{"id":33092,"date":"2022-06-02T03:21:01","date_gmt":"2022-06-02T03:21:01","guid":{"rendered":"https:\/\/harchi90.com\/jack-welchs-questionable-legacy-under-fire-in-david-gelless-book\/"},"modified":"2022-06-02T03:21:01","modified_gmt":"2022-06-02T03:21:01","slug":"jack-welchs-questionable-legacy-under-fire-in-david-gelless-book","status":"publish","type":"post","link":"https:\/\/harchi90.com\/jack-welchs-questionable-legacy-under-fire-in-david-gelless-book\/","title":{"rendered":"Jack Welch&#8217;s questionable legacy under fire in David Gelles&#8217;s book"},"content":{"rendered":"<div>\n<p>Once dubbed the best manager of the 20th century, former General Electric chief executive Jack Welch takes the blame for much of what&#8217;s wrong with businesses in the 21st, in a new book by New York Times business reporter David Gelles released today<em>.<\/em><\/p>\n<p><strong>Why it matters: <\/strong>Welch retired from GE in 2001 and died in 2020, but his style of leadership lives on at some of the biggest companies in the US, Gelles explains in &#8220;The Man Who Broke Capitalism.&#8221;<\/p>\n<ul>\n<li>Welch&#8217;s legacy turns up everywhere in the corporate culture, from celebrity CEO worship &#8211; Elon Musk&#8217;s Twitter feed carries on his legacy &#8211; to outrageous pay packages to a relentless focus on shareholders and stock buybacks at the expense of long-term innovation and worker well-being<em>.<\/em><\/li>\n<li>&#8220;Jack is the apotheosis of everything that is wrong with capitalism over the last 50 years,&#8221; Gelles said in an interview with Axios&#8217; Felix Salmon and me over the weekend. <\/li>\n<\/ul>\n<p><strong>Details: <\/strong>Downsizing and outsourcing were a key part of Welch&#8217;s business strategy.  He laid off more than 250,000 employees during his two-decade tenure &#8211; earning the nickname &#8220;Neutron Jack,&#8221; which he hated. <\/p>\n<ul>\n<li>&#8220;Before Welch, employees were considered a company&#8217;s greatest asset,&#8221; Gelles writes.<\/li>\n<li>His policy of stack ranking, where the bottom 10% of performers were fired annually, established a cutthroat &#8220;Survivor&#8221; -like culture long emulated by other firms, most infamously Microsoft.<\/li>\n<li>Welch&#8217;s focus on GE&#8217;s share price meant ensuring the company met its targets even if that entailed doctoring the books. <\/li>\n<li>Wall Street loved him, GE&#8217;s stock, and basically any executive he worked with.  His proteges di lui went on to run many Fortune 500 firms, including Albertson&#8217;s, Home Depot, Honeywell and Chrysler, often replicating Welchism but without the financial success.<\/li>\n<\/ul>\n<p><strong>One of the more damning connections<\/strong> Gelles draws in his book is from Welch to Boeing. <\/p>\n<ul>\n<li>Since 1997 the aviation company was run by three Welch proteges who deliberately shifted the company&#8217;s culture from one that was always &#8220;engineering first&#8221; to one focused on the bottom line.<\/li>\n<li>Ultimately, that commitment would come to haunt the company, writes Gelles, leading to two deadly plane crashes in 2019 of its 737 Max, which killed 346 people. <\/li>\n<li>Last year, Boeing agreed to pay more than $ 2.5 billion to resolve criminal fraud charges related to the Max. &#8220;Boeing&#8217;s employees chose the path of profit over candor,&#8221; said a Justice Department official at the time.<\/li>\n<\/ul>\n<p><strong>Yes, but:<\/strong> Welch&#8217;s defenders say he turned around a &#8220;bloated institution,&#8221; doing the unpopular work of making it lean and profitable.<\/p>\n<p><strong>My thought bubble: <\/strong>One of the most bedrock pieces of Welchism &#8211; the idea that a company owes little to its employees &#8211; seems passe at a moment when labor shortages are pushing up wages and benefits.<\/p>\n<ul>\n<li>It remains to be seen if the business world returns to the status quo, as the economy cools off.<\/li>\n<\/ul>\n<p><strong>The bottom line:<\/strong> Welch&#8217;s legacy ultimately helped destroy General Electric, a former giant of American industrialism.  A combination of scandals, terrible deal-making and the financial crisis drove the company into a ditch. <\/p>\n<ul>\n<li>Soon, it won&#8217;t exist in its current form anymore<strong> &#8211;<\/strong> current leadership plans on dividing the company into three parts.  <\/li>\n<\/ul>\n<p><em>Editor&#8217;s note: This story has been updated to clarify that GE in its current form won&#8217;t exist anymore after the company divides into three parts.<\/em><\/p>\n<\/div>\n<p>    .<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Once dubbed the best manager of the 20th century, former General Electric chief executive Jack Welch takes the blame for much of what&#8217;s wrong with businesses in the 21st, in a new book by New York Times business reporter David Gelles released today. Why it matters: Welch retired from GE in 2001 and died in &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/harchi90.com\/jack-welchs-questionable-legacy-under-fire-in-david-gelless-book\/\"> <span class=\"screen-reader-text\">Jack Welch&#8217;s questionable legacy under fire in David Gelles&#8217;s book<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[8],"tags":[16068],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/images.axios.com\/zqu8Xn0KGt92BjoWuu6MA6SvBO8=\/1366x768\/smart\/2022\/05\/26\/1653595034704.jpg","_links":{"self":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/33092"}],"collection":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/comments?post=33092"}],"version-history":[{"count":0,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/33092\/revisions"}],"wp:attachment":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/media?parent=33092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/categories?post=33092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/tags?post=33092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}