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Harry Elsinga, Manager of Executive Development at GE, reveals to HRM how leadership skills and a fusion of talent and imagination has built one of the most widely renowned executive teams in business today. By Leslie Knudson From the quiet hum of a refrigerator to the illustrious launch of the Mars Observer spacecraft, GE has continually lived up to its slogan: Imagination at Work. Embodying the spirit of imagination and philanthropy with its aim to invent products and services that help the world live and operate better, its no wonder that GE consistently ranks as the most admired and respected company in the world. Its stable share price, and an absence of any recent major acquisitions proves that GEs reputation is built on more than just fashion. Rather its steady admirable reputation comes from its longevity GE is the only company included on the original Dow Jones Industrial Index in 1896 that is still listed today and its ability to churn out inventions that transform how people live since its inception. Tracing its origins back to the ingenuity of Thomas Edison and possibly the most transformative invention of all time, GE has continued its long-standing tradition of bringing innovation to the world: from introducing the first U.S. jet engine, to kicking off the fiber optics revolution in communications, to lighting the first major league baseball night game, to making the silicone rubber that composed the boots Neil Armstrong wore when he took his first steps on the moon. Still GE hasnt slowed its voracious desire for growth and expansion. Led by global CEO Jeffrey Immelt, today GE is a diversified technology, media and financial services company serving customers in more than 100 countries and employing more than 300,000 people worldwide. Yet from kitchen appliances and medical devices to aircraft engines and plastics, the product that GE is probably most proud of, and most widely known for among its corporate constituents, is its leadership talent. Talent at the front Part of the reason that GE is so widely recognized and respected for its leadership talent comes from the factis that measuring and developing talent is always at the forefront of GE business strategy discussions. GEs operating system, referred to as its learning culture in action, entails year-round learning sessions where leaders from GE and outside companies share intellectual capital and focus on generating the best ideas and

practices. Conversations about developing talent and reaching business objectives are side-by-side so there is a continuous link. We really have a tight organization around how we combine our leadership meetings and how we approach our business, Elsinga notes. We have a constant cycle going on throughout the year where we talk about business and people at the same time. How do we develop talent in those businesses, how do we make sure that we have the right people to open a particular plant or to do an acquisition, etc.? Those discussions always go hand in hand. And its not a one-time kind of conversation; this is a constant, ongoing process. GE is very critical on their intake of talent and participates in behavioral skills interviewing in order to predict behaviors moving forward, specifically looking at how experiences people have had can translate back into GE. On the inorganic side, Elsinga notes that it also makes sure incoming talent from acquired companies is of the highest caliber. If you have acquisitions, it becomes very important to make sure you retain the good talent. If you buy a company because of its industry expertise or its market position, make sure that you retain the people that make it work and that they feel really good about the most recent transaction. Once an individual is identified as a GE caliber candidate and welcomed into the culture, a number of development and leadership practices shape the employee to fit the GE mindset. We run leadership programs that run for two years for HR, finance, commercial, marketing, IT and manufacturing, that bond people as a team together to their function and they also bond them to GE, Elsinga says. Not only does a leadership program build a strong network but it gives us great leverage in terms of knowledge and building capability and talent for the future. And GE puts its money where its mouth is when it comes to supporting such programs, investing US$1 billion in training and development annually to wean individuals into possessing and nurturing the kind of skills and traits necessary to become a leader. Advanced management training is offered at dedicated facilities in Europe, Asia, Latin America and Ossining, New York, which is home to GEs Crotonville facility, Americas first corporate university. GE also offers intensive management training outside of its facilities through leadership programs that maintain a curriculum for GEs highest performing employees. Beyond its sophisticated development system, its leaders are groomed with depth and substance through simple and natural approaches such as consistent ongoing dialogue and ingrained corporate values paired with various assignments for on-the-job development. Growth: the GE initiative While historically GE has been fairly active in both organic and inorganic growth, it has recently heightened its focus on organic growth with a new initiative to drive eight percent organic revenue growth. Launched in 2004, this seemingly lofty initiative represented two to three times the growth of global GDP and three percent more than what GE averaged historically. Yet GE achieved its goal in 2005 and is on track to hit its target again in 2006.

In order to meet this ambitious growth initiative, GE took a look at the attributes of companies that had long-term success with organic growth. After benchmarking and looking internally at what made their own leaders successful, GE identified five key growth traits: imagination, clear thinking, inclusiveness, external focus and having a domain expertise. As the first trait, imagination is the starting point for any kind of growth from GEs view. If you want to drive a growth culture, you have to have imagination. The second trait, clear thinking, involves being able to transform those imaginative ideas into clear business actions. You need to be able to articulate clearly, and also be clear in terms of your strategy and where you want the business to go, Elsinga says. The third trait, inclusiveness, is particularly important for GE given its wide-reaching global operations, but in any situation it helps to have people understand how their diverse roles fit together within the overall business scheme. Elsinga notes, Inclusiveness is very important since GE is constantly growing outside of the United States. If there are people from five or six different countries on a conference call, you need to make sure that you as a leader resonate with everyone in a constructive way. As a direct offshoot of inclusiveness comes the fourth trait, external focus, which is being able to expand your focus outwards. Elsinga explains, The external focus trait is simply: do you understand your markets, are you known in the industry and do you know your industry? Elsinga admits there may be some debate over the final trait, expertise. Expertise is the fifth dimension; you can argue whether its a trait or not but we think its a trait because it builds confidence. If you know a particular area really well, that brings confidence, which allows for creative risk taking and customers love to see that. As you can expect from a company whose roots are tied to Thomas Edison, imagination is touted as one of the top growth traits. Sustaining an imaginative climate at GE not only fuels growth but accounts for its versatility in terms of its range of products and services. A recent initiative to spur innovative growth called Imagination Breakthroughs, challenges each business group to identify breakthrough ideas centered around market-driven, customer-focused innovations that deliver solutions for customers and organic growth for shareowners. Ideas that are heralded as Imagination Breakthroughs are capable of generating at least US$100 million of new revenue in three years. But its not just specific initiatives such as these that help promote the primary growth traits. Sustaining and nurturing them on a day-to-day basis means an ongoing dialogue about how the growth traits tie directly to business objectives. You can only make it work if you tie it to the business, and it has to be a part of the business model, Elsinga says. These traits have to be real in your job today. So what we do is we drive initiatives in the organization where people have a dialogue about these things we call them growth dialogues for example, lets say youre working in HR in Europe or in a call center in Japan or in real estate in New York City, we say everybody should have a discussion with their team and leaders such as how does imagination look for us? How do we define imagination? After individuals complete the growth dialogues, leaders report back their findings and what theyre focusing on. GE also devised a matrix specifically for rating employees, based on the five growth traits and their components, to be

used as part of their annual review. Each individual identifies a development need and an action plan to improve on that trait. On the developmental side, GE also uses particular training courses at its leadership training center in Crotonville to offer more perspective into the growth traits. Measuring performance Beyond the idealized growth traits, GE also upholds four basic actions to drive performance: imagine, solve, build and lead. Stemming from those action-oriented qualities are the foundational values that represent GE and its common set of beliefs: passionate, curious, resourceful, accountable, teamwork, committed, open and energizing. This specific set of corporate values lies at the heart of GEs unique approach to leadership development. Ongoing appraisal processes and evaluations help to measure performance and also to sustain the values that GE leaders aim to embody. Your ticket to entry at GE, your base premise to be a part of this game, is you have to perform and you need to have the GE values, Elsinga says. We always make sure that we have an appraisal process that looks at both values and performance along with integrity. Then you can have several dimensions within values or performance that help to make things more granular. Theres a school of thought that believes you can have an appraisal once a year and talk about everything in one conversation to get it done for the year. Thats a school of thought that we do not apply in GE. We think that you should have multiple opportunities throughout the year to sit down with the employee to talk about career, performance or particular opportunities or issues that arise. The most important thing is that people feel encouraged to continue to perform. At the end of the day, its all about whether you have those conversations with the employee. I think the most important thing is we tell people on a regular basis, we think youre doing great, you delivered this to the business and by the way, here are the one or two things that wed like to see more of. To keep performance levels high, succession planning processes at GE have been polished to a degree most likely unsurpassed by any other company. GEs notorious annual Session C leadership and organizational talent reviews are designed to identify individuals suited for bigger roles or individuals who can be groomed to take on higher positions. The annual intensive review has enabled GE to announce successors the same day leave notifications are delivered. Constantly reviewing the talent pool on a variety of layers enables GE to always have an eye on future leadership potential. Succession planning is very important and I think it should be a big item for every organization. You always want to build capability in your organization. People love to be recognized for good performance and there isnt a better way to tie someones good performance than identifying that a person could be a player for role X, Y or Z. We really like to engage in succession planning in GE and do it on an ongoing basis. Its an ongoing dialogue not only at the highest level of the organization but at most of our professional positions in the company. HR at GE

What has also enabled GE to create and sustain such a high-performance workforce is its organizational approach that views HR as a critical component of their overall business strategy. While a number of organizations set the HR function in the shadows, GE fuses its business strategy with its HR strategy to create an open and successful approach to building a strong, results-driven workforce. In organizations that view HR as a separate and distant arm of the organization, Elsinga feels that it simply becomes an administrative function where HR does the bookkeeping but theres no touch with the employees. The big issue is it [HR] becomes way too administrative but it also becomes focused on inside hidden processes, so its not aligned with where the business is really going. You want to be aligned with business and business leaders, and if you are a separate part of the organization, then we dont think youre a player at the table. To keep HR aligned with business and out in the open, GE views communication as the most critical element. The most important thing that we see with the HR function is that there always is a constant dialogue, Elsinga says. Theres a constant dialogue with employees, with managers, with leaders, whether it is with a good employee or an employee that needs to improve. We dont like to hide things in GE. GE has also developed strong processes around feedback and coaching to create leaders who can establish good touch with their employees. HR can really help coach leaders to enable them to be really good at giving feedback and being great at being inclusive leaders for their organization, Elsinga says. You need to make sure that managers build the capability. Great employee touch is not something that everybodys born with but it can be learned and you can coach somebody to get there. In essence, GE views its leaders as an extension of HR with the capacity to communicate how each employee fits within the overall business strategy. Our leaders are capable to see across the prism so it starts with helping employees understand our product capability and the innovation that we have in our products and then combining that into the strategy with where the business is heading, Elsinga says. Its simply making sure people understand the latest technology and products, whether its a new refrigerator or a new MRI scanner. Communication is the key skill set to have and if you undermine your communication efforts, then youre losing an opportunity. GE has built its strong leadership flagship over the years through sophisticated recruiting, training, development and succession programs. Arguably one of its greatest and most valued impacts may be its power to effectively convey to each GE employee where their contribution fits within the grand scheme of the organization, which continues the legacy of a resilient and committed workforce who views GE as highly as its competitors do. We have all these great products so connecting our employees to them is what its all about, Elsinga says. Its explaining to them that were going to move into a new market or explore a particular area so people can tie their personal job to whatever the business strategy is. The key word here is contribution. If someone can see their contribution on an ongoing basis and tie that back to the business strategy then employees feel really good about the work theyre doing. Its about making that connection so the employee can drive home in the evening and say, wow, this was a great day because that particular thing I did today really contributes to the business.

The John F. Welch Leadership Center at Crotonville The centerpiece of GEs commitment to excellence in leadership development is the John F. Welch Leadership Center at Crotonville, the world's first major corporate business school. Nestled in the Hudson River Valley in Ossining, New York, the 53-acre campus was opened in 1956 when GE embarked on a campaign to train and educate managers better. Today Crotonville plays a crucial role as an agent of cultural change at GE with a mission to create, identify and transfer organizational learning to enhance GE growth and competitiveness worldwide. Through Crotonville programs, constituents are tackling new business problems from around the world and sharing knowledge with customers, suppliers and business colleagues. While the campus is also used for entry-level training programs open to everyone, the majority of participants in Crotonville courses are nominated by their business when they achieve certain career milestones. Today several thousand people each year from important customers and partners to top GE executives come together to identify opportunities and debate business issues by undertaking the training programs offered at the Crotonville center. The campus has expanded considerably since its early days. Courses are held in the education building, which offers three modern amphitheaters for large classrooms and breakout sessions, or the learning center which contains the great room to accommodate up to 150 participants as well as additional break-out rooms for smaller learning sessions. Both buildings are equipped with advanced audio, visual and computer technology to facilitate learning and sharing. Beyond the learning areas, the Crotonville campus resembles a small college campus, complete with a residence building, a recreation center converted from a 140-year-old farmhouse, and a number of fitness and recreation facilities.