THE Jack Welch show is in town and middle managers are queueing up to hear what the business guru — who advises that 10 per cent of staff should be fired every year — has to say.

However, this year Welch acolytes will get two for the price of one. Those managers who get to meet the frank- talking 69-year-old sage who led General Electric (GE) for 40 years, will also meet Suzy, the mid-40s Harvard graduate who became his third wife last year.

She is the co-author of Welch’s latest book, titled Winning. They met when she interviewed him while Editor of the Harvard Business Review. Their affair led to marriage, but only after she was forced to resign from her job.

Meanwhile. the perks that Welch took as part of his retirement package from GE were revealed in a divorce settlement with his second wife, Jane.

Suzy Welch’s influence on “Neutron Jack” is stamped right through Winning — not least because it is written by the former journalist. It is hard to imagine Welch, the self-confessed workaholic, writing chapters about work-life balance or attending ballet recitals without the influence of the mother of four.

Mrs Welch also feeds her husband’s need for intellectual stimulation. The impression they give is that the weightier topics of the oil crisis, Sarbanes-Oxley, the failing German economy or growth in China are debated over breakfast, lunch or supper.

Top of topics that Welch expects to be queried on during question-and-answer sessions with business managers is Hurricane Katrina. The storm fits the criteria of a classic crisis management business case, as described in Winning.

However, for the President Bush-backing Welch, there is no pride in the way that some of his countrymen appear to have gloated at the discomfort felt by the White House.

“The residual feelings about Iraq gave detractors a subtle sense of satisfaction that the US bungled the handling of Katrina,” he says.

“When you don’t fill the vacuum in the midst of a crisis, the shame-mongerers all show up.

“There wasn’t a vacuum in World War II when Winston Churchill stood up here. There wasn’t a vacuum in 9/11 when Rudy Guiliani (then Mayor of New York City) stood up.

“But in New Orleans there was no mayor, no governor and the whole federal administration seemed to bungle it.”

He approves of the sacking of Michael Brown, the head of the Federal Emergency Management Agency: “I thought they treated him in a pretty good way and moved him along.”

That is not surprising from Welch, whose best-known business tenet is his “20-70-10 rule”, Every worker is separated into three categories: the top 20 per cent, the middle 70 per cent and the bottom 10 per cent — who are dismissed.

How might that rule be applied in an economy such as Britain’s which has near-full employment and a tight labour supply, or Germany’s, where unemployment is historically high and rising? “It works best in a place like the UK,” he says. “That’s the ideal. You take out the bottom 10 per cent and they will find jobs. If you’re trying to build the greatest enterprise in the world, your bottom ten is someone else’s middle 70 or even their top 20.

“A time of full employment is the ideal time to upgrade your organisation. People don’t end up on the street. Doing it in a recession, that’s what’s cruel.”

The rising price of oil is another topic that Welch expects to have to address. Some Europeans might be surprised by his take on the energy problem. He begins by talking about wind power and the increasingly vocal anti-wind farm environmentalists in the US.

“Americans complain that the environment is a cost. Off the coast of Massachusetts, Senator (Edward) Kennedy, the great Liberal of America and conservationist, is fighting against the wind farm because it ruins his view when he’s sailing. Yet they still keep driving their SUVs.

“Now you can’t have that and not want to drill in Alaska. Until the lines (for petrol) get long and the politicians are dealt with in an aggressive action, you won’t get a reaction.”

He says that GE’s decision to invest huge sums in wind farms is one of the best bets the company has made since he left.

Last time he was in London, US corporate governance was struggling to cope with the fallout from the Enron and WorldCom scandals.

Welch was an early critic of the Sarbanes-Oxley legislation, which introduced a raft of regulations that companies had to comply with. He says that it went too far: “It solved the need for a balm and that was all. It is murderous on small companies.”

He is relieved to see what he calls “judgment” creeping back into the Securities and Exchange Commission, the American regulator: “They’ve taken the black and white out and put some grey areas in.”

Yet he points out that it was existing US legislation, rather than the more recent regulations, that brought some of the most high-profile wrongdoers to book. “It was necessary. But it didn’t do anything to put anybody in jail,” he says.

Winning also attempts to answer the one question that every single audience asks the business guru: “My business is getting killed by China. How can I stay alive?” Don’t run away from China, he advises. “The interesting issue in China is that private enterprise is now equal to or maybe even bigger than the State. They have let the genie out of the bottle.”

He passes up the opportunity, however, to say whether private enterprise will lead to democracy in China: “That one’s way over my pay scale.”

THE WORDS OF JACK WELCH

'It's not that bosses want you to give up your family or your hobbies. They're just driven by the desire to capture all of your energy and harness it for the company'

- Welch on work-life balance

'Germany is in a vicious cycle that I think is going to come to a head. The state's going broke but I'm not sure how you change that psyche'

– Welch on the German economy

‘[When] it became obvious that Katrina was a crisis-management disaster, you knew someone’s head was going to roll. People need to feel someone has paid, and paid dearly, for what went wrong’

– Welch on Hurricane Katrina

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