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

Understand Development Need

 

Ready For Movement

Identify Possible Successor

  

Smooth business continuity
Improve staff morale It encourages “Hiring From Within”
Promote & Compensate
Develop & Train Successor

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:
Commercial Finance



Health Care


 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
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

Case Study : Discussion Session
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

Case Study : Discussion Session
Why do you think that involvement of the top leadership in the succession planning process is important?

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

Case Study : Discussion Session
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”.

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

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

Case Study : Discussion Session
Comment on the performance of GE under Immelt’s leadership.

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”

Case Study : Discussion Session
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

• Customer centric company

• Focus on Innovation • Retain managers to make them specialist • Focus on Long term strategies • Natural Leader

Jack Welch


Case Study : Discussion Session
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

Case Study : Discussion Session
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.

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

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

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:
  

 Books
 Human Resource Management – V.S.P Rao

Case Study : Succession Planning At GE

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