Too Close for Comfort

Stories about romantic escapades rarely get much coverage in the financial press. Given that the business world's most prominent figures include people like Bill Gates and Alan Greenspan, this is perhaps not surprising, nor unappreciated. But leave it to Jack Welch, who pioneered so much else during his two decades as the chief executive of General Electric, to upend tradition.

As first reported last week in the Wall Street Journal, Welch--age 66, married and recently retired--ended up having an affair with Suzy Wetlaufer, 42, a divorce who edits the Harvard Business Review. Wetlaufer told colleagues that she became intimate with Welch after completing a series of interviews in which she asked him to elaborate on the management lessons contained in his best-selling autobiography, Jack: Straight from the Gut.

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In December Wetlaufer asked her boss Walter Kiechel, editorial director of Harvard Business School Publishing, to spike her article. She worried that the "close" relationship that had blossomed between her and the corporate legend might lead some to challenge her objectivity. Kiechel hastily reassigned the piece to two other staff members, whose Q&A; with Welch ran in the February issue of HBR, a monthly covering business-management issues.

But the resolution of this personal-professional conflict was not as tidy or swift as many would have liked, and four of her senior editors called for Wetlaufer to step down. Last Friday she did just that, after conceding that she had lost the confidence of her colleagues.

Wetlaufer is widely considered a talented editor who successfully oversaw HBR's transformation from a bimonthly to a monthly. But her staff was upset that she waited almost a month after the affair with Welch began before facing up to the potential conflict of interest--and even then acted largely at the urging of someone outside the magazine. That someone was Jane Welch, 49, Jack's wife, who reportedly knew about the affair and called Wetlaufer to question whether the editor could be neutral in her article.

Jane seemed more concerned with journalistic ethics than did Wetlaufer's colleagues, several of whom had known of the affair since it began last November, after Wetlaufer and Welch met for lunch at the clubby Manhattan restaurant "21." The meal was set up so the pair could be together for a photograph to run with Wetlaufer's Letter from the Editor. They reportedly had their first date that night.

Not long after, Wetlaufer, a gregarious and charismatic woman who often speaks with colleagues about her personal life, told several people in the magazine's Boston-area office of the relationship. "She was having fun," says a staff member. "She didn't raise any ethical concerns. She was on Cloud 9." At one point, she reportedly flaunted an expensive bracelet--a gift from Welch. "Much to our discredit," the staffer says, "no one came forward to challenge her the way we should have." Kiechel has organized a task force to clarify guidelines about author- subject fraternization. How this will affect Wetlaufer remains to be seen; her publicist says the relationship with Welch continues.

In an e-mail to her staff, Wetlaufer wrote that she plans to take a few weeks off but will return to HBR as an editor at large. This did not satisfy some employees, who complained at a meeting following Wetlaufer's e-mail that she would retain her office and continue to work among them. As a result, two senior editors resigned.

As for Welch, he's not talking. An assistant at his Shelton, Conn., office called the situation a personal matter, and his many fans probably agree. The state of his marriage is unknown. Stanley Bing, a columnist for Fortune and author of the new book Throwing the Elephant: Zen and the Art of Managing Up, observes of Welch's behavior that top executives' "sense of self is wrapped up so tightly with status that when their circumstances change, they can mutate into something unrecognizable to their closest friends--or interviewers." Or perhaps the key is that, as the authors of the article on Welch that finally ran in HBR point out, "no CEO exerted a more magnetic pull on the media than Jack Welch."