GE full of talent that's raidable
By Gary Strauss
USA Today
GE might bring good things to life, but lately, its former executives have been bringing good things to other companies.
Advertiser library photo • Feb. 29, 2000
Led by legendary CEO Jack Welch, GE is corporate America's top farm team. Fifteen former disciples of Welch run publicly held U.S. companies. Ten have become CEOs since 2000 alone.
Jack Welch leads corporate America's top farm team.
GE remains loaded with raidable talent, even with the recent departures of Power Systems chief Robert Nardelli and Aircraft Engines CEO James McNerney, who were quickly snapped up by Home Depot and 3M after Medical Systems CEO Jeffrey Immelt was tapped to succeed Welch.
"It's still the No. 1 company to recruit CEOs from," says Jeff Christian of Christian & Timbers, a leading executive recruiter. "There are probably 50 executives there who could run Fortune 500 companies."
Several quickly installed GE's management template at their new firms, revving up stock prices and re-energizing operations. Consider:
• TRW, up 21 percent since Feb.1 under David Cote, former CEO at GE Appliances. Cote is reducing TRW's dependence on the automotive industry, expanding semiconductor sales and slashing debt.
• Supermarket operator Albertson's, up 13 percent since April 23 under Larry Johnston, also a former head of GE Appliances. In a restructuring move, Johnston is shuttering unprofitable stores and cutting administrative overhead.
• Tool and industrial-parts maker Pentair, up 56 percent since Jan. 2 under Randy Hogan, who held several management positions at GE before leaving in 1994. Hogan has boosted earnings and cash flow by cutting costs and improving operating efficiency.
• Home Depot, up 24 percent since Dec. 4 under Nardelli, who is re-energizing the company with GE-style employee training, planning and quality control standards.
• Even troubled Honeywell, whose $42 billion merger with GE fizzled in late June. Honeywell is up 8 percent since July 3, when former GE executive Larry Bossidy took over as CEO.
Why is GE so fertile for picking CEO talent?
Under Welch's two-decade leadership, GE shares have rocketed more than 3,550 percent. Despite a softening economy, GE continues to post results upstarts would envy. Second-quarter profit was a record high, up 15 percent over a year ago.
Even derailed deals like Honeywell don't make GE gun-shy about making acquisitions to spur growth. Last Monday, the company struck a $5.3 billion deal for commercial lender Heller Financial.
Defined by market capitalization, GE is among the world's biggest companies. If they were stand-alone firms, GE Capital and several others of its 20 major divisions would be big companies themselves. And virtually all are No. 1 or No. 2 within their markets.
GE has long been a leader in identifying talented executives early in their careers. About 10,000 are groomed each year at GE's vaunted Crotonville, N.Y., Leadership Development Center. Many are seasoned at GE's far-flung businesses, where they're able to get a range of management experience and develop multiple skill sets.
"When you work at GE, you get accelerated learning at some very different industries," Bossidy says. "They (also) work on leadership development by coaching, by education and by mentoring. Over time, that makes you very aware. And very qualified."
Welch takes a personal role in building GE's leadership farm team. "He personally reviews performance evaluations and career plans of the top 500 executives in detail," says University of Michigan business professor Noel Tichy, the chief engineer behind GE's management training engine and co-author of "Control Your Destiny or Someone Else Will," whose latest edition is due out this month.
Welch is also legendary for conducting frequent, intensive reviews of scores of managers, says Tichy, to identify A players who could be tapped for major roles, B players who were ripe for nurturing and future promotions, and C players who are ultimately weeded out.
Those who deliver results and thrive under the intense, demanding Welch are viewed as potential successes at virtually any big company seeking senior management talent, notes retired GE Vice Chairman John Opie.
