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Chief Learning Officer Peters says the company reviews its key leadership traits every five years David Yellen
GE Power & Water CEO Bolze shared lasagna and good talk with Immelt during one of the CEO's new sleepovers David Yellen
A couple of Fridays each month, Jeffrey R. Immelt hosts a sleepover. The chairman and CEO of General Electric (GE) invites one of the 185 officers of his company—and only one—to his home in New Canaan, Conn., for a leisurely meal. After a few drinks, some laughs, a plate of pasta, and a wide-ranging discussion of what's going on in the world, the two executives part. Immelt, 54, stays home while his guest heads to lodging at GE headquarters in nearby Fairfield. When they reconvene the next morning, things get personal. "We spend Saturday morning just talking about their careers," says Immelt. "Who they are, how they fit, how I see their strengths and weaknesses—stuff like that." One recent guest, Steve Bolze, president and CEO of GE Power & Water, calls it "a really nice discussion, a chance to get to know each other better."
What does it say about Immelt that after almost a decade in the top job he's looking for ways to bond with his team? "The personal connection is something I may have taken for granted before that I don't want to ever take for granted again," he says. "Sometimes there's a tendency to say, 'Well, this is an officer of the company. They've been here 20 years. They can figure it out. Do they really need me to draw them a diagram?' But you need to make the time."
The sleepovers are part of a major rethink by Immelt, a personal reevaluation of how GE equips its people to lead. The reappraisal was triggered by the global financial crisis, which shook the $157 billion-a-year conglomerate, almost destroyed its financial services unit, and sent its share price from $29 in the days before Lehman Brothers crashed to below $6. (It has since recovered to around $19, leaving GE's market cap, at roughly $200 billion, about half what it once was.) That led Immelt to become what he describes as "self-reflective on steroids" and to ask a hard question: "Was there one of my top 150 people who was thinking, 'You know, Jeff, commercial real estate shouldn't be so goddamn big,' but didn't have a way to say [it]?"
Immelt intends to spend this year exploring new ideas, which he describes as "wallowing in it," to decide how GE should shape and measure its leaders. He has solicited management suggestions from a broad range of organizations—from Google (GOOG) to China's Communist Party—and sent 30 of his top people to more than 100 companies worldwide. He's holding monthly dinners with 10 executives and an external "thought leader" to debate leadership. He launched a pilot program to bring in personal coaches for high-potential talent, a practice that GE once reserved mainly for those in need of remedial work. To increase exposure to the world beyond GE, Immelt is even reconsidering the age-old rule that employees can't sit on corporate boards. "I think about it all the time," he says. "You have to be willing to change when it makes sense."
To see GE openly scrutinize its leadership approach is a bit like watching Oprah take talk-show lessons. Despite questions about GE's ho-hum results (earnings from continuing operations sank 38% in 2009 and are expected to stay flat this year) and the familiar calls to break up the conglomerate, creating leaders is one area where GE's reputation remains unparalleled. Year after year the world sees it as the gold standard for talent. In a recent global survey of the best companies for leadership by Hay Group, GE ranked No. 1.
At a time when many view training as a burdensome cost center, GE continues to treat human resources as a sacred art, spending $1 billion a year on training and devoting weeks or months of each year to evaluating talent. Immelt spends a big chunk of April on little else. "Their investment is formidable," says Brooks C. Holtom, a management professor at Georgetown University's McDonough School of Business. "The bench is widely viewed as one of the deepest in the world."
Yet there's a growing sense that something's not right—and not just because of the "decade from hell" that Immelt wrote about in this year's annual shareholder letter, which concluded that "GE must change" to thrive in the new era. (Amid the crisis, he has cut the dividend and laid off 10% of his workforce while forgoing his own bonus for the second year in a row.) He's backing out of the NBC Universal media business, waiting for his big bets on carbon capture and nuclear technology to pay off, and contending with harsh realities: an appliances unit he couldn't sell, a commercial property unit that could be a drag on earnings for years to come.
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