Jack Welch, Legendary CEO Of General Electric, Dead At 84

Mar 2, 2020
Originally published on March 2, 2020 2:12 pm

Updated at 5:08 p.m. ET

Jack Welch, the larger-than-life chief executive who grew General Electric into an industrial powerhouse, has died. He was 84.

During his reign from 1981 to 2001, the company's market value skyrocketed to $410 billion from $12 billion. For his success in growing GE's value, Fortune magazine dubbed him "manager of the century" in 1999.

Welch aggressively bought and sold divisions, insisting GE rank near the top of any business in which it operated.

But his style of management came under a lot of scrutiny and criticism after he left. Welch was known as "Neutron Jack" for cutting tens of thousands of jobs, and critics say the seeds of GE's downfall were planted under his tenure.

"Today is a sad day for the entire GE family," company Chairman and CEO H. Lawrence Culp Jr. said in a statement Monday. "Jack was larger than life and the heart of GE for half a century. He reshaped the face of our company and the business world.

"When I last saw him, what I remember most vividly was when he asked me, 'So how exactly are you running the company?' Jack was still in it — committed to GE's success."

"There was no corporate leader like 'neutron' Jack," President Trump wrote in a tweet. "He will never be forgotten."

"Jack was brilliant, with historic contributions to global commerce," wrote Jeffrey Sonnenfeld, president of the Yale Chief Executive Leadership Institute.

He noted that another CEO — Colgate-Palmolive's Reuben Mark — managed even bigger business gains during the late decades of the 20th century, but lacked Welch's talent for self-promotion.

Welch's legacy has grown more complicated in the two decades since his retirement. GE has struggled, and its market value today is about a quarter of what it was at its peak.

"The question I think that we have to look at today was the value short-term value or was it real value that was ultimately mismanaged," said Charles Elson, professor of corporate governance at the University of Delaware.

Welch also triggered an Securities and Exchange Commission investigation with his multi-million-dollar retirement package, which included country club memberships and use of a corporate jet. He ultimately gave up those perks.

"It was overreaching and not only offensive to the investors in GE, but I think offensive to the public in general," Elson said.

GE was one of the 12 companies in the Dow Jones Industrial Average when it was created in 1896, but it was booted from the blue chip index in 2018.

NPR's Scott Horsley and Uri Berliner contributed to this report.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

DAVID GREENE, HOST:

One of the most celebrated business leaders of the 20th century has died. Jack Welch, who ran General Electric for two decades, died over the weekend at age 84. Welch built GE into one of the world's most valuable corporations while building his own reputation as a management guru. In a tweet this morning, President Trump called Welch a business legend and a leader like no other. And I want to bring in NPR chief economics correspondent Scott Horsley to talk about him. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good morning, David.

GREENE: So I think Welch - you could say one of only a handful of business executives who became a household name in our country. Remind us why that happened.

HORSLEY: Yeah, he really did, David. When he took over General Electric in 1981, the company was worth about $12 billion. By the time Jack Welch stepped down two decades later, the company's value had grown to more than $400 billion. He was not an inventor. He didn't invent lightbulbs or GE jet engines. But he was an aggressive manager, and he became one of those celebrity CEOs. Even people who don't necessarily follow business that closely knew Jack Welch's name.

He popped up on television. He wrote books. As the 20th century was coming to a close, Fortune magazine dubbed him manager of the century, and the Financial Times called Welch one of the three most admired business leaders in the world.

GREENE: I mean, there's the celebrity but also, you know, the business side of him. So, I mean, what made him so successful?

HORSLEY: Long before move fast and break things became a mantra for technology titans, Jack Welch was kind of living by that slogan. He insisted that GE be No. 1 or No. 2 in any business in which the company operated, and he wasn't shy about unloading divisions that didn't meet that standard. At the same time, he pushed aggressively into new businesses, like finance and broadcasting.

And he was equally ruthless when it came to General Electric's employees. He laid off about a quarter of the GE workforce during his first five years as CEO. That earned him a less flattering title - Neutron Jack. And on his watch, GE managers were consistently rated A, B or C, and the Cs were encouraged to look for other jobs. So he was a tough person to work for.

But he also gave managers a lot of autonomy. He made the corporation less bureaucratic. He was a chemical engineer by training, but he really did become a management guru. His techniques were widely taught, widely emulated. And a lot of managers who got their start at GE under Welch went on to lead other businesses.

GREENE: So that's the Welch leading GE. I mean, his legacy has gotten, I guess we could say, more complicated since he retired. So, I mean, how do you think he's seen today?

HORSLEY: It is more complicated. You know, he had excellent timing. He retired just days before the 9/11 attacks. And in the period since then, it's been tough times for GE. The company's finance arm suffered greatly during the recession. They sold off their broadcast properties. Today, GE is worth only about a quarter of what it was at the peak. So that's tarnished Welch's legacy a bit. He also went through a very messy public divorce. And in the 2012 election, he questioned whether federal authorities were cooking the unemployment stats to make President Obama look better, which was just nonsense.

Moreover, I think Welch kind of epitomized the notion of shareholder capitalism - that is, that the sole purpose of a corporation is to reward shareholders. And certainly, GE shareholders were richly rewarded on his watch. In the 1980s and '90s, when he was at the helm, you know, shareholders - shareholder capitalism made a lot of U.S. corporations leaner and meaner. But the philosophy has fallen a little out of favor recently. Business leaders are now expected to think more about employees and communities as well. Welch himself ultimately came around to that point of view. But it does make his legacy a little more complicated than it was at the turn of the century.

GREENE: NPR chief economics correspondent Scott Horsley on the death of Jack Welch and his legacy. Scott, thanks so much.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.