GE Succession Planning - A Case Study

GENERAL ELECTRIC, NEW YORK

Case Study : Succession Planning at GE

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

Presented By : Team Members

Christ Biswasi Minz

Debarati Sen Gupta

Denny Singh

Kumar Shubham

Krishna Kumar

Kartikey Yamdagni

Kamal Nayan

Maneet Kumar

Manishankar Sonkushre

Man Mohan Anand

M.S.Ramaiah Management Institute, Bangalore | MBA PRIST(A) 2009-11

Succession Planning

Succession planning is a process for identifying and developing internal employees with the potential to fill critical organizational positions

It reduces risk

Create a proven leadership model

Smooth business continuity

Improve staff morale

It encourages “Hiring From Within”

Understand Development

Need

Identify Possible

Successor

Develop & Train

Successor

Promote & Compensate

Ready For Movement

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

Commercial

Finance Energy Transportation

Health Care

Infrastructure

Case Study : Succession Chart at GE

Thomas Alva Edition (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)

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

Q:1(a)

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

A:1(a) Adopted Succession Planning from Mid-1900.

Movement of candidates across all its business

Focus on “Talent Differentiation”

Major Tools Used at GE for Differentiating Talent

Vitality Curves

9 Blocks

Accomplishment Analysis


Q:1(b)

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

A:1(b)

Advantages of involving the top management in the succession Planning:

Better Assessment Ability

Employees will be trained under experts

Personal attention to key candidates

Build a health relationship between top management and employees


Q:2(a)

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

A:2(a) In 1994, Welch created a list of essential qualities,

skills and characteristics an “Ideal CEO” should posses.

Submitted a list of 23 candidates to GE Board

Organized informal events to look at potential CEO candidates

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

Developed “Eight Basic Objective for Selecting CEO Successor”.


Q:2(a)

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

A:2(a)

Yes, Welch was right.

Each candidate are equally enough to run GE

They could easily become CEOs of any leading company

Retaining candidates may results into personal as well as business conflicts

Work efficiency may reduce after retaining


Q:3(a)

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

A:3(a)

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

Introduced a Customer Service program – ACFC

He focused on “Customer Centric” strategy.

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


Q:3(b)

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

• Money making machine

• Focus on Acquisition • Focus more on Job Rotation • Focus on Short term demand

• Charismatic

Jack Welch

• Customer centric company

• Focus on Innovation • Retain managers to make them specialist

• Focus on Long term strategies • Natural Leader

Jeff.R.Immelt


Q:3(c)

Do you think Immelt is right in investing more in R&D and

innovation, rather than on acquisition? Give reason to support your answer.

A:3(c) Yes, He was right because in case of economic slowdown

the company need to make their own growth.

Growth opportunity through innovation helps in economy slowdown, rather than acquisitions

He spent $100 Millions to “Revamp House of Magic” (Global Research Lab)

New products/technology always attract customers more than existing one thus generates more revenue


Q:4(a) 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.

A:4(a) Need for succession planning

To have a ready pool of deserving candidates to fill the leadership positions when need arises.

Opportunities for internal employees increases Build a healthy relationship between Top Management &

employees

Problems due to lack of succession planning Affect business performance and reputation Moral of the company’s staff is affected Severance pay, In case external employee is hired


Q:4(b)

Many companies appoint CEOs from outside, rather than from

within the company. Do you support this practice? Justify your answer, citing reasons.

A:4(b)

No, Reasons are explained below:

Non-Familiarity with OC

They don’t understand norms and rules of the company

Increases cost

Demotivate employees

Case Study : Conclusion

Preparing future leader

Building-up the performer

Creating healthy working environment

Overall cost saving.

Case Study : Bibliography

Websites:

http://www.google.co.in

http://www.icmrindia.org/

http://www.ge.com/in/

Books

Human Resource Management – V.S.P Rao

http://www.google.co.in/

http://www.icmrindia.org/

http://www.ge.com/in/

Case Study : Succession Planning At GE

Thank You

GE Succession Planning - A Case Study

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