[hagbardgroup]

The new system is not 'better' than the old system, and is probably significantly worse. While it's true that Welch's advice is no longer valid, it's because the legal, financial, and monetary environment has changed so much since the heydays of GE.

My grandfather retired a millionaire after working as a basic GE accountant for his entire postwar life. So as far as he was concerned, GE treated him well, and it treated his family well enough that my mother still remembers the Christmas parties that the company threw in upstate New York for their genuine human warmth.

When I compare how GE treated my grandfather versus how my father was treated by the companies that he worked for (taking the ambitious, go-getter advice), I am struck by how poorly he was served by both that and the overall cultural structure of the United States. My grandfather survived a Nazi prison camp for the US Government, and his weeks of eating grass soup paid off.

So to people saying that Welch's advice was psychopathic bullshit, I say sucks to you. Grandpa worked 9-5 for Jack, was not a particularly ambitious man, and came out way ahead in return for his loyalty. While surely this did not work for everyone, it did for enough of the people for stories like this to be common.

My perspective is entirely different -- because the US no longer rewards loyalty in either the public or private spheres. It is in fact punished, as this writer notes. How exactly can you build a company that lasts for longer than a relative eyeblink when every person is looking out for #1, and expects to be stabbed in the ass by everyone around them?

LinkedIn is a pain in the ass. Propagandizing for yourself to eke out a good living and career hopping all over the country is a pain in the ass. Both activities are tangential to producing profitable work over a long period of time. Every jackass who wants to get a VP position has to be a hot air spewing 'thought leader' now. This is all wasteful activity that defeats the entire economic purpose of firms.

The modern cynicism is corrosive to our long term prospects as a country, even if it is correct individual advice for the current environment. It will not survive, because this country will not survive as a single entity given such broken incentives and cultural mores.

[FD3SA]

>How exactly can you build a company that lasts for longer than a relative eyeblink when every person is looking out for #1, and expects to be stabbed in the ass by everyone around them?

Exactly, but I believe you have the causal chain reversed. It was the big companies that severed the bond of trust, and the employees who had to adapt to the new free-for-all market.

Neutron Jack eliminated 81,000 jobs in 5 years from GE (1980-1985). This resulted in the remaining employees, quite rationally, being very concerned for their careers. And thus, they began looking for options, and looking out for #1, because they knew they couldn't depend on Jack.

Of course, I agree that it is not productive to constantly be looking for better opportunities, but this is a result of never knowing when a Jack-like CEO is going to lay you off. Big companies started this war, and now they have to live with the consequences.

The startup movement is, for all intents and purposes, a way for talented employees to directly capture some the incredible value they would otherwise have created for big companies. Jack could've given these guys profit-sharing, equity or other incentives to work for him. Instead, he hung the sword of Damocles over their heads.

Elon Musk would've made one hell of an employee for any big corp. Instead, after weighing his options, he realized it would be better to just beat them at their own game.

You reap what you sow, Jack.

[pdonis]

> It was the big companies that severed the bond of trust

Because they had to. The original "bond of trust" was never about actual two-way loyalty; it was about the company bottom line. Companies used "bond of trust" rhetoric to lure employees in; they never actually meant it.

In the period following WWII, most industries in the US were growth industries: companies had to get and keep workers by hook or by crook, even if it meant giving them lavish compensation well beyond what their work would actually be worth in an equilibrium, non-growth market, because the alternative for the company was to lose all the growth business to their competitors, as people bought cars, refrigerators, etc. who had never had them before. (Pg talks about this in one of his essays: basically, companies like GE in the two decades or so after WW II were startups overpaying for labor to capture market share.)

By the 1970s and 1980s, much of that growth had stopped because most of the markets for the big US industries were reasonably saturated. Most people now had cars, refrigerators, etc., so those companies all had to shift from a growth market to a mature market where most business was from repeat customers wanting to upgrade their products, not new customers who had never had the product before. So the companies, in order to stay in business, had to drastically change the way they treated employees, since the costs of those employees were now a significant driver to their bottom line.

I'm not saying the companies were good and sweet and true; of course not. They broke a lot of long-standing employee agreements in the process of downsizing. I'm just saying that any employee who didn't see it coming from a mile away wasn't paying attention, and any employee who actually believed the company rhetoric about the "bond of trust" was living in a fool's paradise from the beginning.

> Jack could've given these guys profit-sharing, equity or other incentives to work for him.

He could have given some of them those incentives, yes. He could never have given all of them those incentives; there wasn't enough to go around. The plain fact was that companies like GE had too many employees for a mature market; there was simply not enough business any more to support all of them.

Again, that doesn't mean the way he did it was good. But if it took what he did then for employees to realize they couldn't depend on him, then again, those employees weren't paying attention; they should have known from the start that they couldn't depend on him, that if push came to shove he was going to do what was best for the company, not best for them. Any employee should always know that; that's what it means to be an employee.

[justinmk]

> because the US no longer rewards loyalty in either the public or private spheres

The comfort of 1950s US was an accident of the WW2 windfall resulting from our happy position as the creditor for most of Europe. Pointing to that accident as a model for future progress is childish.

[Amezarak]

Can you explain to me how the federal government being a creditor to European nations after World War II ensured happy times for employee/employer relations? If creditor/debtor status of the federal government makes such a difference, why didn't the massive US federal debt (around 110% of GDP) negate that creditor status? This argument has never made sense to me since a) most European countries had almost fully recovered by the mid-50s, yet this boom lasted much longer, b) our exports (and imports) were way down during the post-war period and basically irrelevant c) the loans were mostly inflated away. I don't understand what mechanism would have had the observed effect.

If anything I'd have thought the wage and price controls from WWII were a bigger factor, since in the absence of higher pay, companies had to offer more benefits and cultivate better relationships with their employees to keep them around - and there seems to have been a lot of inertia from those policies.

[anigbrowl]

US federal debt was largely domestically held. Also 'most European countries had almost fully recovered by the mid-50s' seems quite wrong to me as a European. Certainly, they had functional economies again and cleaned up the mess of the war, but that's hardly a full recovery. European countries were paying off war debt far longer than that too. The US had a huge economic advantage for several decades.

Things like price controls and the GI bill and the Cold War all helped in their way, but I'm not sure that that's a formula you can deploy going forward.

[pcrh]

After WWII, the US was pretty much the only functioning manufacturing nation for a decade. In addition, new markets opened up to US manufacturing due to the dropping of trade barriers with, and competition from, the markets of the British and French Empires as well as Japan. This advantage also lead to faster technological development in the US compared to other markets for a while.

These advantages slowly eroded as other economies were rebuilt. They nevertheless lasted well into the 1970's.

[Amezarak]

While that might have helped the domestic manufacturing market, international trade was not a substantial part of the US economy for a long time - in 1950-1960, imports and exports were 4-5% of GDP (with exports usually just barely north of imports.) They're triple that today. The pre-World War II import/export statistics aren't much different from the post-World War II import/export statistics, but the economy was much different. I don't see how any argument about international trade can apply, based on the data.

After all, it's not just competitors that are gone, it's customers too.

[FD3SA]

That, in combination with the ~50% tax rate on income and capital gains. Turns out, when you redistribute wealth, consumption increases so rapidly that the economy takes off.

That no longer is much of an option, as wealthy individuals have not only managed to reduce capital gains to ridiculously low levels, but also diversified their holdings throughout the globe. This makes taxation a poor tactic, as capital will just flow to tax havens as the rate increases.

Turns out that feudalism is the natural state of man, and reprieves from it are quite temporary anomalies.

For those interested in details, Thomas Piketty's Capital is an excellent reference on the subject. Also, the movie Inequality for All is a far more approachable presentation based on the book.

[fennecfoxen]

Naaah. The post-war revival in the economy was largely a result of having dismantled the FDR New Deal and its attendant control economy. No, not the Social Security part or anything like that - the part where politicians and regulators thought competition was bad for consumers, and spent the decade propping up their preferred cronies with price controls and selective bailouts and other such nonsense. With the politicians, of course, receiving ample campaign contributions in return. Taxes still damage the economy, it just turns out there are things that can damage an economy more than taxes. :)

Ah, the New Deal, when our leaders thought they could lead us out of famine and into prosperity by burning crops. Birthplace of big-agribusiness! Et cetera.

[djur]

Most of the price control/cartel parts of the New Deal were partly or entirely dismantled before the war. Of course, a new set of price controls were set up during wartime, but those were not New Deal programs.

What survived from the New Deal were the Keynesian stimulus programs, which were generally very successful, lasted through the war and up through the '70s, and some to this day.

[CamperBob2]

Turns out, when you redistribute wealth under specific historical circumstances that no longer prevail, consumption increases so rapidly that the economy takes off.

[hagbardgroup]

I disagree with you in part, but would rather not debate it online.

[x0x0]

I think it was more we where one of the few advanced economies not bombed into the ground.

[coldtea]

And yet the US has had far more wealth the next decades, per capita and in aggregate (adjusted for inflation) that it ever had back then, right?

So it's not like the new ruthless environment is a result of budgetary restrictions.

[hagbardgroup]

Sorta. It is too complex an issue to debate in detail on HN without a formal moderator. You are grasping an important part of it.

[watwut]

You grandfather was not only one working for Jack Welch. He might have benefited, plenty of others did not. Jack Welch laid off a lot of loyal hardwoking capable people in his days. GE cut all businesses in which the company could not dominate the market in first or second positions and I doubt those all were slackers. Were your grandpa be employed there, his treatment would be much different.

He used "fire 10% management" strategy for years, maybe even started that thing. I find suspect that someone who is not particularly ambitious man working 9-5 survived long in that stab back otherwise you will be one of fired 10% environment. Maybe he retired before or was stable due to connections?

There were bound to be many many people who worked hard, did their best, achieved a lot and then fired cause somebody had to be fired no matter objective absolute performance.

Jack Welch contributed his share to dropping loyalty. Whether the "old high loyalty" was better or not, Jack Welch is among those who destroyed it.

[hagbardgroup]

Quite possibly. My grandfather's working life stopped in the mid-1980s. I had hoped to communicate that the search for human villains and heroes tends to be misleading. Our actions are often reactive to larger, more complex trends in politics and finance.

It is easier to say "Jack Welch, big badman, such fat meanie" than it is to track all the myriad complex changes in tax policy, central banking, technology, society, and in other fields.

"I find suspect that someone who is not particularly ambitious man working 9-5 survived long in that stab back otherwise you will be one of fired 10% environment."

You're entitled... to your feelings. I would describe someone who worked for over 30 years without attempting to reach an executive position as 'not particularly ambitious.' I could also be lying. Or paid off by GE. I could even be Jack Welch.

Don't trust what you read on the internet.

[watwut]

I did not meant that you are lying, sorry to come across that way. I referred to system of hires/fires and culture that forms after fire x% every year is going on.

Your grandfather working life stopped in the mid-1980s, so it was all in the making. He had maximum few years of that. GE after Jack Welch was not exactly known for 9-5 easy going non-ambitious culture.

It is quite possible that GE had enough "fat" for someone working 9-5 without much ambitions to make to the top 20% who were getting large bonuses. Then, once they fired lazy, only ambitions and non-ambitions people remained. That is the point everybody complains about, cause non-ambitious follow and then it is fight about politics between remaining ambitions.

However, your grandfather retired a millionaire, so he must have been high enough in hierarchy or be outlier in some other way. Regular GE workers in that era did not retired millionaires.

[CamperBob2]

GE cut all businesses in which the company could not dominate the market in first or second positions and I doubt those all were slackers.

(Shrug) The ones who weren't slackers did better somewhere else. The ones who were slackers, Welch was right to fire. What's the problem here, exactly?

I'm not defending stack ranking -- it's stupid and counterproductive. But the notion that GE owes somebody a lifetime career at their shareholders' expense is unsustainable in a world that (rightfully) doesn't work that way anymore.

[mattgreenrocks]

> because the US no longer rewards loyalty in either the public or private spheres. It is in fact punished, as this writer notes

Loyalty is seen as weakness: "this person can't hack it on their own!" Everything is viewed through the lens of power, which makes for a highly toxic environment.

> Propagandizing for yourself to eke out a good living and career hopping all over the country is a pain in the ass. Both activities are tangential to producing profitable work over a long period of time.

Thank you.

In the absence of believing in institutions (employers), we now just believe in ourselves. To the point where we're actively encouraged to "do things and blog about them." Yes, we need to call attention to the things we've done because...well, everyone else is yelling about what they've done.

I understand the need to talk about what you've done, but it's beyond ridiculous how much self-promotion goes on. Sometimes I feel Twitter and HN is over 50% self-promotional. It's gross.

[pdonis]

> The new system is not 'better' than the old system, and is probably significantly worse.

It's worse if your goal is to work for one company for your entire career, and take whatever that company can offer you, yes. The new system no longer offers that goal as a realistic option.

However, by not offering that goal as a realistic option, the new system at least forces people to take responsibility for their own careers, instead of expecting someone else--"the company" or whoever--to manage their careers for them. I don't think that's a bad tradeoff, all things considered.

[justin66]

> So to people saying that Welch's advice was psychopathic bullshit, I say sucks to you. Grandpa worked 9-5 for Jack, was not a particularly ambitious man, and came out way ahead in return for his loyalty.

I'd have thought your grandfather was retired by the time Welch took over. In any case, Welch changed GE corporate culture away from what your grandfather would have been nostalgic about.

[cml]

I don't disagree with your sentiment, but I think that Mr. Welch's advice could be read as extremely cynical as well: maybe he's just telling people what they want to hear, which has the added benefit of encouraging (perhaps unwarranted) loyalty in lower-ranking employees. Like a self-serving Socratic "noble lie" for corporate types?

[hagbardgroup]

It was not a lie at the time. It worked out just fine. Why do you think he enjoys such an excellent reputation now? Reputation is just an effect of the sum of your interactions with people.

[pdonis]

> It was not a lie at the time.

I'm not so sure. I think company executives in the boom years following WWII knew perfectly well that a time would come when the boom would be over, and those companies would have to start focusing more on labor costs and downsizing, reducing pay and benefits, etc. They just didn't see any need to tell the employees ahead of time that all that was coming at some point.

In other words, the company executives were never under any illusions that their "work all your career at our company and we'll take care of you" rhetoric was actually sustainable in the long term. Only employees had those illusions.

> It worked out just fine.

It sure worked out fine for Welch, yes. It didn't work out fine for a lot of his employees.

[cml]

Your grandfather's experience is evidence that something was working well. But this is advice that Jack Welch is giving in 2014, and as someone who is clearly still trying to be a public figure I would expect him to be a bit more in tune with the current state of affairs. It just strikes me as a little disingenuous.

Edit: typo.

[analog31]

Because he wrote a self congratulatory book that gratified its audience?

[skybrian]

The original post was short on actual advice. My advice would be to make sure that what you do makes sense to the many people you work with, to people who don't know you at all in other parts of the company, and sometimes even the outside world.

This doesn't mean endless propaganda. It means taking the outside view, writing well, and perhaps sometimes giving presentations that are actually useful. It means earning trust at a distance, not backstabbing like you claim.