*A Book Review*
By Jack Welch with Suzy Welch
by Michael C. Gray
August 8, 2005
It's not often that an executive of Jack Welch's caliber shares his insight into management and management philosophy. As the former chief executive officer of General Electric, Jack Welch is rated as one of the outstanding contemporary corporate leaders. When he speaks, anyone who wants to learn to run an operation more effectively should pay attention.
This book evolved from thousands of questions asked of Welch when speaking to audiences around the world.
I was interested to learn that Jack Welch's education background wasn't in business. He has a doctorate in physics. He is the outstanding example of General Electric's management development program.
Welch starts out by explaining what a mission statement is. Instead of platitudes about quality and service, Welch believes an effective mission statement should answer one question, "How do we intend to win in this business?" For example, the mission statement at GE from 1981 through 1995 said it was going to be "the most competitive enterprise in the world" by being No. 1 or No. 2 in every market. The mission statement guided the corporation's management to fix, sell or close every underperforming business that didn't meet the corporate requirements.
Once the mission is established, a company should define its values. The corporate values are behaviors, how the mission is to be carried out to win.
Welch emphasizes the importance of candor - open communication - to business success. When an organization has a high degree of candor, everything operates faster and better. In some organizations, people are afraid to communicate straightforwardly or put forth ideas that stimulate real debate. Presenting new ideas or criticism of practices with candor brings issues to the forefront so they can be dealt with much more quickly.
The more controversial comments in this book may relate to differentiation and managing people. According to Welch, managers should assess their employees and separate them into three categories of performance: the top 20%, middle 70% and bottom 10%, then act on the distinction. The top 20% should be treated as stars, rewarded and nurtured. Management of the middle 70% should focus on training, positive feedback and thoughtful goal setting, including identifying people with potential to move up and cultivating them. The bottom 10% has to go. Welch sees terminating these people as a humane action that may free these employees to pursue successful careers at companies and in pursuits where they truly belong and at which they excel.
This is just a sample of Welch's corporate wisdom. The book is oriented to big organizations, but there is information here that can be translated and adapted by entrepreneurs and smaller companies. Welch includes questions of his philosophy with responses. If you are concerned with running an organization more effectively, you will want to read and study Winning.
Buy it on Amazon: Winning.
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