Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 29, 1992 TAG: 9203270104
SECTION: BUSINESS PAGE: D-1 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Along with the dry recitation of 1991 financial results in General Electric Co.'s just-released annual report is another chapter in Chairman John Welch Jr.'s philosophy of corporate management.
It's not unusual for a chief executive to use his company's annual report to expound on any number of topics. But Welch's annual letter to shareholders has become closely watched by other corporate leaders and business professors for news on the latest thinking on Welch management, and his techniques are being adopted throughout corporate America.
The latest version of the "Gospel According to Welch" describes four kinds of leadership traits found in corporate managers:
Type One, according to Welch, is the leader who delivers on commitments and shares in the values of the company's management; in other words, a star. Type Twos do not meet commitments and do not share the company's values; they should be eased out. Type Threes miss commitments but share the company's values, and thus should get a second chance.
Welch seems most concerned about Type Fours. They are the leaders who deliver on commitments but do not share the company's values. According to Welch, they tend to be tyrants who are overly concerned with short-term performance. Even though they produce the results headquarters wants, they may be too destructive to morale to have around.
Coming from a CEO who personified a hard-nosed approach to corporate command, that injunction is news.
"In an environment where we must have every good idea from every man and woman in the organization, we cannot afford management styles that suppress and intimidate," wrote Welch, who unlike many other CEOs does not rely on a corporate ghost writer for the letter to shareholders.
The annual report recaps other elements of the growing body of management wisdom that Welch has been advancing in his decade-long tenure as GE's CEO: the idea of a "boundary-less" company, in which workers at all levels are encouraged to communicate and share ideas with one another; "best practices," in which GE seeks out admirable corporate culture traits at other companies and adapts them for its own use; and GE's unique "Work-Out" program, in which managers, workers, suppliers and customers exchange gripes and seek solutions to bureaucratic snafus in a town meeting-style forum.
There is nothing wholly original in the ideas that Welch is putting forth, management theorists note, and even Welch agrees. But given GE's size - at $60.2 billion in revenue last year it is one of the nation's largest corporations - and Welch's influence as head of the Business Council, a group of blue-chip corporate leaders, his adoption of these ideas carries particular weight.
Welch, 56, began as an unlikely prophet. Trained as a chemical engineer and plagued by a chronic stutter, he was a somewhat surprising choice to head GE when he was appointed chairman in 1981. He quickly put his mark on the company, however, eliminating 100,000 of its 400,000 jobs in a sweeping restructuring that earned him the bitter nickname "Neutron Jack" but has made GE, unlike many other large industrial dinosaurs, a financial success.
Welch, who declined to be interviewed for this article, turned in the mid-1980s from physically restructuring the company to remaking its corporate culture, including chopping away at its hamstrung bureaucracy. As he did so, the letters to shareholders in the company's annual reports began more and more to reflect his leading-edge management philosophy.
Welch's newest baby is the four types of leadership, which has been discussed around the company for the past year. A GE spokesman said some top managers at the company have been eased out because they were closer to the autocratic Type Four than to the ideal Type One style.
Business professors and other experts say Welch's philosophy is finding followers around corporate America much as the company's famed by-the-book planning system was adopted by countless companies a generation ago - before Welch did away with it as antiquated.
by CNB