SUCCESSION

PLANNING AT
GENERAL
ELECTRIC
INTRODUCTION
GE is Innovation at work
GE History
Succession planning

It is a process through which managers identify and

help groom their replacements before they move on to
another position themselves.

Steps of succession planning

• Assessment
• Development
• Opportunity
“Failure to plan for
succession is
planning to fail.”
J. K. Williams; President & CEO (ret) – Williams Buggy Whip Co.,
Inc.; 1902
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Immelt
Who is Jack Welch?
Taking Over GE
• Challenges from outside of GE
vEconomic recession
vHigh interest rates
vHighest unemployment rate since the
depression

Welch’s reaction to the Challenges

“Restructuring”
• Challenged everyone to be “better than the best”
• Sold more than 200 businesses and made over
370 acquisitions
• Insisted GE become more “lean and agile”
resulting
• Delayering: elimination of the “sector” level
• Downsizing: elimination of about 123,450 jobs
• Divestiture: elimination of an additional 122,700 jobs
• Replaced 12 of his 14 business heads
 Initiatives - Objective
• Work-Out
• Best Practices
• Going Global
• Six Sigma
• E-Business


“W e b rin g to g e th e r th e b e st id e a s – turning the meetings of our top

m a n a g e rs in to in te lle ctu a lo rg ie s. ” ~ Jack Welch
Did it work?
LEADERSHIP AND TALENT MANAGEMENT

GE identified “differentiation” as a key factor in its leadership

development and succession planning program
Categorization of
Employees
Starting the Process of CEO
selection
•
§ Started in 1994
§ Welch was to retire in 2001
§ Agenda was to find a suitable successor of welch.
§ A list of essential qualities, skills and
characteristics was created by Welch with the
help of Bill Conaty and Chuck Okosky both
related to the field of HR.
§
§
§
§
CEO Selection
• Integrity and values.
• Vision
• Leadership
• Experience
• Edge
• Energy etc.
CEO Selection
• A list of 23 potential candidates was submitted to
the management development committee of
GE’s board the same year.
• From 1994 onwards, these candidates were given
challenges to meet in order to identify their
strengths and train them in their areas of
development.
• Directors getting a feel to the human side of the
contenders
§ Feedback was given to Welch about every candidate.
•

CEO Selection.
• By 1998 after retirements, departures and
candidate’s failure to meet expectations, the list
of 23 candidates reduced to 8 candidates.
• 8 basic objectives were laid down by Welch in
order to select out of these 8.

8 Basic objectives:-
• Pick the strongest leader
• Look for the best complementary mix of corporate
executive officer skills.
• Retain all contenders through transition and into
the next administration.
• Minimize dysfunctional competition.
• Create opportunities for up-close and personal
view of the contenders before the final decision.
• Provide the necessary transition time given the
company’s breadth and complexity.
• Anticipate back-fill requirements for concurrent
selection announcements.
• Keep options as long as possible consistent with
the fourth and fifth objectives.
•
Robert Nardelli W. James McNerney Jeffrey Immelt
Age 52. Age 51. Age 47.
Chief of the GE power CEO, GE Aircraft Began his GE career in
systems that makes Engines (ran several 1982.
turbines and other divisions Held a series of
generators for during his 15 years leadership roles in GE
electric utilities. in GE). Plastics, Medical Systems,
In 1997 media guessed GE Appliances.
he would be a top
vote-getter.
CEO Selection.
• With meetings and private dinners, with all these
three candidates, Welch gathered their personal
opinion about the organization as well as on
topics outside the organization.
• As a part of these tests, they were also asked to
make a list of their successors.
•
CEO Selection.

• John Rice D a ve Jo e H o g a n
would C a lh o u n w o u ld re p la ce
replace w o u ld Im m e lt.
Nardelli. re p la ce
M c . N e rn e y
 Other
Finalists

• Both McNerney and Nardelli instantly became the two

most intensively recruited executives:
• McNerney, CEO at 3M
• Nardelli, CEO at Home Depot
Final Result
• Immelt-The new successor.
• Board approved the selection in November,2000.
• In September 2001, Welch retired and Immelt took
over.
•
Advantages of the new CEO

• Age was his advantage.

• Well-liked and popular.
• Demonstrated capacity to grow.
• Had a perfect blend of intelligence and edge.
• Focussed on long term strategies.
•
Was the choice correct?

• Focused on long term strategic vision.

• Made the company customer centric.
• Focused on research and development as well as
innovation.
• Had the potential to transform the organization.
•
Challenges for Immelt?

Jack Welch and Jeff Immelt

-USA Today
Business Restructuring by
Immelt
Growth Business Cash Generators
Commercial Finance Insurance
Energy Consumer and Industrial
Consumer Finance Products Materials
Advanced
Transportation Equipment Services
Healthcare
NBC-Universal
Infrastructure
Difference in Ideologies
Welch Immelt
• Making Generalist • Making Specialist
• Leader Centric • Consumer Centric
• Investment in Short • Investment for long
Term term perspective
• Successors from within • Successors from
the Organization anywhere
• Innovation
• Research and
Development
Myth Related with
Immelt
GE Now
• Operates in 100+ countries worldwide
• 300,000+ employees worldwide
• 2006 revenue - $163.4 billion
• 2006 earnings - $20.8 billion
• One of original six companies still listed
on Dow Jones index
Success Continues

• Continually finding ways to improve



• Accountability of managers


• Developing leaders


• Rewarding leaders

Leadership Continues

“A t th e to p , w e d o n ’t ru n G E like a b ig co m p a n y. W e ru n it like
a big partnership, where every leader can make a contribution not
just to their job, but to the entire Company.”
-Jeff Immelt, CEO
Letter to Investors
2005 Annual Report