The stunted vocation: an analysis of Jack Welch's vision of business leadership.

Abstract

Jack Welch, the former CEO of General Electric, is often used as a model of business leadership. Welch's excessive focus on immediate business objectives prevented him from leading through a broader and more humane moral horizon. According to the more comprehensive and compelling moral vision of Catholic social thought, Jack Welch is not a model of leadership that should be employed by current business leaders.

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The Business Ethics Crisis

On July 9, 2002, President George W. Bush announced in the wake of a series of business scandals that America's "greatest economic need" was "higher ethical standards to be upheld by responsible business leaders." (1) This unprecedented presidential plea for ethical behavior as a key to economic renewal directly challenged the business leadership of the United States.

After the President's speech, there were mixed responses to the challenge. Chris Galvin, the president of Motorola, immediately sent a forceful memorandum on the importance of ethics to his employees around the globe. Everyone at Motorola was reminded that "the highest ethics" were expected of them and that each employee should take "pride and confidence in this part of our culture." There were also some initial indications that the President's plea might not have traction. A Wall Street Journal and Harris interactive survey of corporate recruiters indicated in September of 2002 that a sense of corporate citizenship and responsibility rated dead last among a list of 24 attributes that they sought in potential employees. (2)

The corporate recruiter survey suggests that the problem may have deep roots. Indeed, a national survey in 1999 of MBA students discovered that 73% would acquire a patent from an opposing company by hiring a competitor, if asked to by their boss. Interestingly, only 60% of convicts asked the same question responded in the affirmative. A national business ethics survey in 2000 of employees at all levels in companies across the U.S. disclosed that 26% had observed people in their business lying to customers, vendors or the public, with another 24% witnessing abusive or intimidating behavior towards employees. (3)

These discouraging behaviors are partly the consequence of defective theories. The regnant models of leadership promoted in scores of management texts and business classes seem to have been ineffective in preventing the ethics crisis. Perhaps it is an appropriate moment for Christian scholars to contribute their insights and assistance in the shaping of alternative management paradigms. This article responds to this challenge by offering a critique from the perspective of Catholic social thought. Specifically, I will assess the leadership of Jack Welch, the former Chief Executive Officer (CEO) and Chairman of the General Electric Corporation (G.E.), according to criteria developed in the teachings of John Paul II. Welch was a prominent model of business leadership in the resurgent U.S. economy of the 1990s. This "global legend" was described by Business Week as "the gold standard against which other CEOs are measured." (4)

When I started to research Jack Welch a few years ago, the "gold standard" had largely avoided any tarnish of scandal, and had achieved spectacular results for his stockholders. The stock price of G.E. shares rose 1,155% from 1982 to 1997. (5) To achieve this success, Welch, who happens to be a Catholic, espoused a very uncompromising and narrowly focused business leadership model. Unfortunately, the hagiography bestowed upon Welch from much of the business press has obscured serious ethical deficiencies. Another Catholic, Pope John Paul II, offers a more humane vision for pursuing a vocation in business. The different visions of these Catholics follow from their very different assumptions about human nature and ends.

The Vision Problem

Jack Welch remains a positive icon in the business world because of his phenomenal "success" in making G.E. the most profitable company in the U.S. Within a decade of his assumption of corporate leadership, the company and its subsidiaries were ranked number one or two worldwide, in every field. Welch ruthlessly and, it must be conceded, effectively pursued the ultimate end of "success" as measured by profitability, market share, etc., through a relentless push for more productivity, the massive dismissal of employees in less profitable portions of the company, the removal of layers of bureaucracy, the improvement of communication between portions of the company, and the rewarding of those who improved the bottom line. There are certainly some worthwhile dimensions of G.E.'s revolutionary approaches to innovation, such as the improved communication and openness between departments. The instigator of change exulted in his ability to transform an institution.

We took a bureaucracy and we shook it. We created a world-class

organization, whose excellence is accepted on every continent. I

believe the G.E. I'm leaving is a true meritocracy, a place filled

with involved and excited people, with good values and high

integrity. (6)

As his words attest, Welch is a driven and "successful" executive. He is also a Catholic, although the faith in which he was reared, and has never completely rejected, failed to significantly impact his moral trajectory. Hence, it is worth pondering to what extent his model of business leadership might not be consonant with Catholic social teaching. Unprepared to resist and perhaps naturally disposed to value economic success above any other concern, he adopted certain business goals as virtually unqualified idols. An idol in this context means inappropriately adopting something as a final end. After assuming control at G.E., he announced that his prime directive was to make the company "the most competitive enterprise on earth" in "brutally competitive times." (7) The values that would guide this quest are expressed in the descriptive terms that he finds positive in an explanation of his success in the "Prologue" to his autobiography. (8) These include the following: creative earthy competitive honest adaptability loud hard working smartest agility informal committed high spirited smart outspoken

These words and phrases suggest some of the keys to a macho, tough, efficient and profitable corporate culture. They also suggest a circumscribed set of human qualities and ends. Other than honesty, the words have limited moral connotations.

Causes and Effects

Why does Jack Welch seem so blithely unaware of a broader moral framework? The answer can be discovered, at least in part, in his constricted understanding of human nature. Business executives are persons of action and not speculative philosophers, but they are nonetheless guided by certain implicit assumptions about human beings and their fundamental purposes, traits and goals. Such implicit assumptions are often revealed in both their actions and their explanations for those actions.

The roots of Welch's views of human nature seem to have arisen early. In his autobiography, he observes that, "I've never really changed that much from the boy my mother raised in Salem, Massachusetts." Welch was raised by a devout Irish mother who had visions of her son becoming a priest; she sent him regularly to Church to be an altar boy. Mrs. Welch went to mass every day, hung crucifixes in her house, regularly prayed the rosary, and considered the priest of her parish a saint. From his pious but formidable mother, young Jack learned "good values" such as toughness, aggressiveness, realism, perseverance and a very strong work ethic. The most important gift from his mother may have been self-confidence. In response to a boyhood stuttering problem, his mother constantly stroked his ego. It is not an accident that self-confidence became the most essential quality of a Welch era G.E. executive. (9)

Key values such as determination and self-confidence are also essential traits for competition, whether in the boardroom or on the golf course. The value of competition was permanently ingrained in Welch at the "Pit." The "Pit" was a dusty lot in Salem that hosted basketball, football and hockey pickup games. Here, young men learned how to be "scrappy" and to compete in a struggle that valued the survival of the fittest. Welch was one of the organizers of the games. This experience provided certain fundamental lessons in how to manage competition and motivate performance. (10)

From my days in the Pit, I learned that the game is all about

fielding the best athletes. Whoever fielded the best team there

won.... it was no different in business. Winning teams come from

differentiation, rewarding the best and removing the weakest,

always fighting to raise the bar. (11)

The survival values learned from his mother and the "Pit" were not inherently problematic. Such values do become problematic, however, if they are raised to the status of final ends and are not guided by a more expansive and just moral vision. Welch's restricted vision locked him into what the social thinker Jean Bethke Elshtain has called "a dense wall of immanence where every reference point is anthropocentric." (12) Such a wall encloses only material objectives such as production, efficiency and profitability. There is a terrible irony in a man who is relentlessly promoting "great ideas" and "better ways" being oblivious to the limits of his vision. He and his managers were open to new ideas, but only if they did not challenge the fundamental assumptions or framework guiding the G.E. model.