CEO with a twist

After reading and hearing a lot of praise on Jack Welsh' management methods, this man has an interesting counter-opinion:

Change of any kind, of course, takes leadership, and in your book you take kind of a swipe at somebody whom many executives regard as the ultimate leadership icon: Jack Welch, the former CEO of General Electric. You characterize his policy of annually firing the bottom 10 percent of employees as "microterrorism."

Yeah. I'd say there are two sides to Jack Welch. Yes, he is a paradigm, and everyone looks up to him as being the most perfect example of an executive. He would never have been able to accomplish what he did if he were not a tremendous man, so that should not be under discussion here.

The model that Jack Welch presents, however, has problems, principally in its emphasis on charismatic leadership. This is true not only of Welch but also of Lou Gerstner, Michael Eisner, and Roy Vagelos of Merck. CEOs around the world are drawn like a magnet to the idea of having the influence that Welch had. But I don't think it's in the best interests of GE or any company to have a very strong charismatic figure, because the capacity to make succession happen is diminished. When succession time rolls around, the question is, Should the organization be attuned to the Neutron Jack way of doing things, or should it be attuned to what GE needs to be in the new world? That is the trouble with the Jack Welch paradigm.

My second objection has to do with a method of management that says, Here's what I need you to do, here's my vision-lock into it and you'll be all right. Work hard, deliver, and you'll survive, but if you don't play along, you're out of here. To my mind, that's a format of terror. By eliminating the bottom 10 percent every year, you're losing a tremendous investment, because these people could change places and be used in other ways. You're also sending the message up and down the line that your company is a military hierarchy. The Welch paradigm is, after all, a military paradigm; it is a Norman Schwarzkopf paradigm. What's the difference between them? None to speak of. Wouldn't Welch have been able to run the Gulf War? Perfectly. Would Schwarzkopf have been able to run GE? I'm sure he could have. There's something wrong with that; it shouldn't be that easy to make that interchange, because the creative business world needs a lot of components-ingenuity, free thinking, leaps of faith-that the military model doesn't value.

For the complete interview, see http://www.conference-board.org/articles/atb_article.cfm?id=255&pg=1