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What GE’s CEO Succession Plan Can Teach Us

Planning for Jeff Immelt's departure took careful management across many years; it's a great example of how to get succession planning right, but companies shouldn't confine such care just to the top

Last month Jeff Immelt (above) was replaced as CEO of General Electric after 16 years at the helm of the company. Much of the coverage at the time suggested it was because investors had lost confidence in his leadership after GE’s stock underperformed in the past year.

But this was not a snap decision by GE’s board of directors. In fact, the planning for Immelt’s succession began not in 2016 or 2015, but all the way back in 2011. Susan Peters, senior vice president for human resources at GE, explained how in a LinkedIn post: “First, we knew it would take years to move potential candidates through the leadership roles that would develop them. We began intentional moves of key leaders to give them new, stretch experiences with ever increasing exposure to complexity.

“By 2012, we wrote the job description and then continuously evolved it. We focused on the attributes, skills and experiences needed for the next CEO, based on everything we knew about the environment, the company’s strategy and culture. We did research; studying over 100 external leaders and articles to get the best understanding of the attributes needed today and in the future.

“We pulled our internal and external research together to create our ‘enterprise leadership capabilities,’ a list of competencies essential for GE’s next great CEO. 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.”

Not Just for the Top Job

The board went on to evaluate a slate of internal and external candidates before deciding to promote from within, Peters explains, and gave the internal candidates exposure to increasingly complex roles to test their abilities and determine who could fill the CEO’s shoes. While media reports suggest that the timing of the succession was influenced by recent investor pressure, Peters says that this, too, was carefully planned, with Immelt and the board agreeing on a target date of this summer four years ago.

Planning the handoff of a company — especially a large one — from one CEO to another is among directors’ most important responsibilities. According to Peters’ account, GE’s succession followed all of the key steps recommended in CEB’s extensive research on succession planning. The company started the planning process years in advance of the expected transition date, looked closely at how the role was likely to evolve in the future, and created a job description for the new CEO.

This kind of forward-thinking strategy is absolutely essential for the succession of a CEO, but it is just as useful for other leadership positions. One firm in CEB’s networks that takes an innovative approach to succession planning across the board is MTS India, which prototypes critical roles its HR and business leaders believe the company may need in years to come, ensuring that leadership pipelines are regularly re-aligned to match MTS’s evolving needs.

 

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