NATIONAL HARBOR, Maryland—During a discussion at the Asian American Hotel Owners Association annual conference and trade show last Thursday, Jack Welch, the former CEO of General Electric and the darling of the business world, emphasized hoteliers shouldn’t bury their heads in the sand during this horrible economic climate. Instead, they should seize the opportunity to make their properties and companies stronger now so they can be much stronger in the future.
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Jack Welch
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“This recession offers more opportunities than it offers troubles,” Welch said in front of about 2,000 attendees. “The companies that can withstand this heat will come out the other end with opportunities they’ve never had before. Conserve cash, take care of your best people, and buy ’em or bury ’em when you think about competitors.”
The affable Welch spent the nearly hour-long session trading good-natured jabs with David Lieberman, senior media reporter, money section, for USA Today. He wasn’t shy about voicing his opinions and referred to politicians as jerks on a number of occasions.
There’s a little more clarity in the economy than there was four months ago, and that could be a positive sign, Welch said.
“Orders have flattened, so I think there’s somewhat of a bottom,” he said. “Inventories are at record levels of depth. We’ve never taken inventories out at the record we did this recession.
“We don’t know the shape of the financial markets,” he added. “One day you feel terrific, the next day you realize budget deficits are going up and the long-term outlook is looking very frightening. Uncertainty is the word.”
Forming a committee to look at how the economic crisis started and how to avoid it in the future is a good idea, Welch said.
“Smart people should look at that, not a bunch of grandstanding politicians,” he said as the audience roared its approval.
The former General Electric leader touched on a number of topics, including:
- President Obama’s performance: “If anything, he’s doing too much. He’s taking on too many fronts. Fixing health care, fixing the environment … he’s got a banking crisis and an economic problem. Keep the eyes on that ball. Multitasking is great but not for leaders. Leaders have to focus the people.”
- The Employee Free Choice Act: “What I’m afraid of is too many businessman will fall prey to a quote ‘compromise.’ Don’t buy a compromise. You don’t want an Employee Free Choice Act. It’s wrong. It’s ridiculous.” He said it didn’t make sense for a politician such as Nancy Pelosi, Speaker of the House, to be elected through a secret ballot process but to take that process away when it comes to voting for union representation.
- Increasing shareholder value: “Shareholder value is a product of your effort. You have a strategy to provide great service and achieve high occupancy rates. You don’t get shareholder value by saying that’s your goal. You’ve got to eat while you dream. Any jerk can squeeze, squeeze, squeeze. Anybody can say ‘come back in 10 years, I’m dreaming.’ Managers have to do both. You have to be planning the short and long.”
- Firing the bottom 10 percent of a work force every year: Welch equated it to Major League Baseball teams trying to upgrade their pitching staffs each year. “You want to keep raising the bar of excellence in your company. You want to make it better and better and better. In large companies, you can handle a bunch of turkeys hanging around. That’s not the case with small companies.”
- The type of employee he looks to hire: “You want somebody who’s excited, who you think will excite others.” Welch uses the “4 E’s and a P” during the hiring process: Energy, energize, edge, execute. “Wrap those four in a big P called passion. When you look for those in people, then you generally bat pretty well.”
- Opportunities in the hotel industry: “The real-estate opportunities in the hotel industry are enormous, as competitors of yours are falling by the wayside. The smart hoteliers are going to have better properties. … The hotel industry has done a helluva job in training upgrading and growing. … Globalization creates a better chance for the have-nots to have. … The winners of tomorrow will be those who take advantage of today in a big way. … Take care of your best people. … It’s easy to get caught up in defense right now. Make those bold moves. There will be a tomorrow, a tomorrow you can be strong in and win big in.”
