's we supplied 13 GE plants with steel. Welsh closed them all and moved the production offshore. Even moderately profitable plants were closed to minimize legacy costs and free up capital. Leveage the brand name and cheapen the products. Fire people who were dedicated employees who 's contributions built the quality reputation which Welsh destroyed. Then his wrecking crew packed up their statistical bullshit and moved to Stanley (later became Stanley Black and Decker) and destroyed that company. Corporate greed at it's worst. Stock buybacks, my ass. We can lay some of the blamed at the feet of big box retail, but Welsh wrote the book and the greed spread like cancer. Apparently Welsh and his disciples had no conscience.
Nah - he destroyed it, gutted it, off-shored it until companies like Boeing have new planes that are falling apart mid-air. The other bozo was Lee Iaccoca from Chrysler who 'saved' Chrysler by cutting cost and investing more in design. But ultimately that was proven to be a bad choice, since this kind of consumer-fisting works only for a limited period. Right after him Chrysler went broke again and got saved only by Daimler, the government and now Stellantis which lives off budget cars in other countries.
Agreed 💯
The strategy of firing the least productive 10% of your employees is extremely stupid as it cost 3 times more the an employee's annual salary to replace them.
a master's and phD by 25. Even by entering college at 18 that's 4 years for a BA so he would be 22 after that plus 1.5 years for a Masters and he'll be 23.5/24, even assuming he started gradschool immedietly that's another 3 years minimum, and not because the work's gonna take that long, but because the administrative diatribe takes ~ 2 years. That was part of the joke in The Big Bang Theory when Leonard said he got his phD at 27. That's quite literally the fastest anyone can get a doctorate prior to starting your BA at 17 or 16.
No mention of cheap imports in the 80s, or the relocation of production in the 90s - both of which were encouraged more than discouraged by US government/tax system - story of GE isn’t complete without that.