Former General Electric CEO Jack Welch knows a thing or two about how to run a business, as evidenced by his tremendous success leading GE from 1981 to 2001.
He shared his thoughts on what makes a successful CEO with the
Kansas City Business Journal.
"There are three measurements you need to understand at a business to know if you're on the right track," Welch said.
- "First and foremost is employee engagement. How do your employees feel about their jobs, where they're going and do they like the work? Are they proud of what they do?" he noted.
- "Secondly is customer satisfaction. You don't have a business without customers, but you've got to have employee engagement first," Welch added.
- "The third is cash flow. If you've got the first two right, you'll get the cash flow. If you don't, you won't. It's really that simple."
Look at what a successful corner grocery store does in these areas, and you can just extrapolate it to bigger companies, Welch said.
To be a good leader for your employees, he stated, one needs to be "rich with your praise, cheer them on, love to watch them grow and be excited about their success. You need to be happy to see them get promoted and pleased to give them raises. You need to love to give bonuses. Basically, you need what we call the generosity gene. It's absolutely critical."
Meanwhile, Welch approves of GE's recent decision to jettison most of GE Capital. "I like the package. It looks like a smart move and right for the changing financial landscape," he told
CNBC. "The financial services game is a changed game."
The 2008 financial crisis and the 2010 Dodd-Frank financial reform law were the game changers, Welch noted.
"If you're sitting with a huge balance sheet of cash in financial services and can't lever it — not very pretty," he told
CNBC. "It would be like saying, 'Let's keep the buggy; forget these automobiles going down the road.'"
GE's action demonstrates the company's ability to adjust to a changing environment, an ability that has served GE well throughout its history, Welch states. That explains why the company will be around for "100 more years in the Dow Jones [Industrial Average]."
© 2025 Newsmax Finance. All rights reserved.