Jack Welch was the CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4000%.
In 1961, Welch planned to quit his job as junior engineer because he was dissatisfied with the raise offered to him and was unhappy with the bureaucracy he observed at GE. Welch was persuaded to remain at GE by Reuben Gutoff, an executive at the company, who promised him that he would help create the small company atmosphere Welch desired
Welch was named a vice president of GE in 1972. He became senior vice president in 1977 and vice chairman in 1979. Welch became GE's youngest chairman and CEO in 1981, succeeding Reginald H. Jones. By 1982, Welch had dismantled much of the earlier management put together by Jones and led an aggressive simplification and consolidation initiative. One of his primary leadership directives was that GE had to be No. 1 or No. 2 in the industries it participated in.
In 1981 he made a speech in New York City called "Growing fast in a slow-growth economy". Welch worked to eradicate perceived inefficiency by trimming inventories and dismantling the bureaucracy that had almost led him to leave GE in the past. Welch's public philosophy was that a company should be either No. 1 or No. 2 in a particular industry, or else leave it completely. Welch's strategy was later adopted by other CEOs across corporate America.
Each year, Welch would fire the bottom 10% of his managers and rewarded those in the top 20% with bonuses and stock options. He also expanded the broadness of the stock options program at GE from just top executives to nearly one-third of all employees.
In Jack: Straight From The Gut, Welch states that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985. Of the 112,000 who left the payroll, 37,000 were in businesses that GE sold, and 81,000 were reduced in continuing businesses. In return, GE had increased its market capital tremendously. Welch reduced basic research, and closed or...