Jack Welch: 'I Fell In Love'

Jack Welch, the retired CEO of GE, is one of the most successful corporate executives in the history of American business. And he is obsessed with winning, which happens to be the title of his new book, "Winning."

But over his long career, there have been some bumps in the road.

There's been criticism that he fired too many people, and that he was greedy for taking a generous package of retirement perks when he left GE.

And there was ugly publicity a few years ago, when he was still married, about his romantic relationship with a younger woman, Suzy Wetlaufer. She's since become the third Mrs. Jack Welch.

Welch sat down with to set the record straight – not only about his successes, but about the negative headlines as well.

"I came into a company that had at least an extra 100,000, maybe 150,000 extra people. It was the early '80s. We were making television sets in Syracuse, N.Y., and the Japanese were selling them at the mall cheaper than we were making them," adds Welch.

"Now, it didn't take a genius to shut that operation down. And we took out lots and lots of people. And people started, the media labeled me Neutron Jack. It's awful."

"But not as awful as it was for the people who were let go," says Rather.

"No, we all had a tough go," says Welch. "Look, the worst thing a person does is fire somebody. Or lay somebody off. It's the most unpleasant moment of a leader's life. That's why people don't do it."
But in his new book, "Winning," Welch says bosses have to do it on a regular basis: get rid of the least productive, bottom 10 percent of their work force. Welch also spells out standards on how to reward top workers. He lists eight rules managers have to follow to be good leaders. And six other rules on how to be effective managers of people. But most important in the battle to win, Welch writes, is that employees have to be just as upfront as he is.

"At GE, you encouraged employees to speak up. To be candid," says Rather. "But what if I'm working at a place where they say, 'Let me tell you, if I say one word, I'm gonna get whacked.' What do you do?"

"That's a tough situation. But the facts are, that's one of the reasons I wrote this book is to get people to realize the value of candor," says Welch. "And we have to get that candor into the workplace. If people -- they can save so much time. They can become so much more competitive. Everything works faster and smoother. People are open, upfront. The team rallies around it."

He writes, among other things that "The world has its jerks. And sometimes, bosses are just jerks." So what if you get a boss who's a jerk?

"They'll find him. And in time, you know, if a couple of years go by and they don't find him, life is too short for you to stay," says Welch. "And you're a good employee. You either make your scene there and get moved out or you go somewhere else."

Has Welch ever been called a jerk? "Probably," he says. "But not that I know of."

By workers? "Oh, I'm sure," says Welch. "I'm sure."

Welch acknowledges the unions at GE didn't always love him, but stockholders did. Under his leadership, GE stock went up 4,000 percent, making it the most valuable corporation in the world at the time.

Even though he retired more than three years ago, the accolades for Welch keep coming in. Last November, The Financial Times published a special survey on the best corporations in the world. The No. 1 company was GE. "Love it," says Welch. "Love it. Love it. That really turns me on."

The newspaper also asked business leaders to pick historical figures, living and dead, they'd most like to have on their corporate boards. They chose Welch, Bill Gates and Winston Churchill.

GE stock made Welch a very rich man. He's worth hundreds of millions of dollars. And now that he's retired, he has more time to spend that money.

What does he indulge in? "You know, I never had a lot of things, so I'm a bit nouveau riche in terms of going to a hotel. I like great hotels, great sheets," says Welch. "I mean, silly little things. I don't like boats. I don't like buying airplanes, boats. I have no toys."

He didn't buy his new townhouse in Boston, either. He rents it, even the furniture. But Welch does like to live well. And his lifestyle became an issue when he was going through his divorce from his second wife, Jane.

There were ugly headlines accusing Welch of being greedy for the retirement perks he received from GE. He was no longer the CEO, but he was allowed to keep using company apartments and airplanes. Call it a golden parachute, but it landed him in the mud. The publicity wasn't pretty.

"The newspapers are filled with stories, 'Hey, this guy has perks all over the place. He took GE stockholders to the cleaners," says Rather. "Tell me your side of the story, because I've got to tell you, from reading the clips in the newspapers, pretty tough on you, Jack."

"Yeah. It was a moment. In 1995, I had a bypass. In 1996, the board came to me and said we want you to stay till 2000. Never had a contract," says Welch. "And they said we'd like to give you this enormous amount of stock. I said, 'I don't need stock. I'm going to stay. But I would like to keep what I have now: the plane, the apartment, the car, et cetera. And if you give me that when I retire, that's all I need.'"

No secrets?

"No secrets. Out there clearly, OK? File it with the SEC. Now I get divorced. My lawyers are meeting with my ex-wife's lawyers. What's the value of this plane, car, etcetera? So it becomes a big asset allocation issue," says Welch. "And my assets were now portrayed as retirement perks. Even though for five years, they've been disclosed as a retention contract."
GE offered Welch stock options, which he didn't take. "I got plenty of money," says Welch.

But would he have been better off to take it? "$300 million? I'd be much better with that in the pocket than the – than that little plane ride and the chauffeured car," says Welch.

So why didn't he take it? "Because I thought I had more than I ever dreamt I'd ever need," says Welch. "And I liked flying around in the company plane. And it was -- it was easier for me to do that -- and I had plenty of money. I didn't need more money. This is the opposite of greed. OK?"

What about the other perks he received: an apartment, airplane and Yankee tickets. Why couldn't he just buy it himself?

"Well, first of all, I don't go to the Yankees game, OK. I use them as -- I'm a Red Sox fan. And I use the Red Sox box once in two years," says Welch. "Look, why-- and why do I like the GE plane? Because it was very convenient to keep using it. That's all I wanted to do. I just didn't want to change my lifestyle."

"Turned out to be a big mistake," says Rather.

"Not really. I mean, look, you get divorced. Things happen," says Welch. "I have nobody to blame for the divorce but myself. I'm happy it happened. I'm thrilled to go on with life."

But even though Welch says the deal was perfectly legal, he was being skewered by the media, which put him on the same page with other stories about corporate greed. So he decided to renounce the perks and give them back to GE.

"I work for a company for 40 years. I love this company. I got two choices. Give the money back, renounce the perk," says Welch. "Then if I do that, I look like I did something wrong. I shouldn't have had it. Or keep the perk. Then I look like a greedy pig. Now, take those two choices, OK? That's a beautiful dilemma to be sitting on. So I decide I'll give it back, and GE got completely out of the press."

Welch says he was "120 percent innocent."

He also feels he did exactly the right thing when he met a younger woman named Suzy Wetlaufer. She wasn't married, but he was. The gossip was nasty and the headlines were just as bad. But Wetlaufer, a writer and former journalist, became the third Mrs. Welch.

Welch, 69, and the new Suzy Welch, 45, have been married less than a year. But they've already written a new book together called "Winning," and they call themselves not only teammates, but also soul mates.

They've managed to weather an ugly storm about their relationship, which began just after Welch retired as chairman of GE, but was still married to his second wife.

Wetlaufer was divorced and the mother of four children. She was also editor of the Harvard Business Review. She met Welch in 2001, when she showed up in his office to interview him for her magazine.

"When I first met Jack, I was terrified of him," recalls Suzy Welch. "I wasn't expecting a fun, laughing., enjoyable, exciting guy. I walked into his office like most people, with my knees knocking together. I was scared."

"He says, 'Come on in.' And I came on in, still sort of heart pounding in chest. We sat down. And I turned on my tape recorder. I had my list of questions, and I started down them," adds Suzy Welch. "And within 10 minutes or so, I noticed I was having an awfully good time chatting with this guy. And we had a great long conversation that covered a huge amount of territory."

All on tape? "Yes," says Suzy Welch.

Well, not exactly. "I've read several places that at some point he reached over and said, 'Turn the tape recorder off.' Did that happen or not," asks Rather.

"Yes," says Welch.

What made Welch want to turn the tape recorder off? "I wanted to know more about her," he says.

And he did. Was Suzy Welch flattered?

"I was perplexed by that," she says.

"It was a perfectly harmless exchange between the two of us," says Jack Welch. "It lasted probably about 10 minutes max, maybe five. I asked her about her kids, about her marriage."

"Did he make a run on you during the time," asks Rather.

"Oh, gosh, no, no, he didn't," says Suzy Welch, laughing. "Not that – it -- the first time we met and that first very exciting, wonderful interview, it's fair to say sparks flew. But nothing happened."

Suzy Welch then says she turned the tape recorder back on and wrapped up the interview. She wrote her article and, a couple of months later, went to New York to have a picture taken with Welch for the magazine.

"I went down. We had the picture taken together. And then we went out to lunch," she says.

"No, the way it happened was this way," says Welch. "I said, 'You want to go to lunch?' And she said, 'Yeah, let me get my calendar.' I said, 'No, today.' And so she said, 'OK.'"

Suzy Welch says things began to get serious a few weeks after that: "There was no denying what was happening. We were falling in love."

"Did you discuss it between yourselves at that time," asks Rather.

"We were not unaware of the fact that – circumstances -- I was divorced. But Jack was not," says Suzy Welch. "And the circumstances were not perfect or what you would wish in such a situation."
Suzy Welch decided she could live with that situation, being involved with someone else's husband. But she couldn't live with a professional dilemma. "The complicating factor, and it was a major complicating factor, was that we had an interview that was about to run with my name on it with Jack," she says.

She also says she was worried about the ethical questions that would come into play with that: "That's why I picked up the phone and called my boss, and said, 'We have to pull the Jack Welch interview. I've become romantically involved.'"

The article was pulled, and reassigned to other reporters, who conducted a new interview with the former GE chairman. That article was published the next year, and Suzy Welch resigned as editor.

Why did this story become such a media event? "Can you think of anything better? Here's the cake, OK, the cake that Suzy talks about making all the time. We got the editor of the Harvard Business Review, America's most prestigious sort of intellectual business magazine. We got a well-known CEO who had received a lot of accolades from the most admired company with the highest market value," says Welch.

"And the guy is married. He falls in love. He runs off with the woman. Christ, if I was a journalist, I'd write a scandalous story. It's a pretty good story. I mean, it's a good story. But I don't care. I fell in love."

"This is not my usual kind of question," says Rather to Welch. "But when you first told your wife what you just told me, and under the Jack Welch total candor, I'm assuming you told her? … Told her straight out?"

"I did," says Welch.

"And what did she say," asks Rather.

"Can we shut it down now," says Welch.

Of all the questions that 60 Minutes Wednesday asked Welch, that was the only one he couldn't answer. Part of his divorce agreement with his former wife is that he can't talk about it.

How hard was it for Suzy Welch to deal with some of the headlines? "It was shocking," she says. "And it was such, it felt like I was reading about someone else. I didn't – who they were talking about."

Did she regret getting into this relationship?

"You know, I never said that. I never said it," says Suzy Welch. "And I thought, 'This has got to pass. Because people have got to have better things to do in their life than read about this.'"

What was the worst of it for Welch? "Seeing her [Suzy] beat up because of this," he says. "Because I've been prince to pig, at least four times in my career. You know, neutron to guru, to genius, to bum. It happens. That's what happens in the CEO's career in 21 years."

So what is Welch really like?

"He's warm. He's funny. He's interesting at every moment. He's caring," says Suzy Welch.

"I love you," Welch says to Suzy. "No one's ever said so many nice things."

"I love you, too," says Suzy, to Welch.

"You know, those kinds of things that people say about Jack," she tells Rather, "I have a big disconnect with them."
At times, the Welches still seem like giddy newlyweds. And they say they spend a lot of time together. They wrote most of their new book on the top floor of their rented 20,000-square-foot townhouse on Beacon Hill, one of the most elegant and expensive neighborhoods in Boston. It has stunning views of the Boston Common.

What was it like, working with Welch. Was he obsessive? "Just about as much as I am," says Suzy Welch. "We are perfectionists. We are hungry to work all the time. We are entertained by every aspect of business and we never wanna stop working."

And they work, even when they take a stroll in the neighborhood, looking for new ideas, even analyzing neighborhood businesses to see what makes them successful.

Welch says he has an expression for it: "I'm probing and searching for the big 'Aha', the big 'Aha.' This is the way to win," he says. "Is it a new machine? Is it a faster machine? What's the big thing that gives you the edge? In any product, or any service you got, that's what you search for. … More 'Aha.'"

Jack and Suzy write about "Aha" in their book, and they even mention the local pizza parlor because they think it has great "Aha."

"The best strategy is always sauce. I mean, we would die for this sauce. You dream about it," says Suzy Welch.

"It's all in the sauce," says Welch, laughing. "Just simple as that."

Just up the street, the Welches think the successful local drug store, Gary Drug Company, has great "Aha" because it concentrates on paying close attention to its customers. So 60 Minutes Wednesday went inside to see what "Aha" looks like.

"Do you have 'Aha' here," Rather asked the pharmacist.

"We might," says the pharmacist. "I would hope so, if it's a winning enterprise."

"Service," says Suzy Welch.

"Yes," says the pharmacist. "That we have."

When Welch isn't out looking for Aha, he's talking about it before huge audiences. Even though he's been retired from GE for more than three years, he's still treated like a rock star. Yesterday, hundreds of people jammed into the Los Angeles Convention Center and paid big money to hear him talk about business and winning.

"I enjoy it. It's invigorating to me. I never know where the questions are coming from," says Welch. "What they're gonna say, how they're gonna say it. It's exciting. I like it."

Welch seems to feel just as excited about his new life, his new book, his new wife. Any thoughts about having children together?

"We thought about it. We talked about endlessly. And the answer is no," says Welch. "It's too much of an age difference. You know, if you want to talk about regrets, you can kick the can all the way down the street that we didn't meet at the same age, at the same time, 25 years ago. It really ticks you off. If you go there, it can really turn your crank the wrong way."

"We think about me being 80 and she's 55 or 56," adds Welch. "And you know, will I be a bumbling idiot someday, you know? I mean, it's a lousy thing to think about."

"Oh, I don't see you as a bumbling idiot. I could see you doing Bob Dole kind of commercials, maybe," says Rather, laughing.

There were lots of laughs the day 60 Minutes Wednesday spent with Jack and Suzy Welch, a considerable contrast to the rocky times and difficult questions they've faced since they first met.

What's the toughest question Welch has ever been asked?

"Do you think you'll go to heaven," says Welch.

His answer?

"It's a long answer, but I said that, if caring about people, if giving it your all, if being a great friend counts, despite the fact that I've been divorced a couple of times, and no one's proud of that. I haven't done everything right all the time. I think I got a shot," says Welch. "I'm in no hurry to get there, and to find out any time soon."