Making people a priority is the key to making things happen

An intense focus on people and making an enemy of bureaucracy are the secrets of business success, according to Jack Welch, former chief executive of goods and services giant General Electric (GE).

Welch, widely regarded as the most influential CEO in business history, said the key to running a company successfully is getting the “best players on the field”.

Speaking to 1,250 British business chiefs at the Leaders in London conference last week, Welch said: “If you are carrying people who are not the best, shame on you. I spent all of my time on people.”

Current chief executives, who Welch speaks to in his new role as a business consultant, cannot believe the lengths he went to in ensuring GE’s core competency was people, delegates heard.

“Managers went on three (separate) three-week courses,” Welch said. “People now can’t believe that. They say ‘I can’t let my best people leave the business for that long’, but it’s the only way to improve.”

During his time at GE, Welch was famous for introducing the 20-70-10 concept, whereby the top 20 per cent of staff were heavily rewarded for excellent performance, the middle 70 per cent were encoraged to strive for the top level, and the bottom 10 per cent were managed out altogether.

Responding to suggestions that the regime was harsh, Welch said: “Whenever we ran polls, people at lower levels of the organisation always said we were not aggressive enough. The biggest damage for morale is keeping poor performers.”

On the issue of corporate governance, which has been in the spotlight since the Enron and World-Com accounting scandals, Welch was characteristically forthright.

“The best way of avoiding trouble isn’t by creating a pile of rules, but by putting [the guilty employees] in handcuffs and marching them down the street,” he said.

“You need to hang the bad apples publicly, not hush it up. Lawyers and HR might say ‘let them go quietly’, but that’s crazy.”

 

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