Jack Welch, Lou Gerstner and six modes to guide your own management approach

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Jack Welch and Lou Gerstner were leaders of two of the most storied companies at the end of the last century. Mr. Welch, who took the helm of a troubled General Electric in 1981, was nicknamed Neutron Jack for the brash way he steamrolled through the company, restructuring and rebuilding. In today’s vernacular, Mr. Gerstner might be labelled “Sleepy Lou”: When he took over IBM, which was seen as tired, visionless and pampered, he ignored the crescendo of calls to dramatically restructure, sell part of the company and immediately propose a dramatic new vision. “The last thing IBM needs is a vision,” he declared, outraging analysts and consultants. He went slowly, respecting sensible tradition, unlocking value that had been overlooked by focusing on culture and what customers want.
Mr. Welch was deemed by Fortune magazine to be the greatest manager of the 20th century, but today, his tenure is under critical review. David Gelles savaged him two years ago in the book The Man who Broke Capitalism, documenting how he vaporized hundreds of thousands of jobs in a bid to boost profits, reduced the strength of the American manufacturing base and destabilized the middle class. Innovation consultant Greg Satell makes the comparison between Mr. Welch and Mr. Gerstner on his blog and suggests we took the wrong model from the 1990s when worshipping Mr. Welch.
He says GE “invested heavily in getting better and better at things people care less and less about. That’s a problem we rarely talk about. We like to believe that success breeds more success, but the truth is that success often breeds failure.” GE’s innovation diminished as it preferred deal-making while IBM continued steadily innovating. He points to IBM’s quantum computing effort, “which the firm has been working on for decades, long before any commercial potential was clear, and now looks to have a huge future. Other long-term initiatives such as artificial intelligence and neuromorphic chips show similar promise.”
It’s easy to turn this into a two-sided choice for today. Tough or nuanced. Top down or bottom up. Exploration versus exploitation. Profits before people. It’s also the legacy of CEOs captaining large corporations, whose challenges are different from the average manager.
Instead, let’s look at six modes of managing that apply more generally. Psychologist Daniel Goleman, who pioneered the notion of emotional intelligence, first presented them in a 2000 Harvard Business Review article, each aspect springing from different components of emotional intelligence:
It’s not a case of choosing one over the other, but building your skills in each and knowing when to use that approach. However, you need to be wary of the coercive and pace-setting styles, which often have a negative impact.
The coercive style should only be employed to break failed business habits and shock people into new ways of working. Neutron Jack used it on many occasions to push his companies in new directions and even Mr. Gerstner chopped 35,000 jobs when he took over at IBM. “The leader’s extreme top-down decision-making kills new ideas on the vine,” Mr. Goleman wrote. “Likewise, people’s sense of responsibility evaporates: Unable to act on their own initiative, they lose their sense of ownership and feel little accountability for their performance.”
The pace-setting style sounds admirable, with the leader setting extremely high performance standards and exemplifying them in their own actions. He or she is obsessive about doing things better and faster. The leader quickly pinpoints poor performers and demands more from them. “In fact, the pace-setting style destroys climate. Many employees feel overwhelmed by the pacesetter’s demands for excellence, and their morale drops,” Mr. Goleman writes.
Authoritative leadership is often seen in a bad light these days. But Mr. Goleman defines it positively: An authoritative leader states the end but gives people their own means. The authoritative style works well in almost any business situation but is particularly effective when a business is adrift.
If the coercive leader demands, “Do what I say,” and the authoritative urges, “Come with me,” Mr. Goleman describes the affiliative leader as saying, “People come first.” The leader builds strong emotional bonds and then reaps the benefits of such an approach, namely fierce loyalty.
By spending time getting people’s ideas and buy-in, a democratic leader builds trust, respect and commitment. Letting people have a say on decisions affecting them creates flexibility and responsibility. Listening to them improves morale. But the drawbacks include endless meetings and delay. “This approach is ideal when a leader is himself uncertain about the best direction to take and needs ideas and guidance from able employees,” he writes.
The coaching style involves acting more like a counsellor than a traditional boss. Such leaders recognize and build talent. “Coaching focuses primarily on personal development, not on immediate work-related tasks. Even so, coaching improves results. The reason: it requires constant dialogue,” Mr. Goleman writes.
Again, it’s not just one style you need. Mr. Goleman’s research found leaders who have mastered four or more – especially the authoritative, democratic, affiliative and coaching styles – have the best climate and business performance. Similarly, both Mr. Welch and Mr. Gerstner have attributes you should cultivate and others to shun.
Cannonballs
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.