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Lessons from the Great American Leaders & How They Apply Now

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A Leader’s Management Style Sets the Organizational Tone

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Jack Welch – Former CEO – General Electric

The leader’s management style sets the organizational tone. When Jack Welch took control of General Electric, he “wiped out whole layers of management, jettisoned underperforming units, introduced tough performance measures for employees, and junked the venerable “blue books” that for years had told GE managers what to do and how.

Most significant, he redefined the CEO’s central purpose in life. Before, GE had focused on growing revenues, even though a bigger company didn’t necessarily mean a more valuable one, while its CEOs talked about balancing the interests of employees, shareholders, and society as a whole.”[1]

If Welch’s actions didn’t set the tone, no one was paying attention, but indeed they were and his management style affected American businesses for decades.

Like Welch, leaders imprint their companies with their unique management style. While they collectively can be categorized using labels such as autocratic, paternalistic, collaborative as well as other commonly used descriptions, individual leaders craft a style that is a reflection of who they are and how they prefer to manage.

The two most influential leaders who are responsible for shaping modern management styles were Alfred Sloan (General Motors) and Jack Welch (General Electric). Peter Drucker said of Sloan that he was “the designer and architect of management… a foundation for America’s economic leadership in the 40 years following World War II.” Both Sloan and Welch had a significant influence upon the management styles of their contemporaries.

As was cited previously, Welch’s influence began the emphasis on shareholder values that resulted in many leaders focusing on short-term profitability, which has underscored a host of problems with its application over the past two decades. Ken Lay (Enron), Bernie Ebbers (Worldcom), Al Dunlap (Sunbeam) and a host of other leaders have relied on this emphasis for their personal gain, at the cost of long-term corporate financial viability. While they maintained a focus on increasing shareholder value to the cheers of Wall Street, they collectively destroyed their companies.

Therefore a leader’s management style is an important factor in determining his or her professional competence. This is due to its overall impact on all key constituencies and the organization’s financial health and sustainability.

Prior to the introduction of Sloan’s management principles, many of the great leaders tended to be paternalistic, as exemplified by John Heinz (J.J. Heinz), Milton Hershey (Hershey Chocolate) and George Westinghouse (Westinghouse Electric).

These leaders provided fair wages, good working conditions and were socially responsible. They provided a variety of employee benefits, built housing communities and a clean and healthy home and working environment.

Others were autocratic such as J.P Morgan (J.P Morgan), Andrew Carnegie (Carnegie Steel) and Cornelius Vanderbilt (New York Central Railroad). They focused on improving efficiencies, quality and the customer experience, while simultaneously driving down costs and prices.

Many contemporary leaders such as John Chambers (Cisco), Andrew Grove (Intel) and Thomas Engibous (Texas Instrument) have developed more collaborative management styles to harness their organization’s collective power to achieve their goals and objectives.

One facet that differentiated the great leaders was their ability to create and sustain the emotional balance incorporated within the Legitimacy Principles. They established and maintained strong emotional connections with all of their key constituencies. This was true despite the utilization of a variety of unique management styles that they incorporated.

Reference:

  1. Useem, Jerry, Tyrants, Statesmen, and Destroyers (A Brief History of the CEO) (Fortune Magazine) November 18, 2002

For more information on this topic and to read a free chapter, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It by Timothy F. Bednarz (Majorium Business Press, Stevens Point, WI 2011).

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

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