GE Succession Planning - A Case Study

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GE Succession Planning - A Case Study, talks about the succession planning methodology to choose Jack Welch.

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GE Succession Planning - A Case Study

  1. 1. GENERAL ELECTRIC, NEW YORK Case Study : Succession Planning at GE M.S.Ramaiah Management Institute, Bangalore | MBA (PRIST-A) | HRM Case Study
  2. 2. 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
  3. 3. Succession Planning  Succession planning is a process for identifying and Understand Development developing internal employees Need with the potential to fill critical organizational positions Identify Ready For  It reduces risk Movement Possible Successor  Create a proven leadership model  Smooth business continuity  Improve staff morale  It encourages “Hiring From Promote & Develop & Within” Train Compensate Successor
  4. 4. 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 Health Energy Transportation Infrastructure Finance 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
  5. 5. 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)
  6. 6. 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
  7. 7. 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
  8. 8. Case Study : Discussion Session 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
  9. 9. Case Study : Discussion Session 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”.
  10. 10. Case Study : Discussion Session 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
  11. 11. Case Study : Discussion Session 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”
  12. 12. Case Study : Discussion Session Q:3(b) Compare Welch’s and Immelt’s leadership styles and ideologies. • Money making machine • Customer centric company • Focus on Acquisition • Focus on Innovation • Focus more on Job Rotation • Retain managers to make them • Focus on Short term demand specialist • Focus on Long term strategies • Charismatic • Natural Leader Jack Welch Jeff.R.Immelt
  13. 13. Case Study : Discussion Session 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
  14. 14. Case Study : Discussion Session 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
  15. 15. Case Study : Discussion Session 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
  16. 16. Case Study : Conclusion  Preparing future leader  Building-up the performer  Creating healthy working environment  Overall cost saving.
  17. 17. 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
  18. 18. Case Study : Succession Planning At GE Thank You

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