Stanford GSB Speech

Stanford GSB Speech

Create Candor in the Workplace, Says Jack Welch
Video File, 1:03 hour

STANFORD GRADUATE SCHOOL OF BUSINESS — According to Jack Welch, companies that develop extraordinary products and services do more than gain market share—they represent the very foundation of society. "Winning companies are the only things that matter—without them, nothing else would work," the former chairman and chief executive officer of General Electric told Dean Robert Joss on April 27.

Welch and Joss chatted before a packed house in Memorial Auditorium about a few of the management insights described in Welch's most recent book, Winning. "My first book was all about me," Welch said, referring to his 2001 New York Times bestseller Straight from the Gut. By contrast, Winning, co-authored with his wife, Suzy, codifies the expertise that Welch has developed and refined over the course of his career—namely, the management philosophies that helped him turn a $13 billion company into a $500 billion enterprise over the course of a 20-year tenure at the helm of General Electric.

A remarkable absence of candor in the workplace represents one of the most significant obstacles to companies' success, he said. "In a bureaucracy, people are afraid to speak out. This type of environment slows you down, and it doesn't improve the workplace." Instead, Welch called for developing a corporate culture that encourages and rewards honest feedback. "You reinforce the behaviors that you reward," he explained. "If you reward candor, you'll get it."
An effective performance appraisal system, he said, relies not only on honest feedback but also on meaningful differentiation among employees. At GE, he put these principles into action by implementing a forced ranking system that divided employees into three distinct segments: the top 20 percent of performers, the middle 70 percent, and the bottom 10 percent. Even though GE's "20-70-10" system—which methodically manages out the bottom 10 percent of employees each year—has always been controversial, Welch emphatically defended it.

http://www.gsb.stanford.edu/news/speakers_vftt.html
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