SAW SHARPENER

Jack Welch, the CEO of General Electric and regarded by many as the country's best CEO was recently interviewed at a university and later answered questions from students. I saw the program on C-SPAN and would like to share with you some of the things Welch said.

** Welch said GE is in the people development business. He said there is no other game if you are going to have a successful organization. He spends approximately 75%of his time developing people while most CEO's spend maybe 20%. All of the senior managers are mentors and the mentees are considered products for which the mentor is responsible. A significant portion of the mentor's performance appraisal is based on the performance of the mentee.

** When asked how he could be a devout Catholic and make business decisions, he said it was simple. His business ethics were the same as his personal ethics. When pressed on how he made ethical decisions he said he based the decision on the ethical principles (there is that word again) his mother taught him. He went on to say that organizations are people and there must be only one ethical "compass" - your soul will tell you what to do.

** He had a number of comments on leadership. When asked if leaders were born or made his answer was "both". The leadership program in GE is extensive and he personally teaches some courses. He said that leadership develops from building self confidence. You must make decisions, continually learn from your successes and failures and you will improve your leadership skills. He equated the process to that of becoming a world-class heart surgeon. He said you do not want to be the surgeon's first patient. He said leaders must have focus and passion and not be "dabblers".

** When asked what his definition of a successful person was he said it was someone who grabs life and runs with it. He noted he "works like hell and plays like hell - I don't dabble".

** He was asked if he could defend his large compensation package. He said "no", but there are a lot of very successful and well paid people at GE who appreciate what they have and do not mind him being compensated to keep them successful. There are 19,000 millionaires of the 300,000 GE employees. He said people still want to work for GE since they are generally the best jobs in the area.

** GE's performance evaluation is based on the 4-E's - the corporate values:
Energy - a must.
Energize - you must not only have energy but must be able to energize and excite others.
Edge - you don't dabble. You focus and can make decisions.
Execute - you have the ability to "get the job done".

Everyone is ranked on the E's via a matrix of performance vs. potential. The top 20% are highly rewarded while the next 70% receive much lesser rewards. They try to remove the bottom 10%. He agreed the system was subjective but the result was not a surprise to the employee since the supervisor constantly communicated progress the employee was making through out the performance period. He thinks the system works well because the reward is directly tied to performance and people know what is expected of them.

** He said an organization must have a vision, otherwise you have nothing to rally the people around. The vision must be simple, relatively stable and the boss must communicate it until you "feel like you are going to gag".

** A definition of "smart" is to always hire people smarter than yourself. In fact, an important part of your job is to hire people better than you.