Management 101: Motivation Matters

It's no secret that General Electric is one of the world's most successful companies in the world. Its market value has gone from $12 billion in 1981 to $284 billion today. At a time when corporations are focusing on core competencies, GE has succeeded as a conglomerate with very old-fashioned businesses--leasing, locomotives, lighting, TV. So what is it that accounts for such incredible performance?

BUSINESS WEEK followed GE's CEO, Jack Welch, around for months for clues. To its surprise, the magazine discovered that charisma still counts. The force of one person's personality at the top can generate uncanny returns at the bottom line.

Clearly, Welch's strength is his mastery in motivating people. Welch painstakingly reviews the performance of the company's top 3,000 managers every year. He personally hands out hundreds of bonuses for good work. He is constantly writing notes to managers and employees, suggesting changes, thanking them, making note of family crises.

Welch also teaches at GE's training center, in front of an audience of elite managers, lecturing them, cajoling, and listening. Four-hour performances aren't unusual. In 17 years, Welch has taught some 15,000 GE managers and executives. Welch's in-your-face candor defines GE's corporate culture. He demands it from his executives and returns it. This corporate conversation is a terrific, if terrifying, way to generate internal data and curb bureaucratic obfuscation. There is little indecision-by-committee at GE. Welch's message to his managers is brutal as well: Cull the weak, compete for No.1, and forget about excuses for not meeting targets. When managers do meet goals, Welch showers them with gratitude--and money.

Losers, however, get fired. The stick is the other side of the Welch motivation machine. Bad performance is severely punished. And Welch keeps track. Even in the best-run operations, he insists on a steady flow of information, and he provides a continuous supply of suggestions. It's micromanagement, and despite B-school dogma, it works. In an era of management fads, from mass customization to value chain analysis, the lesson from GE is that personality still counts.

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