What Have We Learned from Jack Welch
Longstanding CEO of General Electric, Jack Welch, died aged 84, but as one of the US’ most influential business magnates, what have we learned from his legacy?
As the news made headlines this week, GE chief Jack Welch, the man who transformed General Electric into one of America’s wealthiest firms, has died. He has previously been named ‘manager of the century’ and is both a best-selling author and a confidante of US Presidents. His legacy will leave a big mark on US business, but according to Peter Ryding, founder of e-coaching software VicYourCoach, one thing we can all learn from Welch’s reign is to ‘hire and fire on cultural fit’.
Jack’s one message that most impressed me was his ‘Performance Culture Matrix’. Every company needs to know and understand the cultural fit of each of its employees. To do this Jack created a chart with performance from low to high along the bottom and cultural fit from low to high up the sides. Then he would plot everyone’s position onto that chart, especially senior executives. According to Jack the success of every organisation depends upon how to treat people in ONE of those four boxes.
The obvious boxes to answer are:
• High Performing and High Cultural fit – promote them.
• Low performing and low cultural fit – fire them.
However, most organisations do a lot of the above. What they DON’T do is live Jack’s approach to the final box. High performers who have low cultural fit. And he believes that in the 1980s and 1990s, this is the thing that made GE so successful – you FIRE THEM! Yes, even if they are a top performing sales director because bad behaviour and anticultural behaviour is so toxic and infectious.
My experience of detecting and treating anti-cultural behaviour at a senior level is exactly the way Jack described it. I have never regretted getting someone out early and usually I have discovered the rest of the iceberg is there and a broad relief from customers, suppliers, employees. In each case it helped me turnaround the company even faster.
I have never regretted getting someone out early and usually I have discovered the rest of the iceberg is there and a broad relief from customers, suppliers, employees.
All modern leaders need to understand Jack’s matrix and be ready to use it. However, the real trick is to recruit people based on cultural fit ahead of just skills and then to develop them so that you avoid having any key people in that high performing and low cultural fit box in the first place. THAT is a sign of a great modern leader!