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What you can learn from GE’s 6-year CEO succession planning process

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With the announcement of General Electric’s (GE) next CEO, John FlannerySusan Peters, head of HR at GE, has shared the success behind the firm’s CEO succession process in a recent post

She wrote: “The environment we work in today demands greater leadership. As I’ve written before, the most effective leaders are the ones who can operate across multiple contexts and turn apparent chaos into opportunity.”

“This requires courage, grit, and resiliency. It was through that lens that we built our process and the Board made its decision. Like all big decisions at GE, we did our homework,” she said.

Having taken more than 6 years in the making, GE laid out its CEO succession planning through five key steps:

  • Moving key leaders to give them new, stretch experiences
  • Writing the job description and continuously evolving it
  • Observed internal candidates and evaluated both internal and external candidates against our key criteria
  • Carefully contemplating the timing of the transition
  • Interviews

With GE being aware that it would take years to move potential candidates through the leadership roles that would develop them, it began by first intentionally moving key leaders to give them new, stretch experiences with ever increasing exposure to complexity.  

GE_2011_q

By 2012, GE wrote the job description and continuously evolved it. The firm focused on the attributes, skills and experiences needed for the next CEO, based on everything it knew about the environment, the company’s strategy and culture.  

Studying over 100 external leaders and articles to get the best understanding of the attributes needed today and in the future, it pulled its internal and external research together to create its “enterprise leadership capabilities” – a list of competencies essential for GE’s next great CEO.

GE_2012_2

Peters said: “Our process reflected the recognition that CEO success is less about what they know going in and more about how fast they learn, experiences they have had, and their resilience.”

ALSO READ: Best succession planning consultants in Malaysia for 2016

Moving forward, the GE Board then observed internal candidates and evaluated both internal and external candidates against its key criteria, using multiple sources of data.

The data goes back years and includes candidates’ track-record of leading global businesses and functions, business performance stats, executive reviews, leadership qualities, and feedback from those with whom they worked.

After thoughtful deliberation, the GE Board then decided on internal succession as the best path forward.

“Our internal CEO candidates continued to be exposed to bigger, more complex roles that would test them as leaders and develop them for our biggest leadership jobs in the company, including CEO,” said Peters.

In the same post, Peters also underscored how GE has had only 10 CEOs over its 125-year history with Jeff Immelt being GE’s chairman and CEO for 16 years.

On that note, she noted how timing of the transition had to be carefully contemplated. During this process, the team at GE considered its business planning process, the portfolio transformation, and the appropriate period of overlap between the incoming CEO and outgoing Chairman and CEO.

GE_2013_3

Having the responsibility to announce the next CEO, she remarked: “Four years ago, the GE Board and Jeff Immelt agreed on a target date of Summer of 2017 as the right time to make the CEO transition.”

Finally, interviews were set at the last step. Over the past month, the GE Board heard directly from the candidates about how they view the CEO role and their vision for GE. The Board challenged candidates with difficult questions and listened deeply to their thinking.

GE_2017_7

Sharing some of the questions posed during these interviews, they included:

  • How would you position GE to win in that environment
  • What strategic changes would you drive, including capital allocation or portfolio management
  • What do you see as the most beneficial aspect of GE’s culture that would be important for you to maintain? What would you plan to change?
  • What is some of the toughest personal feedback you have received?
  • What professional or personal experiences have helped shape your global perspective?
  • How do you learn?

In conclusion, Peters commented: “At the end of the day these decisions are about people and delivering results for shareholders.”

Infographic / GE

Photo / 123RF

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