What City Management in Los Angeles Could Learn from Jack Welsh
In America’s business circles, Jack Welsh is widely regarded as a management superstar. He took over as General Electric’s Chief Executive Officer in 1981, and served in that capacity for over 20 years. In 2000, Fortune Magazine named him “Manager of the Century.”
During Welch’s reign, GE thrived; its market capitalization rose from $13B to $400B, revenue grew from $27B to $125B and earnings grew to almost $14B. Obviously the organization was doing something right! To understand GE’s success, one needs to know that Welch was, and is, a “true HR believer.” He understands how important employees, human resources, are in any organization.
As this column is written, Welch is kicking off the SHRM Conference in New Orleans. Among other things, he’ll tell his audience of 10,000 HR practitioners to put their money where their mouths are. He’ll say it’s not enough to recite such truisms as, “employees are our most valuable resource.”
Welch is expected to say that HR can, and should, play a game-changing role in the organization. He’ll say HR can be, should be, the engine that drives the hiring, appraisal and development processes in the organization. He’ll probably also say that too many companies relegate HR to the mundane busywork of newsletters, picnics and benefits.
Welch may challenge CEOs all over America to “elevate their HR head to the same stature as the Chief Financial Officer.” He’ll say, “HR matters enormously in good times. It defines you in the bad times. If ever there was a time to underscore the importance of HR, it has arrived.”
OK. So what could city officials learn from Jack Welsh? Well, before responding to Welch’s “game-changing” comment, officials should know that other authorities agree with him. In his 1996 book, Accountability In Human Resource Management, Jack J. Phillips writes: “Because human resources represents a significant cost to the organization, the effects of the function can influence the overall success or failure of the organization. Indeed, some organizations have failed because of ineffective HR policies. For example, many experts agree that much of the Eastern Airlines failure can be pinned on ineffective employee relations practices…
“On the positive side, the success of many outstanding companies today—3M, Proctor & Gamble, Motorola, Federal Express, Merck and Coca Cola—can be traced to effective HR policies. Chief executives, striving to improve productivity and achieve performance goals, are demanding; their cost-effective and productive approaches stem from their HR function. At America’s top organizations, chief executives are recognizing the link between people and the bottom line… HR departments are taking significant strides in reducing costs, enhancing customer service, improving profits, and boosting productivity…”
But while HR departments across America take significant strides, HR authorities in Los Angeles are stifled by city “leaders.” During the past 16 years, both the Personnel Department and the Board of Civil Service Commissioners were seized by lawless politicians. In the name of “efficiency,” three mayors blocked positive proposals, defended the continued use of invalid employment tests and unreliable employee evaluations. They gave little or no thought to employee productivity. Together, Mayors Riordan, Hahn and Villaraigosa dumbed-down City Service, and made a costly mess of HRM.
He’s late but Villaraigosa must surely know the time to underscore the importance of HR has arrived!