GE’s Jack Welch: The Great Corporate Communicator

There have been volumes written about Jack Welch, whose management practices have

made him one of the most celebrated and respected leaders and educators in corporate

America. Indeed, many top managers of Fortune 500 companies, including CEOs at over

a dozen U.S companies, got their training by working at senior management positions

under Welch.

Our purpose here is to focus on his genius for corporate communication and what we

might take away from his example for our own use. From this perspective, four

interrelated themes emerge from his activities as CEO of GE: the strong partnership

between communication and strategic planning, the place of communication as a core

organizational value in transforming the company and sustaining its vitality, the role of

communication for GE as a “learning organization,” and the importance of streamlining

communications by reducing unnecessary bureaucracy.

Communication as a Part of Strategic Planning. For Welch, communication took

center stage in all his efforts to create strategic change at GE. Were we to follow him

through a typical year’s planning cycle, we’d see that he scheduled numerous

opportunities for informal, intense dialogues with his 35 direct reports, who were held

accountable for explaining and defending their strategic recommendations for their

businesses.

As described to shareholders in the GE Annual Report for 2000. Welch’s meetings with

senior management, known as the “GE Operating System,” represent a “series of intense

learning sessions in which business CEOs, role models and initiative champions from GE

as well as outside companies, meet and share the intellectual capital of the world : its best

ideas.” In Corporate Executive Council (CEC) meetings, which typically begin at 8 A.M

and run until 10 P.M, talk ranges from reviews of performance targets to discussions of

best practices, customer impact, and succession planning, including selection of

candidates for leadership training.

The Welch calendar of meetings may be planned ahead with goals and agendas, but the

meetings themselves are anything but formal in tone. As a firsthand observer reported,

These sessions earn descriptions from executives like “food fights” and “free-for-alls.”

They are where Welch collected unfiltered information, challenged and tested his top

players, and made sure that the organization’s triumphs and failures were openly shared.

“I may be kidding myself,” says Welch, “but going to a CEC meeting for me is like going

to a fraternity party and hanging around friends. When I tell my wife I can hardly wait to

go, she says, ‘Well, why wouldn’t you? You hired them all!’ If you like business, sitting

in that room with all these different businesses, all coming up with new ideas, is just a

knock-out.

Moreover, important strategic issues – like acquiring new businesses or selling old ones –

were typically addressed at one session and scrutinized again and again at later meetings

of the full CEC or in smaller groups. When CEC was not in session, Welch could be

found traveling to each of the separate GE businesses for a closer review of their

operations. Welch met many of his employees, and

….every one of Welch’s direct reports – from three vice-chairmen to each of the

operating heads of GE’s 12 businesses.... receives a handwritten, two-page evaluation of

his performance at the end of the year. “ I do the evaluations on Sunday nights in my

library at home,” says Welch. “It gives me a chance to reflect on each business.”

Attached to the detailed notes are his jottings from a year earlier, with new comments

written in red pencil in the margins. “Nice job.” “Still needs work.”

As his work with senior management indicates, Welch takes a hands-on approach,

motivating through compelling words and actions.

Communication as a Core Value: Repeat! Repeat! Repeat! The company’s chief

strategist and communicator, Welch was the teacher, role model, and coach for all his

employees. As biographer Robert Slater described him:

He is the communicator par excellence. Of all his management secrets, his

uncanny ability to communicate, to engender an enthusiasm in employees, may be

his greatest. He knows that it is not enough to simply raise an idea with

employees. He’s not naïve enough to believe that all 270,000 of his workers will

absorb his ideas the first time around. He knows that he will have to keep

repeating an idea until it finally sinks in with everyone at the company.

Repeating ideas ensured that they were heard broadly, but, as important, Welch was

selective in what he broadcast, choosing to communicate ideas at the heart of his vision

for GE, core values he wanted to inculcate in his employees. He expressed these ideas

simply and with passion, and disseminated them across the company’s key constituencies

– in the shareholder’s letter in the company’s annual report, in talks with employees and

financial analysts, in interviews with the press. Rather than “hot-house” ideas that die as

soon as they are uttered, through the force of selective repetition, Welch’s messages had

high impact, functioning as guidelines for action.

Welch, however, could not do it all. Rather, he taught by example: going out into the

field, leading the communications effort, and establishing expectations that management

would follow his lead. His job was to motivate senior management, and they, in turn,

motivated the ones below them – and on and on in this way through the ranks. The

communication process might be described as a kind of cascading movement:

As if in lockstep, each business chieftain ... emulates the behavior of the boss, and their

reports, in turn, do the same. After Welch's Boca meeting [a CEC meeting] in January,

for instance, Lloyd G. Trotter, CEO of GE's electrical-distribution and -control business,

had his own 2-1 /2 day leadership conference in Orlando with his top 250 people. And in

February, after Welch gave him his bonus and reiterated the targets for the remainder of

this year, Trotter then followed through in similar fashion with the 97 people in his

organization who received cash bonuses. Other GE businesses follow the same format.

Not surprisingly, some of Welch's most memorable ideas are themselves about

communication as a core value. Several of these GE values appear on a wallet-size card

that all employees are supposed to carry: "GE Leaders...Always with Unyielding Integrity

Create a Clear, Simple, Reality-Based Vision...and Communicate It to All

Constituencies." Here Welch stressed how important it is for leaders to express

themselves succinctly and clearly. Using this style of communication maximizes the

possibility that key strategic ideas will make sense to a broad base of constituents and

have a positive impact on all of them. "GE Leaders...Always with Unyielding Integrity

Have the Self-Confidence to Involve Everyone and Behave in a Boundaryless Fashion."

Here Welch emphasized the entrepreneurial aspects of communication, that is, the need

for leaders to pay serious attention to new ideas that come from any source, including not

only those of senior executives but also those of workers at the lowest ranks. As an

advocate of the "democratization" of communication, Welch established a climate in

which people from the lowest level to top management could "throw in their oar" in

conversations about the company's present and future.

The two sections that follow put the spotlight on two of the communication challenges

articulated in the short, high-impact messages of the GE employee value card:

• The role of Work-Out, a New England village-style forum for communication that

Welch initiated in late 1980, in supporting and extending communications throughout

the firm

• The creation of a leaner organization, better prepared to respond to threats and

implement new ideas

Work-Out: Extending Communication More Deeply into the Organization. "GE

Leaders.. Always with Unyielding Integrity Are Open to Ideas from Any where... and

Committed to Work-Out," says the GE employee value card. Although "Work-Out" may

sound like an aerobics exercise routine from the 1980s, it was, in fact, one of the premier

communication processes at GE. Initiated in the late 1980s, "Work-Out" was a forum for

brainstorming and decision making for employees and their bosses that reached down

into the organization. The process extended dialogue and debate beyond the very senior

ranks, ensuring that GE remained an informal "learning organization." Whereas

executives have described the Corporate Executive Council (CEC) meetings as "food

fights" and "free-for-alls," the culminating event at Work-Out resembled a grueling oral

examination with questions and recommendations hurled at managers by their

subordinates.

As described in the early days, Work-Out consisted of three-day sessions where groups

of 40 to 100 employees exchanged ideas about their business and how to improve it. At

the first session, once the unit boss set up the agenda, he or she departed, and the sessions

included only a facilitator and the boss's subordinates, who brainstormed about the unit's

problems and possible solutions. When the boss returned on the final day, he or she was

subjected to rapid-fire comments and recommendations by subordinates, required to

make decisions based on the recommendations, and if necessary, to form a team for

follow-up research. Imagine the kind of scrutiny and accountability the bosses faced in

this lively public forum. Consider how important their understanding of corporate

communication is to holding down their position, and, from a broader perspective, to

reaching the best decisions for the organization. As an indication of just how deeply the

approach permeated the organization, "by 1992, over 200,000 GE employees—along

with customers, suppliers, and others—had experienced Work-Out in contrast to 10,000

managers annually attending programs at Crotonville [GE's management training

center]." Early on, Work-Outs focused on streamlining the stodgy, slow-moving

bureaucratic processes at the firm, but later sessions dealt with how to improve

productivity, quality, and customer and supplier relationships.

Cut Through Bureaucracy! When he assumed leadership of GE in the 1980s, Welch

inherited a huge bureaucracy with communication processes and procedures that slowed

down strategic decision making. The business heads spent endless hours compiling thick

written documentation about strategy, an activity that deflected their attention from

purposeful work. To create an organizational context for growth, Welch had his business

heads replace these tomes with short "playbooks" that identified important strategies, and

used these documents as the springboard for his strategic discussions with management.

Increasingly, face-to-face talk replaced time-consuming written procedures.

By the late 1990s, the company had all but removed old-fashioned written

communication. GE is practically a paperless organization. With the exception of the

annual report in which Welch liked to spell out to investors his map and vision of the

company, communication at GE means face-to-face meetings, videos, and Web-based

communications. Everything that used to be on paper is now on the Web, allowing for

instantaneous communication across the business units and 120 countries in which GE

operates. What better way to connect a sprawling, diversified company, to reach

everyone in real time, and to connect with lots of people on the road located in eight

separate businesses that span the globe. No longer encumbered by tons of paper, GE

increasingly relies on e-mail and face-to-face discussions, communication channels that

allow for the informal exchange of ideas. Many senior-level managers applauded his

initiatives:

"I still remember him [Welch] coming to Louisville, Ky, and saying, 'Lemme tell you

how I'm going to get rid of all this bureaucracy," says Bruce Albertson, formerly an

executive at GE Appliances in Louisville, Ky. "Everyone is sitting there saying,

‘Yeah, right.' But he ripped the bureaucracy right out of the middle of that company.

All that churn we used to do, preparing internal charts for people who gave them to

someone else who gave them to someone else who gave them to Jack, did go away".

To spread and invigorate the exchange of ideas, Welch dispensed with layers of

management early in his tenure. From the early 1980s to the early 1990s, he reduced the

number of management levels between himself and those in the field from nine to

between four and six.20 A leaner organization meant, in his words, the ability for "GE to

develop a big-company body in a small-company soul,"21 to operate with the agility and

nimbleness of a small entrepreneurial firm. Equally important is what he calls the

"delayering" of the organization—the reduction of management levels—that has created

a climate in which great ideas can be heard, and, for those that pass the rigorous test of

scrutiny and debate, implemented. The leaner organization made it easier for employees

at GE, in Welch's words, to "Find great ideas, exaggerate them, and spread them like hell

around the business with the speed of light."

Welch's assumption of the top leadership position occurred during a time of relative

stability at GE. From our perspective, many of the initiatives he championed and the

culture he shaped were able to stave off the potential inertia of the more than 100-year-

old firm whose command he assumed. When an organization faces the perils of inertia, as

in the case of GE, CEOs, armed with a knowledge of corporate communication, can work

wonders in leading their organizations through change to renewed health and vitality.

Upon taking the reins and throughout his tenure, Welch recognized the need to target

important constituencies and to keep communicating key ideas simply and with passion.

He knew he had to use face-to-face communications to build credibility and then to

maintain relationships with internal constituencies—employees and senior management

—who are potentially the most powerful goodwill ambassadors for a firm as it reaches

outside its walls. Welch made communication a core value and included it as part of

every senior manager's performance review to ensure that this value permeated the

organization. And he did not do this all alone. Support came from, among other venues,

the corporate communication function. In the next section, we look at the role of these

managers in ensuring that corporate communication works successfully in support of

their organizations.