Introduction

General Electric (GE) is a diversified electrical, financial, transportation and health care company. Since its inception in 1878 by Thomas Edison, GE has followed a strong culture of succession planning and leadership development. GE promotes its CEOs internally who possess business knowledge, are committed, innovative, and focused on organizational development. This article explains the foundation and growth of GE’s distinct talent management practices under the seven CEOs and their considerable contributions toward executive development programs. The main focus of the case revolves around Jack Welch and Jeff Immelt, the two CEO’s with same objective but different perspectives and principles of operation.

Analysis:

The primary reason for GE’s ultimate success was due to the substantial foundation laid by Coffin, which was further nurtured and developed by the five CEO’s in their tenure. It gave a sustainable advantage to the company and also strengthened their meritocracy based culture. But the forced ranking system developed by Jack Welch increased the complexities of the business. Below is an analysis of GE’s strengths and weaknesses.

Strengths:

Tracing its HR efforts initiated by Coffin, GE continuously developed strategic HR programs and policies for the development of its leaders. Some of the major programs in this direction were:

1. Croton Ville – foundation of first corporate university for leadership development.
2. Session C – involved individual performance measurement, development and communication dedicated for managers. It also included performance differentiation and activities of succession planning.
3. PLs – reward programs for exemplary performers.
4. EMS – increased accountability among managers and top 2% of PLs.

Criticism:

Although GE has an upfront approach toward its succession planning process and leadership development programs, some of the methods applied in these processes could be devastation for its success in the competitive business.

First, the performance assessment method is based on forced ranking of employees in 20%, 70% and 10% of exemplary performers, highly valued and least effective category respectively. It is likely that promising individuals are left off from the 20% or 70% category as the two categories are highly selective and inflexible. Second, this method of labeling could affect the morale of employees. Because, those on the 70% category might feel lost thus resulting in the loss of potential individuals. Moreover, only the top performers are entitled for the reward & recognition whereas rest is exempted from even a minimum bonus.

Issues/Problem statement:

1. Heavy downsizing
2. External factor – Negative impact on GE’s image due to the Enron downfall
3. Economic crisis
4. Voluntary attrition particularly among the best performing individuals
5. Categorization of employees under the vitality curve leading to the loss of promising individuals

International Issues:

1. Weak international recruitment strategies
2. Dissatisfaction in growth opportunities among employees
3. Lack of clarity in job promotions

As the company grew and expanded its business to global locations the need for more flexibility in performance measurement especially in position levels also increased. These issues left the company to ponder upon some major considerations:

Considerations:

1. Need for improvements in the performance measurement system, especially the vitality curve to retain its talent pool.
2. Need for a more strategic model in the recruitment of MBA graduates.
3. Need for an effective recruitment strategy to strengthen its position as an employer of choice globally.
4. Effective global talent management activities to attract and retain its global talent.
5. Need for ways to sustain the traditional development efforts of GE.

Solution/Recommendations

1. To combat management and employee turnover issues to intensify in future, GE should improve its employee engagement and motivation programs.
2. To address limitations to vitality curve, it’s important that GE modifies the program especially pertaining to rewarding the employees on the 70% category. Additionally, performance rankings should be made more flexible to enhance employee motivation and morale. It could be done by extending the 20% ranking category so as to justify the further distinction of employees.
3. For retaining employees under the 70% performance ranking category, GE should give more importance to individual performance development instead of distinct ranking. This will help to support individual productivity and prevent employee turnover.
4. To revamp its MBA recruitment efforts, the suggestion to offer a CLPELDT can be effective.
5. To become employer of choice GE should strengthen its global recruitment and retention efforts, GE should adopt a more strategic HRM practices. For instance, increasing the recruitment and development efforts of employees at international locations. Putting more efforts on developing their competencies will increase their prospects of promotion and growth for their retention.
6. To improve employee satisfaction, GE should work on making job promotions transparent and well-defined.

Conclusion:

GE has been an epitome in talent management practices. With its constant efforts of talent management, such as leadership development and succession planning, GE successfully built competitive advantage worldwide. The talent management practices of GE are inspirational. In order to sustain this competitive advantage, it is essential that it improvise its HR practices. Without effective strategies of talent management in this globally competitive world, it could be daunting for a company to remain successful.

References:

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Goldsmith, Marshall, and Louis Carter. 2010. Best practices in talent management: How the world’s leading corporations manage, develop, and retain top talent. Hoboken: John Wiley & Sons, Inc.

Derek Lehmberg, W Glenn Rowe, Roderick E White, and John R Phillips. 2009. The GE paradox: Competitve advantage through fungible non-firm-specific investment. Journal of Management 35 (5).

GE draws top talent with intensive training. 2004. The Bangkok Post2004.

Crainer, Stuart. 2009. From edison to immelt: The GE way. Business Strategy Review 20 (3): 18-.

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