Jack Welch, the hard-charging former head of General Electric who transformed his company and corporate America with his ruthless attention to the bottom line, died March 1 at 84.
The cause was renal failure, said family spokeswoman Abby Whalen. She did not say where he died.
The hallmarks of Welch’s tenure during the 1980s and 1990s have become part of the playbook for chief executives everywhere: unflinching layoffs, ambitious expansion around the world, lucrative stock options for high-performing executives and a relentless drive to reward shareholders with stellar earnings quarter after quarter.
His methods were divisive. Nicknamed “Neutron Jack” for his massive firings of GE employees, he was hailed in 1999 as “manager of the century” by Fortune magazine.
On paper, the results were undeniable. In his 21 years at the helm of GE, Welch increased annual revenue from $25 billion to $130 billion; profits rose to $15 billion from $1.5 billion; and the company’s total value on the stock market grew 30-fold to more than $400 billion – which at one point made it the most valuable public company in the United States.
His success turned him into a model for middle managers everywhere, who pored over his books on management to learn his methods, or what he called “the Welch Way.”
He was in many ways an unlikely person to lead the buttoned-down General Electric. He was born to working-class Irish American parents without high school degrees. He had a stutter and began his career at GE as a plastics researcher with a PhD in chemical engineering.
“The odds were against me,” Welch wrote in his best-selling memoir, “Jack: Straight From the Gut,” which was published in 2001 and sold more than 800,000 copies. “Many of my peers regarded me as the round peg in a square hole, too different for GE. I was brutally honest and outspoken. I was impatient and, to many, abrasive.”
Welch ran GE as if he were a general who would settle for nothing less than world domination. He spun off units with little sentiment and charged into new industries with bold acquisitions. And he wasn’t afraid to take on more debt to finance the company’s expansion.
Welch’s decisions led – and reflected – the wrenching changes going on more broadly in the U.S. economy as it shifted away from old-line manufacturing toward more services, especially in finance. He took a company that was making hair dryers and disposable razor cartridges and moved it headlong into commercial banking, high-tech medical devices and television through the takeover of the NBC television network.
His long record of success at pleasing Wall Street was dotted with a number of scandals. In 1992, the company’s aircraft engine division pleaded guilty to defrauding the Pentagon of $42 million and giving the money to an Israeli general to win jet engine orders. In 1994, the company revealed that a rogue bond trader at the newly acquired securities firm Kidder Peabody had faked $350 million in profit.
After it became clear that GE had for years dumped pollutants into the Hudson River, Welch’s legal team argued tirelessly that the firm had no responsibility to clean it up. In 2002, after Welch left, the Environmental Protection Agency and GE reached a settlement in which the company would remove the toxic chemicals, but environmentalists said the firm cleaned up only a fraction of the mess.
A messy divorce from his second wife, Jane Beasley, also cast a shadow on Welch’s reputation. Divorce filings showed he was enjoying elaborate retirement perks from the company, including the use of a Manhattan apartment that cost $80,000 per month to rent.
The company’s performance soon after Welch left also showed cracks in the legend. GE nearly cratered during the 2008 financial crisis because its finance unit – which Welch turned into a juggernaut that by then accounted for about half the company’s profits – had taken on too much risk and required a massive bailout.
Some began to wonder whether Welch had been simply the beneficiary of great timing. His time at the top of GE coincided almost perfectly with a historic bull market in the United States during the 1980s and 1990s. He left just before the market took a dive in 2001.
“What made his strategy possible, and fully shape it – was the rising stock market – and the new ideology that praised free markets even as they failed,” wrote journalist and economic policy consultant Jeff Madrick of Welch in his book, “Age of Greed: The Triumph of Finance and the Decline of America.”
Welch was, “in microcosm, the new American economy,” Madrick wrote.
John Francis Welch Jr. was born Nov. 19, 1935, in Peabody, Massachusetts. The family soon moved to a working-class neighborhood in nearby Salem.
The senior Welch worked as a railroad conductor on the Boston and Maine commuter line. Welch’s mother, the former Grace Andrews, stayed home to raise “Jack,” as he became known. Welch considered her his best friend and confidante.
During summers, his father encouraged him to caddie at a local golf club to make money. The job made an impression on Welch, exposing him to successful people and turning him into a lifelong golf enthusiast.
He graduated in 1957 from the University of Massachusetts at Amherst with a chemical engineering degree and in 1960 received a doctorate in chemical engineering from the University of Illinois. He married a fellow student, Carolyn Osburn, in 1959.
After getting his PhD, Welch joined GE in a new chemical development operation in Pittsfield, Massachusetts. His career began to take off when he persuaded GE to open a factory for a new plastic product called Noryl. Sales grew quickly, and at age 32, Welch was promoted to general manager of the company’s $26 million plastics business.
“The move put me into the big leagues with all the trimmings – an annual invitation to the company’s top management meeting every January in Florida and my first stock options,” Welch wrote in his memoir.
By 1973, his long-range career goal became clear: to someday run GE. That year, he got a big break when the company made him responsible for a number of different businesses, from chemicals to medical systems and appliance components, totaling $2 billion in sales and 46,000 employees.
GE’s then-chief executive, Reginald Jones, began to notice Welch’s success and called on him to take another job running the company’s products and services – this time in company headquarters in Fairfield, Connecticut, where he essentially would be competing against a number of candidates to become the next head of GE.
Some at GE thought that Welch was too young and brash to be chief executive. But on April 1, 1981, Jones picked him.
The new chief executive quickly launched a formula for GE’s success: The company would only be in markets where it was No. 1 or No. 2. And he wanted to tear apart the firm’s layers of bureaucracy.
In the early 1980s, with the country suffering from recession and fears that the Japanese would overtake U.S. firms, Welch kept making GE leaner, arguing that it was more “humane” to cut people sooner because they would be able to find jobs faster than they would if the company waited for things to get worse.
“Any organization that thinks it can guarantee job security is going down a dead end,” Welch wrote in his memoir. “Only satisfied customers can give people job security. Not companies. That reality put an end to the implicit contracts that corporations once had with their employees.”
By the end of 1985, the company’s head count was down to 299,000, compared with 411,000 at the end of 1980.
Welch was tough on those who remained, developing a cutthroat evaluation system in which each of GE’s businesses had to rank its employees in three groups: the top 20 percent, the vital middle 70 percent and the bottom 10 percent. Members of the last group usually had to be fired.
In 1987, Welch divorced Carolyn, blaming the failure of his marriage in part on his workaholic tendencies. He soon met his second wife, Jane Beasley, a lawyer. He persuaded her to quit her job and travel with him full time. She later nursed him through two heart attacks.
But in 2002, he served her with divorce papers (bringing along a state marshal to do the task). He had fallen in love with Suzy Wetlaufer, who met Welch when she was editor of the Harvard Business Review and interviewed him for an article. They later married.
The divorce from Beasley was public and nasty, as each side fought over Welch’s $800 million fortune. Days before the case went to trial, the Welches issued a statement saying they had reached a settlement. Its terms were never publicly disclosed.
In 2001, Welch handed over control of the company to Jeffrey Immelt, who, like Welch, had spent years running GE’s plastics division. After GE, Welch co-wrote with his wife the best-selling book, “Winning,” which sold more than half a million copies.
Complete information on survivors was not immediately available.
One month before the 2012 presidential election, Welch suggested on Twitter that President Barack Obama had manipulated monthly jobs figures to improve his chances of reelection. Former White House economist Austan Goolsbee was among those who fired back via Twitter: “You’ve lost your mind.”
A reporter at Fortune wrote an article critical of Welch’s comments, and Welch terminated his contract with Fortune and Reuters, where his columns, co-written with his wife, had appeared.
Brash, unapologetic methods had been a consistent theme in Welch’s career and personal life.
“This is no perfect business story,” he once wrote of his time at GE. “I believe that business is a lot like a world-class restaurant. When you peek behind the kitchen doors, the food never looks as good as when it comes to your table on fine china perfectly garnished. Business is messy and chaotic.”