Jack Welch and GE
On October 28, 2005, The Financial Times carried an interview with Jack Welch, by Sathnam Sanghera.
I wrote him a letter to comment on it. It’s reprinted below.
October 30, 2005
Dear Mr. Sanghera,
Thank you very much for maintaining a cynical tone during your feature on Mr. Welch and the new Mrs. Welch. In my mind, and it is a very personal opinion, Mr. Welch personifies everything that is wrong with US business.
1) While espousing a performance culture, GE instills instead a fear culture. Here in Chicago, you don’t have to throw a stick far in a crowd before you hit a former GE employee with it. There have been so many cuts and so many restructurings, that it seems that almost everyone has worked at one time for a GE sub. I can’t believe all of them were at the bottom 10% of the barrel. I hear more about fear and the forced tracking of employees into performance categories in order to meet the quotas of performance expectations than I do about what a great experience or great company it was to work for.
2) So here’s a guy who starts an affair with a journalist, cheating on his second wife. Not only do they both breach journalistic ethics, but they act proud of it, as if this is a recommended way to find true love. They deserve each other. I am not prude about age differences, but there is a Svengali air about all of it that is sickening.
3) From a business perspective, let me ask the question… Which Fortune 500 company, the biggest proponent of the Six Sigma quality movement, was the least likely company you would have expected to receive an adverse opinion on its internal controls from its external auditors at the end of 2004?
That’s right, GE had such a serious problem in its accounting and finance function, specifically with regard to its accounting for derivative contracts, that it received an adverse opinion on its internal controls and had to restate its earnings for several years.
Is this really a well run company or a well hyped-company? They’ve cut so many times and so deeply that it’s a wonder there’s anyone to do the non-sexy work like administration, HR, accounting, treasury, finance and internal audit.
4) Finally, we’re supposed to feel badly for Mr. Welch because he chose the lifestyle benefits over the cash when preparing for his retirement. After the disclosure of these lifestyle benefits during his messy divorce, he had to give them up and it was too late to go back for the cash. Cry me a river…
GECF (now, GE Money) in Japan made “liar’s loans” and charged exorbitant interest rates (like 17%). No wonder the financial services arm of GE is dragging down the rest of the organization.
At one time, those who worked on the financial services side would characterize themselves as working for the “white collar” side of the business. The corresponding implication was that the industrial side (manufacturers) was the “blue collar” side of the business.