Leadership Analysis - Jack Welch

When discussing leadership, particularly in the modern corporate arena, few individuals are referenced as an example of a true transformational leader more often than Jack Welch. During his twenty years as CEO, Welch guided GE through dramatic expansion and an increase in market value from $14 billion to over $410 billion at the time of his retirement. That level of growth and financial success was attainable only through the superior leadership skills that Welch brought to the organization. His unique blend of transactional and transformational leadership style inspired and empowered his employees to take risks, encourage innovation and thus become incontestable industry leaders.

As a transactional leader, Welch was especially focused on correcting mistakes, exceptions, failures and deviations from the standard, all characteristic of Management-by-Exception. By adopting and strongly enforcing adherence to the Six Sigma quality program, he made clear his focus on the importance of eliminating manufacturing mistakes and committing to consistent quality. Another example of Welch’s Management-by-Exception style was his direct involvement in irregularities occurring within GE’s health care division. After learning of that the X-ray tubes produced for GE’s CAT-scan machines were significantly inferior to their competitors, he spent the next four years personally monitoring the progress of that division and its general manager until the solution he had demanded came to fruition (Byrne, 1998).

Perhaps one of the most notorious policies enacted at GE under Welch’s leadership was his 20/70/10 differentiation model; the top performing 20% of employees were greatly rewarded, the middle 70% were educated and shown how they could improve to break into the top 20%, and the lowest performing 10% of employees were released from the company (Welch, 2006). By making it perfectly clear what each employee could expect as a direct result of their performance – and...