Succession Planning at GE
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Case Details:
Case Code : HROB056
Case Length : 14 Pages
Period : 1996-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : GE
Industry : Diversified
Countries : USA
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"You don't get succession candidates if you don't start
with a pipeline."1
- Gestrude G. Michelson, an outside director, GE, in April
2002.
The Successor
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In November 2000, General Electric Inc. (GE) announced that Jeff Immelt (Immelt),
the president and CEO of GE Medical Systems, would be the successor to Jack
Welch (Welch), the Chairman and CEO of the company. Welch was to retire in
September 2001, after a successful 41-year stint at GE. According to GE sources,
Immelt would become the president and chairman-elect of GE, and a member of GE
board and Corporate Executive Office, with immediate effect.
The announcement ended the battle that was viewed on Wall Street as the hottest
corporate succession race of the decade.
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The three candidates for the top spot at GE were Immelt, W. James McNerney (McNerney),
CEO of GE Aircraft Engines, and Robert L.Nardelli (Nardelli), president and
CEO of GE Power Systems.
Neither GE nor Jack Welch revealed exactly why Immelt had been preferred
over the other two. Welch himself went on record to say that the other
candidates were equally capable of running GE.
Welch wrote in his autobiography, that choosing between the final trio "was
the most difficult and agonizing [decision] I ever had to make….All the
three exceeded every expectation we set for them.
Their performance was off the charts. Any one of the three could have run
GE."2 According to Welch, it was his nose and his gut, which prompted him to
select Immelt. Analysts believed that the fact that Immelt was younger than
the other two aspirants at 44 years of age, contributed to his selection.
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GE is known to favor steady leadership over a long period. Since
Immelt was six years younger than his rivals, he would have an
opportunity to plan for a further 20 years at GE, like Welch who
became CEO about the same age, and stayed at the company to
implement his plans. Welch too characterized Immelt as "a natural
leader, and ideally suited to lead GE for many years," adding weight
to this view.
As soon as Immelt was selected to take over as CEO, the media began
to make comparisons between Immelt and Welch, and some expressed
doubts as to Immelt's ability to match Welch's charisma or
impeccable record. |
Many Wall Street analysts believed Welch was one of the most
important and influential business leaders of the 20th century, and clearly
Immelt would have to work hard to match the performance of his predecessor.
Succession Planning at GE
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