Jack Welch is a celebrated, legendary CEO. In his two decades at the helm of General Electric, he grew revenues to $130 billion from $25 billion and profit to $15 billion from $1.5 billion. Market capitalization ballooned to $400 billion, growing by a multiple of 30.

His management became so revered that after he retired from General Electric, Welch launched the online-only business school, the Jack Welch Management Institute. This year, its MBA program was ranked one of the best by Princeton Review.

He’s a veritable leadership guru. So what does he say is the key to being a successful leader? What is the secret to inspiring and motivating people to do their very best?

“The trick is building truth and trust,” says Welch, speaking at the Synergy Global forum in New York City recently.

“If [your employees] trust you, they tell you the truth, and when you get the truth, you act quickly,” the octogenarian management expert says. “And so truth and trust play an enormous role. People have to trust you. You have to build in trust for people.”

As a business leader, building trust comes from doing the following three things, according to Welch.

Be Direct

Candor is critical to developing trust. And that involves being clear with everyone on your team about how they are doing and what they need to do to improve.

“I have spoken to over a million and a half people over the last 17 years around the world. Suzy [Welch] and I traveled to conference after conference for a while after I retired from the company I was with,” Welch says, referring to his wife, a CNBC contributor. “We asked that question and we didn’t get 10 percent of the crowd knowing where they stood,” he says.

“If you are a leader and you are a manager, shame on you if people don’t know where they stand. You have a moral obligation leading people’s lives, talking about their future and not telling them where they stand. It is incredible. It is a shock to me.”

Every three months, managers should write down for each employee what they are doing well and what they need to improve, says Welch.

Set the Vision

Your team needs to feel that you have a clear sense of where you are going as a company.

This is a message Welch has been espousing for decades. “Good business leaders create a vision, articulate the vision, passionately own the vision and relentlessly drive it to completion,” says Welch in an interview with Harvard Business Review in 1989, according to an online transcript.

And for your message to get through, it has to be streamlined, Welch says.

“For a large organization to be effective, it must be simple. For a large organization to be simple, its people must have self-confidence and intellectual self-assurance. Insecure managers create complexity. Frightened, nervous managers use thick, convoluted planning books and busy slides filled with everything they’ve known since childhood,” Welch says to HBR.

“Real leaders don’t need clutter. People must have the self-confidence to be clear, precise, to be sure that every person in their organization – highest to lowest – understands what the business is trying to achieve”.

“But it’s not easy. You can’t believe how hard it is for people to be simple, how much they fear being simple.”

Have Fun

Your team needs to feel like the office is the “the cool kid’s basement,” says Welch. “If you have a unit, you want the six people in your unit to think they have the world by the a-- and the same thing if you have a 400,000-person GE.”

Recognize and appreciate team successes. The office cannot have a dour energy.

Leaders need to regularly check in with themselves to be sure they are thinking about their employees first, says Welch.

“Do I understand my purpose in being here? It’s not about me, it’s about them. The workers. Am I making them so excited they hate being home on the weekend – they want to be in here, working? Am I making it so much damn fun here? Am I celebrating every little victory with a keg of beer or something else,” says Welch.

“We had kegs before you could spell Silicon Valley,” says Welch, referring to the tech mecca famous for its perks. “I am telling you, you have got to make your place... the place everybody wants to be.”

About the author

Catherine Clifford is the senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN.

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