GE Case Study

Case Study : Succession Planning at GE

M.S.Ramaiah Management Institute, Bangalore | MBA (PRIST-A) | HRM Case Study

Presented By : Team Members

Introduction : Succession Planning

Succession Planning is the process of insuring a suitable supply of successor for current and future senior or key jobs arising from business strategy, so that the career of individual can be planned and managed to optimize the organization’s needs and individual aspirations.

It encourages “Hiring From Within”.

Introduction : General Electric

Established in 1892, Thomas Alva Edison merged his EELC with Thomson-Houston Electric Company to form General Electric.

Business Structure of GE at a glance:

Forbes ranked GE as the world's largest company. The company has 323,000 employees around the world.

In Fortune Magazine's 2005 "Global Most Admired Companies" list, GE ranked first overall.

By June,2010 The Ecomagination Revenue of GE will reach upto $25 Billion

Case Study : Succession Chart at GE

Case Study : Summary

Succession Planning Process at GE – The leading diversified business in the world

Growth of GE from inception and GE’s commitment to succession planning

It explains succession planning and leadership development at GE

It examine CEO’s succession planning under Jack Welch (GE’s CEO 1981-2001)

It shows differences between management style and ideologies of Immelt and Welch

Finally, the future of GE under the leadership of Immelt

Case Study : Discussion Session

Question:1

Critically examine the importance of leadership development and succession planning at GE and explain how it is undertaken at the company.

Why do you think that involvement of the top leadership in the succession planning process is important?


Answer:1 GE Adopted Succession Planning right from the Mid-

1900. As a part of Succession Planning, GE shifted its key candidate from one business to another to gain experience across all its business

GE consider Succession Planning as important as Financial Monitoring to differentiate “TALENT”

Major Tools Used at GE for Differentiating Talent Vitality Curves 9 Blocks Accomplishment Analysis

Under the guidance of Welch, Succession Planning become a Systematic Process with the help of various analytical tools and involvement of Top Management.


Question:2

Study and comment on the CEO succession planning process Welch followed.

Do you think Welch was right in deciding against retaining final CEO candidate, who failed to make it to the job? Justify your answer.


Answer:2 In 1994, Welch along with Conaty and Okosky created

a list of essential qualities, skills and characteristics an “Ideal CEO” should posses.

He also designed a “Hit-By-a-Truck” Succession Plan. Welch submitted a list of 23 potential CEO candidate

to the board same year. To have a closer look at potential CEO candidates,

GE’s board members had informal interaction with them – played golf and attended Christmas parties with them.

By 1998, The original list narrowed down to 8 serious candidates.

Welch with Conaty and Okosky developed “Eight Basic Objective for Selecting CEO Successor”. This helped Welch to choose final 3 candidates – McNerney, Nardelli and Immelt.


Answer:2

Yes, Welch was right in deciding against the retaining the final CEO candidates as they equally capable enough to run GE. So it would be injustice to try retaining them at GE, when they could easily become the CEO’s of any leading company.


Question:3

Comment on the performance of GE under Immelt’s leadership.

Compare Welch’s and Immelt’s leadership styles and ideologies.

Do you think Immelt is right in investing more in R&D and innovation, rather than on acquisition? Give reason to support your answer.


Answer:3 Immelt’s Performance at GE

Due to 9/11, GE failed to report double digit earning growth in the fiscal 2002

Measures opted by Immelt: Cut costs through layoffs Restructured GE business into 11 business groups which were then placed into 2 broader category – Growth Business & Cash Generator

Introduced a Customer Service program – ACFC He focused on “Customer Centric” strategy. In 2003, NBC Vivendi was formed with combined revenue of $13 Billion

Invested $100 million in R&D to form “Global Research Center”


Answer:3


Answer:3 Yes, He was right because in case of economic slowdown

the company need to make their own growth. He believed that with the economy slowdown, companies

could not buy growth through acquisitions and should instead look for growth opportunities through innovations.

He spent $100M to “revamp house of magic” (Global Research Lab)


Question:4

Examine the need for Succession Planning in Companies and identify various problems a company might have to face due to lack of succession planning system.

Many companies appoint CEOs from outside, rather than from within the company. Do you support this practice? Justify your answer, citing reasons.


Answer:4 Need: to have a ready pool of deserving candidates

to fill the leadership positions when need arises. Problems:

Affect business performance and reputation Moral of the company’s staff is affected Severance pay.

No, Because most companies better go for hiring CEO from within. The reasons are explained below: Well known about the culture Norms and rules of the company Experienced with the company environment and strategic Cost cutting

Case Study : Conclusion

Case Study : Queries?

Case Study : Succession Planning At GE

Thank You

GE Case Study

Documents

Transcript of GE Case Study