“Dissent is good for business”

Jack Welch says the business world could be turned upside down by the arrival of new graduates in its ranks Keystone

United States business guru Jack Welch has urged Swiss companies to ditch formalities and embrace a new culture of open criticism of management performance.

The former chief executive and chairman of General Electric prophesied that a new generation of upstart employees using the internet to voice dissent would replace rigid bureaucratic models.

Speaking at the International Alpine Symposium in Zurich on Tuesday, Welch told business leaders that the new phenomenon would be “fun” and advised them to embrace the growing wave of feedback.

Welch told the assembled business leaders that the new set of graduates, sometimes referred to as Generation Y, would turn the established business world upside down.

“Communities are now forming on the internet. It might be Facebook or My Space now, but soon these communities are going to be forming within companies,” he said.

“Bosses who used to say ‘shut up’ are not going to be facing one employee, but they are going to be facing ideas coming at them from groups of employees. They are going to know who the bad managers are and they are going to put it on the internet right in your face.”

Positive force

But Welch believes the new culture can be a positive force provided bosses face up to it with the right attitude.

“There will be a whole new level of transparency and managers are going to have to deal with it and learn to handle dissent. It’s going to be more fun to be a chief executive because you are going to get more input coming at you – it’s going to be wonderful.”

He also believes that new era of openness will help to break down negative traditions and formalities that he said hinder progress.

“The value of informality in a company is infinite. Give voice to your people because candour is valuable. Say what you mean and say it straight,” he urged.

Welch, who saw General Electric become the world’s largest company during his 20-year tenure at the top, said he was unconcerned about the current economic troubles in the world.

He compared the economic slump driven by the subprime mortgage crisis with a number of other crises that have struck during his business career.

Worst over

“I happen to believe that the worst is over and that in a year from now we won’t be talking about it any more,” he said.

But he is concerned about an apparent breakdown between chief executives and company boards. Several CEOs, including Fred Kindle at Swiss engineering company ABB, have recently lost their jobs after apparently falling out with board directors.

“Board members are now so afraid of failing that they are no longer acting in partnership with CEOs, but acting as policemen,” he said.
Welch also blamed poor succession planning by company boards for contributing to the much criticised wage inflation for executives. He told the conference that firms are having to pay higher salaries to lure in top managers from outside because they are failing to groom internal successors for the top jobs.

swissinfo, Matthew Allen in Zurich

Jack Welch

Jack Welch was born in 1935 in Massachusetts.

He joined General Electric in 1960, but nearly left after becoming disillusioned with the company’s bureaucracy. He was, however, persuaded to stay on by his line manager.

He became a vice-president of GE in 1972, senior vice president in 1977 and vice-chairman two years later. In 1980 he became the company’s youngest ever CEO and chairman.

The early part of his tenure was marked by a series of job cuts as he stripped out layers of bureaucracy. He would notoriously fire the bottom 10% performing managers every year.

He later diversified the business line of GE with great success. When he took over at the top, GE had revenues of $26.8 billion and a market value of $14 billion. By the time he left, this had increased to $130 billion of sales and a market value of more than $400 billion – making it the largest company in the world.

In 1999 he was named Manager of the Century by Fortune magazine.