Best Practice

By Mel Duval  |  Posted 2007-06-12 Print this article Print

From its embrace of ITIL, its clever balance between centralized and decentralized IT, and its rigorous management training, General Electric's tech team follows best practices. It's won a number of IT awards. And it's helped GE grow into a $163 billion b

#3: Training CIOs For Excellence">

Best Practice #3: Training CIOs For Excellence

GE has long been lauded as a breeding place for top management talent, and indeed, many of its business and technology executives have gone on to lead other Fortune 500 companies. Jean-Michel Ares, a former CIO of GE's Power Systems unit, is now the CIO at beverage giant Coca-Cola. Stuart Scott, former CIO of GE Healthcare, is now CIO of Microsoft; Debora Horvath, a former CIO of GE Insurance, is currently CIO of Washington Mutual.

This reputation for breeding top management does not come by chance. GE carefully, and some even say ruthlessly, educates, develops and trains its managers at every step of their career. Management development programs are fine-tuned to match individual disciplines, such as information technology or finance, and training in such core practices as Six Sigma is expected for promotion.

In technology, the training begins as soon as an employee is hired out of college. New technology staff hires are enrolled into IMLP, short for Information Management Leadership Program. It's a two-year program in which new staff rotate through different GE businesses such as GE Plastics or GE Healthcare, and are exposed to a variety of aspects of I.T. A new recruit might, for example, work in an infrastructure environment maintaining network reliability for six months, then move into application development.

"By the time you graduate out of IMLP, you generally become a highly sought-after commodity within GE," says Carlson's Balagna. While most of the learning in the program takes place within a business unit, employees also take in some classroom training in such things as project management and finance the amount varies from individual to individual at the John F. Welch Leadership Development Center at Crotonville, N.Y.

GE opened the Crotonville institution on a 53-acre campus in the Hudson River Valley in 1956, and originally named it the GE Management Development Institute. It serves as the primary training site for future GE leaders. The campus features training rooms as well as three amphitheatres, one of which is affectionately known as The Pit. It was here that Jack Welch would often engage in one-on-one debates with GE executives over the company's future.

Once staff graduate from IMLP, they go on assignment for a period of two years. They are closely evaluated by their bosses during that time and take part in annual reviews, where they are assessed to see if they exhibit five traits deemed as key to becoming a leader at GE: imagination; clear thinking, or the ability to take imaginative ideas and turn them into business actions; inclusiveness, which often translates into being able to include key personnel from GE's far-flung global operations in decision-making; external focus, or the ability to understand the larger market; and domain expertise. If employees are evaluated highly in those areas, senior managers recommend them for further management training.

Management candidates go through a new-manager's course and are placed in a supervisory or management role within six months to a year of graduation. Later in their careers, they will go through a manager development course, where they are taught everything from finance to sales and economics, marketing, public relations and leadership qualities. The training isn't focused on becoming a good I.T. leader, but on becoming a good business leader. It becomes increasingly difficult to climb through each level of training, as only a handful of candidates may be recommended for the top levels. As a result, senior management talent is culled from the mass of GE's 319,000 worldwide employees.

Management training "is one of the things GE does better than almost any company," Balagna says. "They develop you, and then as Jack Welch used to say, 'let you take a big swing.'" Your big swing may be being placed at the head of a multibillion-dollar GE business unit where you are expected to produce mandated results.

"By the way, if you swing and miss, the results for you aren't that good," Balagna adds. "It's a very Darwinian culture, but it gives people the opportunity to take their best shot."

In Balagna's case, he was targeted to rise to the upper echelons of GE management. He was eventually selected by his then boss at GE Medical Systems division, current CEO Jeffrey Immelt, to enroll in the business management course, designed for leadership candidates who have been targeted to run a GE business unit. Across the entire operations of GE, only 20 to 30 people may be selected to take this course each year. Candidates are pulled out of their current positions and put on a special assignment by the CEO and GE's Corporate Executive Council.

Balagna, who went through the program in 1998, and his classmates were directed by Welch to go to Russia and Ukraine for one month, and to determine GE's business strategy for the developing former Eastern Bloc economies. Should GE invest there, source material such as steel or parts, or stay out? In the end, Balagna and the other managers in the program recommended that GE should only source materials, given instabilities in the region. It was a recommendation Welch accepted, and proved at the time to be fortuitous, as the Russian economy was hit hard in the wake of the Asian financial crisis in 1998. The ruble lost 70% of its value against the U.S. dollar.

Following completion of the course, Balagna was promoted from his CIO position to general manager of GE Medical Systems. He has gone on to implement many of the education and training programs used at GE when he joined medical device maker Medtronic and then Carlson, including replicating IMLP for his new technology hires. "For the people who work at GE, there's one thing that's understood ... execution is everything. Everything else is conversation," Balagna says. "That's the GE culture."


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