Jack Welch is one of the most prominent CEOs of the last century. He has earned name recognition from people around the world. For the uninitiated, Jack Welch is the former CEO of General Electric. He assumed the role in 1981 and remained in the position until his retirement in 2001. Welch is candid and shoots straight from the hip. He pulls no punches and encourages entire companies to do the same. And if there’s anything to know about Jack Welch, it’s this – he’s all about winning. If a company or division at GE was not first or second in its industry, it would be sold or closed. The ultra-competitive Welch wants to win. And he did a lot of that as CEO of General Electric: The Four Types of Managers Welch believes that there are four types of managers. The types revolve around values and commitment, whether the commitment is financial performance or otherwise: • The first type of manager delivers on commitments and shares the values of the company. They are keepers. • The second type of manager does not deliver on commitments and doesn’t share the values of the company. They are gone. • The third type of manager misses commitments but shares the values. This type is more difficult. You generally can give them a second chance in another department or environment. • The fourth type of manager delivers on commitments but doesn’t share values. “This is the individual who typically forces performance out of people rather than inspires it: the autocrat, the big shot, the tyrant,” Welch says. Welch believes that these managers, despite their performance, still need to be removed from the company. According to Welch, the ideal leadership criteria is as follows (taken from the 1992 letter to shareholders): • Create a clear, simple, reality-based, customer-focused vision and [be] able to communicate it straightforwardly to all constituencies. • Understand accountability and commitment and [be] decisive…set and meet aggressive targets…always with unyielding integrity. • Have the self-confidence to empower others and behave in a boundaryless fashion… believe in and [be] committed to Work-Out as a means of empowerment…be open to ideas from anywhere. • Have a passion for excellence…hate bureaucracy and all the nonsense that comes with it. • Have, or have the capacity to develop, global brains and global sensitivity and [be] comfortable building diverse global teams. • Stimulate and relish change…[don’t be] frightened or paralyzed by it. See change as opportunity, not just a threat. • Have enormous energy and the ability to energize and invigorate others. Understand speed as a competitive advantage and see the total organizational benefits that can be derived from a focus on speed. HR, When Used Appropriately, Is the Most Important Department of a Company If the Human Resources department is functioning correctly and used in the correct manner, it’s the most important department in the entire company,according to Welch. He says: “HR is the driving force behind what makes a winning team. We make the argument that the team that fields the best players wins. HR is involved in making sure we field the best players. That’s their job. And their job is to sit in every meeting, be involved in every part of the business equation. They are not the health and happiness, picnics, benefits team. They’re the development team, developing today’s and tomorrow’s leaders. If you have an organization where HR is relegated to forms and benefits, you got the wrong game going. “I like to use one analogy, if you were running a sports team, whether it be the New York Yankees [or the] Boston Red Sox, would you like to hang out with the head of player personnel or the team accountant? Who would help you bring the best team to [the] field? Not the team accountant! “The same thing is true in business. Get yourself a great HR person, preferably one with multi skills, in manufacturing perhaps or in sales, who happens to be a people person. Who understands that the role of the HR leader is to be both pastor and parent: pastor in keeping secrets and parent in keeping it straight. You get that person who loves to see people grow and you got yourself a winner.” Welch believes that “business is all about people. And that’s not a slogan, that’s a reality. People that have it as a slogan don’t get it.” Welch says anyone who believes the financial department is more important than the HR department has it all backwards. Every time he discusses this, he brings up the analogy of human resources being similar to the VP of player personnel on a sports team, and the financial department being the team accountant. They are far less relevant and don’t improve a team. “Why the hell in business do you hang around this stupid finance manager? Everybody wants to hold hands with the finance manager. He’s usually dull, green eyeshade, boring, and all he does is tell you the score, he doesn’t create the score. The human resource person, if you’re using them right, is the person that builds the team that makes the score, that creates the winning formula. So many places have it ass backwards. It’s crazy.” Six Sigma Bring up Jack Welch to any business minded person and they’ll soon mention Six Sigma. But what exactly is Six Sigma? According to Wikipedia, it’s: “Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Champions,” “Black Belts,” “Green Belts,” “Orange Belts,” etc.) who are experts in these very complex methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified value targets, for example; process cycle time reduction, customer satisfaction, reduction in pollution, cost reduction and/or profit increase.” How Welch describes Six Sigma: “Six sigma is a process [you can] put in place to reduce variation in your company. The idea is customers get what they want, when they want it, and it’s right the first time. So, Six Sigma is a technique which you can train your people in to reduce variation. Variation is evil. And once you reduce variation, your costs are improved dramatically and your market share gains are enormous because people get what they want when they want it.” Before Six Sigma was implemented in 1996, GEs estimated waste was around $8-$12 billion annually, and GE had an error rate 10,000 times the Six Sigma quality level of 3.4 defects per million operations. A few years after implementation, they saved a lot of money when compared to the cost: We won’t dive into Six Sigma too much, so just keep in mind that it reduces variations and errors, and GE saved lots of money when they implemented it. If you want to learn more, there are many books on the topic. Employees Need to Know Where They Stand “You have no right to be a leader if someone who works for you doesn’t know where they stand.” -Jack Welch Welch believes in being close to his employees and always letting them know how they’re doing. “One of the things a manger…has as an obligation about…is to let every employee who works for you know where they stand. Are they doing well? Do they need to improve? Four times a year everybody who worked for me got a sheet of paper. [It said on one side] here’s what I like about what you’re doing, [and on the other side] here’s some things you need to improve. And in 18 months or so, if they didn’t improve, I brought them in and said ‘It’s time for us to separate ways.’ “People gotta know where they stand, and you have to let them reach for greater things, and you’ve got to tell them how they’ll be rewarded if they reach for greater things.” We’ve all had annual performance reports. For many, there are only two categories for each criterion – Meets Expectations and Needs Improvement. It’s shallow and doesn’t give you a ton of feedback. If you’re meeting expectations in every category, you’re allowed to be satisfied. You know you’re doing your job well enough to not be fired. But if you want to improve or get a promotion, the typical performance review gives you nothing to work off of. The Jack Welch performance reviews are done quarterly and tell the employee where they stand and what they can do to be better and qualify for a promotion. This works best for both employers and employees. Employers can set clear goals for employees, and the employees know where they stand and how they can get better. If the employees don’t get better, employers know what kind of employee they have. Quotes When asked about his principles of success and what it takes to be a good manager: “You’ll be challenged a thousand times on this…be yourself. For no job in the world, for no situation in the world, ever stop being yourself. Who you are is very important, and the self-confidence you build (whether it’s [at] your mother’s knee or through life experiences) are absolutely critical to you. [What] I see as the ingredients for success [are] four e’s wrapped in a p… • The first e is energy. In a global world like this that moves [fast], every one of us has got to be going [like a] house on fire. • The second e is energizing people. It does you no good to be a whirling dervish if you can’t energize those that work with you, if you can’t excite them, if you can’t give them a dream, if you can’t give them hope and an opportunity to succeed. One of your jobs as a leader will be to energize people to take chances; so that by taking chances they succeed and build self-confidence. • The third e is edge. The ability to say yes and no and not maybe. You hate that damn manager who says ‘Why don’t you bring it back in a couple of weeks and we’ll think about it again.’ It’s yes or no and not maybe. • The fourth e is execute. Deliver. • And when I say wrapped in a p, it’s passion. It’s caring more than the next person. It’s passion for what you’re doing. I don’t care if you want to be a painter, a writer, a business person It’s passion for what you’re doing. It’s all that stuff in you that goes and you give it everything you got to make it happen.” .
Posted on: Sun, 23 Mar 2014 00:53:32 +0000
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