General Electric (GE) is a well-known company, operating in more than 100 countries with over 300,000 employees worldwide. GE business ranges from aircraft engines and power generation, to financial services and television programming. GE’s global CEO Jeffrey Immelt takes one month out of the organization each year and travels from business to business to assist in the strategic HR planning process. According to Sam Sheppard, one of GE’s corporate giant,” The aim is to have everybody driving in the same direction with a clear vision of what that business is looking to deliver in that year.
Now obviously there might be initiatives and one-off instances that come along. We continually monitor whether it really is delivering the results that we are requiring” (www. GE. com) The company recorded revenues of $150,211 million in the financial year ended December 2010 (FY2010), a decrease of 3. 3% compared to FY2009. The operating profit of the company was $30,191 million in FY2010, an increase of 6. 7% over FY2009. The net profit was $11,344 million in FY2010, an increase of 5.
8% over FY2009. The company’s key products and services include the following: GE Capital: Commercial loans, Operating leases, Fleet management, Financial programs, Home loans, Credit cards, Personal loans, Auto loans and leases, Commercial lending and leasing products, Consumer financing, Commercial and industrial financing, to name a few. (Crainer, 2009). CASE SUMMARY The history of management development at General Electric is expanded on this case.
It focuses mostly on the impact of GE two leaders, Jack Welch who invested heavily in management development and insisted that managers be evaluated on how they lived up to GE’s values and his successor Jeff Immelt who did not even go through the normal process of corporate referral center. The abrupt turn with Jack Welch and how Chief Executive Director Jeff Immelt has been addressing GE’s challenges since 2003 and how he became the product of the GE “talent machine” GE LEADERSHIP OR TALENT MACHINE SUCCESSION CHART AT GENERAL ELECTRIC Thomas Alva Edison (1892) Charles Coffin (1894) Gerard Swope (1922)
Charles Wilson (1940) Ralph Cordiner (1950) Fred Borch (1964) Reginald Jones (1972) Jack Welch (1981) Jeff R. Immelt (2001) In order to succeed, companies know that they must have the best talent. This case summed up what GE’s current CEO’s corporate responsibilities faced with dilemma. GE seems to have mastered the talent management concept considering it has recruited the brightest and insistently continue to nurture its leaders.
“_GE attracts leaders with an extraordinary combination of attributes: vision, passion and deep sensitivity to the big issues that challenge the world around them. A remarkable thing happens when you bring together employees who are driven to make a difference: they do_. ” (www. GE. COM) Management talent development was emphasized at GE by Successive CEOs. First, from its founding in 1878 by Thomas Edison, GE was a pioneer of centralized corporate control and a leader in strategic planning. The top leaders were promoted from its own ranks.
Promoting from within is no easy job, particularly when operating in a global economy. Yet, he believed in a simple credo, “there is a way to do it better, find it. ” Charles Coffin who succeeded Edison in 1983 was named “the greatest CEO of all time” by Fortune Magazine in 2003 for his commitment in helping to create a pool of skilled managers by creating a meritocracy based on measured performance. As GE’s first executive officer, he was the leader of the group began a serious development of the business. Coffin’s consultative and participative style of leadership saved the company in the depression of 1893.
Ralph Cordiner emphasized marketing and developed a new corporate slogan: “Progress is our most important product. ” His book, New Frontiers for Professional Managers (1956) summarized his managerial philosophy. Fred Borch introduced GE to strategic planning and calmed things down a little from the Cordiner years. (Crainer, 2009). Jack Welch, former CEO of GE became famous for many aspects of his business career. He introduced the theory of forced ranking or forced distribution. Under Welch’s leadership, employees were stretched to the brink of impossible hence the nickname “Neutron Jack.
” Managers were pushed to produce or moved to another suitable position, and sometimes they were fired altogether. There was no time for complacency. Now, under Jeffrey Immelt, the ninth CEO of General Electric (GE) who succeeded the legendary Jack Welch, the company is patting itself on the back with its more than 300,000 employees in more than a dozen operating segments. His human resources initiatives were to share ideas by opening lines of exchanges between businesses and geographical area, _He says,”We are now down in some businesses to four layers from the top to the bottom.
That’s the ultimate objective. We used to have things like department managers, section managers, subsection managers, unit managers, and supervisors. We are driving those titles out…We used to go from the CEO to sectors to groups to businesses. _ _We now go from the CEO….. to businesses. Nothing else. There is nothing else there. Zero_. ” Putting emphasis on marketing and customer relationships, “_When you take out layers, you change the exposure of the managers who remain. They sit right in the sun.
Some of them blotch immediately- they can’t stand the exposure leadership. I firmly believe that an overburdened, overstretched executive is the best executive, he or she doesn’t have time to meddle, to deal in trivia, or to bother people. Remember the theory that a manager should have no more than six or seven direct reports? I say the right number is closer to 10 or 15, this way you have no choice but to let people flex their muscle, to let them grow and mature_,” targeting technology skills during the session C reviews, and investing in business. MANAGEMENT POLICIES
Immelt decided that GE’s focus should be on its relationship with its customers, building the best infrastructures and expanding its grip on emerging markets. Immelt put two of GE’s traditional strengths — process orientation and the ability to develop, test, and deploy management ideas — in service of a different goal. That meant designing a process that could reliably draw new revenue streams from existing businesses. He targeted and recruited MBAs with marketing management career interests. The first thing he did when he became CEO was throwing a billion dollars into Research and Development (R& D).
In a Harvard Business Review Article, when asked why he made such a move, his reply was: “After I came in as CEO, I looked at the world post-9/11 and realized that over the next ten or 20 years, there just was not going to be much tailwind. It would be a more global market, it would be more driven by innovation, and a premium would be placed on companies that could generate their own growth. We have to change the company — to become more innovation driven — in order to deal with this new environment. It’s the right thing for investors…” (HBR Interview, 2009).
With the intent to improve GE’s average growth rate, Immelt decided to turn GE’s culture upside down. His guidelines were as followed: expand globalization, rebuild the mutual trust between company and employees, becoming a leader in creativity and innovation. Mr. Immelt took over the CEO position in 2001; GE’s share price did not move up, in fact, stocks were down 15% while the major market indexes were up 7% to 11%. He tried to publicly revived GE scientific research labs, granting upon them vastly increased dollars. In doing so, he increased the amount of information GE disclosed to the public.
“It’s our goal to get out there and tell our story, and we think that the more clearly people understand it, the more they’re going to like us,” he says. NEW MEASURES UNDER IMMELT The measures Immelt opted for were: restructuring GE business, cutting costs through layouts, informing millions in R&D to form Global Research Center, introducing ACFC, a customer service program, focusing on Customer Centric strategy, long term strategies, natural leaders, retaining managers to make them specialists and innovation. He wanted the company to come down with new products, services and entering new markets like China, India and Germany.
By trying to diversify GE’s portfolio, Immelt added segments like wind power, security, cable television channels, water filtration, commercial and consumer finance, and oil and gas services. Some called his strategic shift a cultural revolution at GE. DIVERSITY AND LEADERSHIP AT GE With Immelt new approach, analyst thought that GE employees would have to reconceptualize themselves, since so much emphasis was placed on developing leadership traits that drove growth and innovation. Immelt promoted diversity among its top management in order for GE to relate to its customers.
In becoming chairman and CEO of GE, he knew that the company would not survive the regular status quo. He emphasized two of GE’s traditional strengths process orientation and the ability to develop, test and deploy management ideas in service of a different goal. That meant designing a process that could reliably draw new revenue streams from existing businesses. (Stewart, 2006). At an annual meeting with top managers in Boca Raton, Florida, Mr. Immelt stated:” After I came in as CEO, I looked at the world post-9/11 and realized that over the next 10 or 20 years there just was not going to be much tailwind.
It would be a more global market, it would be more driven by innovation and a premium would be placed on companies that could generate their own growth. We have to change the company to become more innovation-driven in order to deal with this new environment. It’s the right thing for investors. ” HUMAN RESOURCES MANAGEMENT Welch believed that outstanding employees should be nurtured by GE since they are the company’s engine and the bedrock upon which the company builds its future; yet he ruled through intimidation. Immelt approach was different; he became the regular guy who likes to cheer people.
Immelt was right in investing more in R& D and innovation rather than on acquisition. The economy was slowing down, so the company has to find ways to make their own progression. Growth opportunity through innovation would help in such economy and new products always attract new customers thus more revenue is generated. He understood the challenges he was presented with and in task of reshaping GE, he delivered well under pressure. The New York Times latest headlines, “G. E. Earnings Beat Expectations” seems to prove that GE is still on the right track.
Immelt said, “Today’s results demonstrate that we are achieving industrial growth and GE Capital continues to grow stronger. “(New York Times, April 2012). ? References Abetti, P. A. (2011). General electric at the crossroads: The end of the last US conglomerate? _International Journal of Technology Management, 54_(4), 345-368. doi:10. 1504/IJTM. 2011. 041579 Crainer, S. (2009). From Edison to Immelt: The GE Way_. Business Strategy Review_. 20(3), 18-22. Doi:10. 1111/j. 1467-8816 Stewart, T. A. (2006). Growth as a Process. _Harvard Business Review_, 84(6), 60-70