Jack Welch, Jack Welch Management Institute founder, explains how a “split role” in executive leadership leads to “shopping” the company. Jack Welch was on CNBC today below are all the clips and computer generated transcripts.
Split Chairman & CEO Role? ‘Dumbest Idea in the World’: Jack Welch
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
our guest host this morning, jack welch founder the jack welch management institute, so many other things, former ge, ceo. how many board were you? none. you glefr did a board. you know what we talked about elan the cramer slrks ceo split up. andrew has been evolving. you were sure we should go the european route. no, i don’t think so. there is no data there to prove it. people think how can you be, how can more governance ever be a bad thing? we made the point if someone is that good at making decisions, they should be the ceo. let me say something no one talks about in a split role, you get shopping where the employees shop the idea, you want to buy this company? how about you, you want to buy it? no, it’s a mess. shareholder democracy can sometimes work, sometimes you can have a great dictator, only when the dictator is great does it work. that’s the complicated part. when you got a leader that can make decision that jamie diamond was crazy. then dave cally. he was so unabashedly anti-splitting it up. but they said he didn’t have enough financial acan you men acumen. he’s deeply capable if finance. these whackos don’t know anything about it. they’re sitting down in maine in the corporate library talking about that stuff. i mean, that wroel crowd. so he learned to manage those quarterlys under the master. he managed the business, not the earnings. why would you ever miss an estimate? because you tell them what the estimate is. 30 days later you announce it. right. a endope can do that. it’s more about managing expectations and the business. managing the business. not the earnings. is jamie diamond an other ceos safe for that, given that resounding vote or do you think iss and empg everybody comes back — they can’t go at jamie. that was the, that was crazy when they go after the best one in the game. then to go after dave on financial acumen. dave was there 20 years on thef, jamie is working in finance. is there a time and place for it, though? one of the things i think about. only to ask for a ceo. if you go back and look when jamie diamond, treks, it was a tron situation, bill harrison was the chairman when jamie was getting that done. i can see a time, for example. in six months when a guy was leaving? if jamie dup was going to step down, they had a succession plan, maybe you make him the chairman the next year or two to help out. a year. maximum. six month, preferably. okay. you give the guy the job. or the woman the job. they get the job. they make the decision. you don’t like them, throw them out. i’m not against firing them. but this idea of splitting for corporate governance and then they make this mistake with cody i felt was bowl saying he has no financial acumen, he has more, he’s forgotten more than the whole crowd will ever know. okay. we got to go. i’m just wondering, there’s got to be a way of making sure that boards aren’t just rubber-stamped of, you know, ceos. if the decisions are bad, the stock goes to held. if they’re friends with, golf buddies with the chairman and ceo. do you think you want to fight on the board? you don’t want fights on the board. you want smart people. if it all works well. cohesively. i sort of understanding. there are sometimes companies screwed up. that’s when you want the
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our guest host this morning is jack welch, a founder of the jack welch management institute. so many things to talk about. so little time. what i want to talk to you about honestly is the dynamic between the fed and unemployment and where we really have in the economy. do you want to talk about snowden initially? is that something? no, i’ll go anywhere you want. on snowden, that he broke the law, should be prosecuted. they should send him back here and prosecute him to the full extent of the law. the i give you my conspiracy theory, you said the president gets an a on this nsa stuff. i think they know that. i think this got us off the irs thing. i know, now we are talking about this i think he is right, no, we’re not talking about lois lerner anymore. that’s a real scandal. looking at metadata to catch terrorists. are you really going to be mad at the president for doing that, no? thoughts by the board. that’s off in the front. it will come back. it will be back. this took, she’s like, god, i love this snowden guy, isn’t she? she’s somewhere drinking a martini. here’s the qui i have. obama you says gets an a for this, snowden should go to jail with this? yeah. are we all cool with all of it? i’m wondering how far it goes. i think we got to understand, but when you have two presidents, totally different ideologies, you have feinstein and you have rodgers saskatoon be further apart. when al gore called it an abomination, then you know it’s the right thing to do, don’t you? just from — i don’t want to go there. oh, you’re chicken. no, i’m not. as a former ceo, what is the role, though, of th companies. you heard all the companies denied it or verizon not saying anything yet. when you were a ceo the ceo of ge, did you guys ever provide information for the government. did you ever have top-level conversations, tease type of things? no. was there somebody in your company that provided information? no, not that i knew of. not that i knew of. because you guys had access. not that i knew of, no. never happened. so we got your take on each scandal, a a.p. scandal, float your boat. the media, that’s the first time they paid attention. is that press scandal? no, it’s not. have you noticed out of these five scandals the four or five the media in this country didn’t break a single one of them. that’s interesting, but benghazi is misleading at best. that’s not a good — that was a bad situation. the way that. that’s just awful. we had lazear on the bush administration, admit it, the idea, never had talking points given to him on what he was supposed to say, put together by the white house that someone is supposed to read verbatim to spin something. the irs tragedy is a real scandal. right. the a.p. let the media fight if him. i can care less about him. they got their panties in a bunch for the first time. maybe they’ll look at another scandal. where do you find eric holder? i find him to be misleading at best s. that a reasonable answer? a reasonable answer. did you see greenspan, i don’t know if you were watching. i’m not going to ask you, if you didn’t watch, i’ll be disappointed. i saw him. you did. we were all sitting around saying if the economy stays a little weak, we’ll stay at $85 billion. so we’ll be fine. if it gets better, then maybe we start upticking at some point. so there is no pain ever for any of us. the last number for them was perfect. not too good, not too bad. the unemployment rate whent up. which means they can’t taper. so we added jobs. it was the best of both of them. but will the market or the world eventually say, loose, you can’t keep doing. you know these things in the irs, in my old jobs argument before, you get back to the problem of government union, government employees, being unionized. franklin roosevelt didn’t want to do it. because you couldn’t manage it. george meany didn’t want to do it. when you have, the people in the jobs who are being benefitted by who they elect. you get going there. i can hear people out there right now saying that unionles or i can hear thinking unions have dropped to a level in this country where, let’s say that that’s the problem, one of the problems with our issues, it’s just impossible. it’s only 7% of the work force. stop saying that. it’s 36% of the federal government. the federal government. right. don’t yell at me. i’m going to yell at you. loose, when you basically have a government — this is what you should have said. no, look, i mean, you got certain — doubt which leads you to when the government unions and government employees can, are in subjective jobs, no matter how decentt the people are, let’s assume they’re all perfect. their biases have to come through. if they are voting, if they are making subjective dignitariess, now, firemen don’t make subjective decision. that’s fine. a postal workers don’t make subjective decisions, they deliver the mail. okay. those things are role controllers. irs and bls. okay. i’m back to the bls. i’m not leaving that, either. once you realize what happened to the irs, you can make it right. might have changed. yeah. may be true then. i didn’t think about that. let’s think about it. both the irs and the bls make subjective judgments. let’s go to september numbers before the anouptsed in october before the election. we hire 875,000 people. the largest number since ronald reagan in 1983. we add 600,000 government workers, the largest in 20ers. ye. we go to the lowest participation rate in 30 years. all for what? all getting ready, all these people for a fourth quarter that’s the lowest number in the whole recovery.4% gdp. stop it. it’s not — and i was saying that within i’m looking at all the order books. this number pops up. we go from the 8s to 7.8. now we’re at 7.6. meanwhile, conservative groups trying to raise money having trouble getting the tax status. so when you get subject — no matter how good the people are. the bls in their handbook has two page sts describing biases. they recognize the problem. people in theirself interest vote for bigger government, more jobs, more tax revenue. just to put a fine point on it, you are not arguing the numbers, themselves, are manipulated for the way some of the — input. the input of the numbers in terms of phone calls the. i’m taik making a phone call, i’m asking you, did you work an hour, this employee. the bias has to go that way. it’s no matter how good the people are. when their basic job is, bigger government, more jobs, better wages. that all plays into that. so you have the irs. they want bigger government, better wages, the bls wants more government and bigger wages. now you are asking them to make subjective. you don’t ask firemen to do that. you ask them to put out the fire t. postal workers, you don’t have them put out the fire. you have them do the maim. you don’t ask airline kroerls to get the planes from here to here safely. they’re n making subjective political decisions. these people are making decisions and god bless them, they may be the most decent people in the world, but any of us in those jobs, you go this way or that way — it’s real.