How do you build loyalty in an organization?
I don’t think you build loyalty. I think you build excitement. Loyalty is not the right word you’re looking for. How do you keep energized people energized? How do you keep people excited about the challenges? Do you reward? Do you celebrate? Do you do all those things?
Loyalty implies a certain contract that you’ll stay with this company for life. You don’t have loyalty. The loyalty is to your customer. Only customers can give jobs. Companies can’t.
So when you start talking about building loyalty, I don’t want to build loyalty. I want to build exciting people who are excited to stay and are ready to leave if things aren’t right.
I don’t want people hanging on with the rope to the mothership. Loyalty is the wrong implication. I like people who, if we don’t get it right here, they’ll go somewhere else. So every manager has to excite his people to keep them there.
What’s the most important business lesson you’ve learned?
Let’s take getting the best team for a given. I was in Chicago for a Q&A session, and this guy said, ‘I have a problem, Mr. Welch, with this differentiation thing and evaluations. I’ve got 10 people reporting to me. Two of them are smarter than me. How do I appraise them?’ I said, ‘What the hell happened with the other eight?’ That’s the point. He should have 10 that are smarter than him. That’s what he should be looking for every day.
My other lesson is that culture counts as much in an acquisition as the numbers do. That’s why so many acquisitions fail. The culture is so different from your own, that while the numbers might look good on paper, getting it to work is harder. [GE made 933 acquisitions during Welch’s tenure as CEO.]
What was your toughest challenge in running GE?
[Long pause.] I don’t think I ever had one. Every day was exciting. I loved every minute of it. I never it saw it as tough challenges. The worst thing you do in life is take people out of a job.
The toughest challenge has been when somebody can’t perform up to your expectations and you’ve had the discussions with them for a year or so and you finally have to walk in and say, ‘We have to part ways.’ It’s obviously the ugliest thing you do in business.
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