Jack Welch Speaks at the 2005 GSB Management Conference

Dean Snyder and the Former GE CEO Talk Business

By: Jason Rosenthal

Posted: 4/28/05

"Can I call you Jack?"

So opened the "Conversation with Jack Welch," a dialogue between Dean Snyder and the former CEO of GE. It was the main event of the 2005 GSB Management Conference that took place at the Fairmont Hotel and Gleacher Center last Friday.

Mr. Welch is on a nationwide tour promoting his new book, "Winning", which he co-authored with wife Suzy (of Harvard Business Review and HBS fame). All proceeds of the book will be donated to charity.
Over the course of the conversation, Dean Snyder and "Jack" talked about the art of managing, the usefulness of MBAs, and the inherent evil in budgets.

Jack on Feedback: Mr. Welch opened with some management advice, with a prevailing theme of the importance of feedback (editor's note: there was no mention of the letters IMPACT). He feels that managers are too nice to their employees, shying away from providing negative feedback. This results in situations where someone works the same company for 23 years, and then suddenly gets fired for poor performance. Because they had never gotten constructive feedback, they never knew to change. In general, no one should be surprised to be fired, because they should have had plenty of feedback along the way, he said. Mr. Welch believes in a 20-70-10 rule. When rating your employees, he said, 20% should be rated on the top, and the bottom 10% should be fired.

Jack on Loyalty: When asked about the importance of employee loyalty, he conveyed that he felt that it was not important. Loyalty from the customer is all that matters. With employees, all you end up with is empty promises.

Jack on Investment Bankers: "Good for ideas, but that is about it."

Jack on Winning: Here, Jack set out with an overtly political tone. "Only winning companies do good in society. [With the exception of certain basic services,] the government provides nothing," he said. "Winning companies give back to the community. In fact, they are the ones that provide revenues for the government." He finds that it is hard to get people to accept the idea of winning, especially when you get "farther east to Massachusetts." To the crowd, he said, "You all accept the idea of winning, otherwise you wouldn't be here."

Jack on MBAs: Mr. Welch feels that there is a gap in MBA teaching from a people management perspective. Students should be learning about hiring, firing, and motivating; these skills are just as important as the analytical fundamentals. MBAs are important because they give you a notch on your belt. As you see how you fit in with your peers, you gain confidence. Leadership is all about confidence.

Jack on HR: HR is the most important organization in a company, yet never gets the respect or the power it deserves. In many companies, HR is only given the responsibility to put out the company newsletter and organize the picnic! People are mistakenly more interested in the CFO than the top HR executives. Why do people want to hang out with the finance guys?

Jack on Budgets: Mr. Welch believes that budgets are "the worst invention ever." They result from the two opposing sides of the budget, headquarters and departments, trying to con each other. The decisions are made by people sitting in a room with no window.
Jack on his New Work in Private Equity: P.E. has been hard because he spends a lot of time looking at bad businesses. In his career, he was so used to working with good businesses.