9 of Jack Welch’s Key Leadership Principles

Lauded as one of the greatest executives of his time, Jack Welch served as chief executive officer of General Electric from 1981 to 2001. His two-decade tenure saw GE evolve from an appliance company to a multinational corporation that encompassed industrial products, media, and financial services.

Welch implemented a management style that involved cost-cutting and comprehensive layoffs, as well as a relentless push for growth, and many of his key principles remain compelling even 20 years later. Take a look at nine of his key principles.

1. Put the right people in the right positions.

Welch believed that making effective “people decisions” was one of an executive’s most critical roles, as these decisions within a corporation have long-lasting consequences. He spent as much as half his time at GE ensuring that the right people were in the right positions. Instead of outsourcing hiring to lower managers, he took a key role in all hiring decisions. He sent strong, established leaders to emerging markets like India or China rather than keeping them in already thriving areas of the business. Additionally, he did not hesitate to lay off underperformers.

Even after he retired from GE, Welch brought his keen hiring and firing sense to his career as a board member, consultant, and investor. He advocated for a scorecard for individuals involved in hiring processes to measure their success in choosing quality employees.

2. Avoid overmanaging.

According to Welch, an effective business leader should lead, not control, the people beneath them. While some senior managers consider their role to be supervisorial, giving orders to their subordinates, this approach gives managers a narrow view of the company’s overall performance. Rather, senior managers should facilitate and inspire, which requires taking a broad overview of the business.

3. Be enthusiastic.

Though known for his brutal honesty, Welch also demonstrated enthusiasm for his work. He wanted GE to have great energy and be a place where people were excited to come to work. Committed to inspiring managers and employees through his example, he maintained an energetic demeanor and generously rewarded top performers.

4. Value simplicity.

Welch believed in a simple, effective management framework. Whenever he faced a problem, he aimed to break down the complex issue into smaller, more manageable components. He embodied his famous “3 Ss” maxim of speed, simplicity, and self-confidence by prioritizing consistency and follow-up. Focusing relentlessly on a straightforward, simple goal, according to Welch, was the best way to beat competitors.

5. Celebrate small victories.

Welch knew the power of positive reinforcement to create a productive company culture. Not only did he recognize the significant achievements of his team, but he encouraged managers to praise and celebrate smaller milestones. Attaining small goals regularly, he noted, paves the way for large successes, and offering consistent positive feedback keeps team members motivated. In his book Winning, Welch noted that creating an atmosphere of recognition boosts morale and eventually improves productivity.

6. Speak with candor.

Welch was known for his candid leadership style. Winning has an entire chapter devoted to the topic, explaining that leaders without candor are less able to inspire creativity and action in their employees. His candor ran parallel to his affinity for differentiation, another topic of the book. He was known for separating employees into performance strata, like the top performing 20 percent, the middle 70 percent, and the bottom 10 percent, which informed his direct style of layoffs.

While some people interpreted his to-the-point feedback as unkind, he claimed the opposite was true. By firing people who were clearly not a good fit for the position, he was saving everyone time and effort. Similarly, sugarcoating feedback prevents employees from understanding their blind spots and weaknesses, which limits their ability to improve. With clear, frank feedback, they can either improve their performance or find a job better aligned with their skill set.

7. Stay curious.

According to people who worked closely with him, Welch never stopped asking questions. Even when he was with people with less experience and prestige than he, he looked for what he could learn from them. Current research shows the relationship between curiosity and leadership success. Researchers looking at tech leaders such as Bill Gates and Steve Jobs found that the most effective leaders maintain a voracious appetite for new knowledge and continually refine their skill sets to stay relevant. Welch embodied this relentless pursuit of new knowledge and openness to new ideas.

8. Embrace change.

Whether you are leading a company or a country, change is inevitable. Welch insisted that managers expect and appreciate changes in market conditions, consumer spending habits, technology, and competition. Resisting change takes effort and wastes energy, which pulls focus away from productivity. When executives and business leaders expect change, they learn to think on their feet, adopt new strategies, and admit what is not working. The ability to course-correct in response to external factors is a hallmark of an effective leader.

9. Acknowledge the facts.

Along with embracing change, Jack Welch believed in taking honest inventories of employees, businesses, and performance. Without a personal, emotional attachment to his business assets, he could make decisions based on objective economic factors and market conditions. Without hesitation, he could sell off assets that were underperforming while taking risks to invest in new products. His overarching understanding of macroeconomic factors allowed him to expand into mass media, which eventually provided consistent revenues for GE.