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Feet on the Street

However, building a business philosophy was not enough. Welch had to COMMUNICATE HIS IDEAS and make sure that employees were listening to and adopting those ideas. He did not believe in videotaped presentations to thousands of employees. He preferred in-person visits to GE installations across the United States and around the world. He spoke constantly before GE audiences. To make sure that he was spending enough time getting his message across, Welch refused most media interviews, rarely appeared on television, and never joined the boards of other companies. The most important means by which he communicated his business philosophy was in his annual letter to shareholders.

Welch spent a few weeks during the early part of each year preparing his letter to shareholders that appeared in the GE Annual Report. In the early years of his chairmanship, Welch’s letters to shareholders were fairly straightforward—he discussed how the company had done the year before and little else. But in time, Welch spent part of each letter describing one or more aspects of his business philosophy. By the late 1980s, most of each letter dwelt on his philosophy. Welch himself considered that letter one of the most important events of his year.

His process was systematic and nearly identical year after year. Alone and seated at his desk in his office at company headquarters in Fairfield, CT, Welch would dictate his first draft into a dictating machine. A secretary then transcribed the recording. All throughout the editing and rewriting of the transcribed draft, Welch still showed it to no one. Eventually, when he was ready, he showed it to 10 senior GE executives. After integrating their comments, he then produced a final version.

It was through these letters that GE personnel read, for the first time, about concepts such as “Number 1, Number 2,” “boundarylessness,” “speed, simplicity, and self-confidence,” and “unleashing the brains and energy of employees.”

Unleashing the brains and energy of GE employees became one of Welch’s most serious challenges in the late 1980s and early 1990s. It stemmed from his desire to get the maximum productivity from his employee force. It took Welch some time before he realized that all the downsizing and restructuring that he had put GE through had taken a toll on the employees who remained. They were unsettled and in need of some nurturing from above. Relieved to survive the cuts, they still believed that they faced perilous futures as they confronted new plants, new bosses, and new jobs. Were their jobs truly safe now? They doubted it—not with Jack Welch in charge.

Welch concluded in the late 1980s that his employees needed to be empowered, and not because he felt sympathy for their unsettled feelings. He understood that he had to provide new motivation to employees to work harder. The secret was giving workers a feeling that they were “owners” of the business, not simply forgotten cogs in a faceless machine.

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