...atleast that name has GE written on it!
Here’s a quick test: Which amongst the following three (who were his top three generals) did Jack Welch choose to succeed him – Jeffery Immelt (GE’s CEO since 2001), Bob Nardelli (current CEO, Chrysler) and Alan Mulally (current CEO & Chairman, Ford)? Immelt, of course! That seemed obvious; and the brackets did help; but what about this one? Who has been the worst-performing CEO for GE in its history of over 100 years? Well, the answer’s simple again – Immelt! Alright, but here’s the biggest surprise, while Welch is arguably touted as the most successful CEO in the history of corporate America, he chose the worst performing CEO for GE, ever!
Of course, many wouldn’t agree to this hypothesis upfront, but how about this one? Welch himself criticised Immelt during a recent interview. These were his words: “Here’s the screw-up: you made a promise that you’d deliver this and you miss three weeks later. Jeff has a credibility issue.” Even in the most recently announced Q1, 2009 results (announced on April 11, 2009), GE disclosed a ghost-scaring 44.41% fall in its net income (that stood at $2.07 billion) as compared to Q1, FY2008. But wait! That’s not why Immelt makes it to the list of the top blunders in capitalism this century... The real reason is here – since Immelt took charge about eight years back, GE’s share price has fallen by a gut-wrenching 70.39% (from $40.83/share in June 2001 to $12.09/share as on April 28, 2009; NYSE) destroying about 95% of GE’s shareholder wealth. What’s worse, Immelt still feels that, “Amid a continued weak economy, we’re performing well and our backlog remains strong.” Now how does destroying shareholder value in the long term, and dangerous short-term double-digit decline in earnings indicate “performing well”? We fail to understand! Worse, to cover up the real ‘gloomy’ air floating around the GE campus, Immelt further announced a remorseless $12 million in bonus to reward performance.
Here’s a quick test: Which amongst the following three (who were his top three generals) did Jack Welch choose to succeed him – Jeffery Immelt (GE’s CEO since 2001), Bob Nardelli (current CEO, Chrysler) and Alan Mulally (current CEO & Chairman, Ford)? Immelt, of course! That seemed obvious; and the brackets did help; but what about this one? Who has been the worst-performing CEO for GE in its history of over 100 years? Well, the answer’s simple again – Immelt! Alright, but here’s the biggest surprise, while Welch is arguably touted as the most successful CEO in the history of corporate America, he chose the worst performing CEO for GE, ever!
Of course, many wouldn’t agree to this hypothesis upfront, but how about this one? Welch himself criticised Immelt during a recent interview. These were his words: “Here’s the screw-up: you made a promise that you’d deliver this and you miss three weeks later. Jeff has a credibility issue.” Even in the most recently announced Q1, 2009 results (announced on April 11, 2009), GE disclosed a ghost-scaring 44.41% fall in its net income (that stood at $2.07 billion) as compared to Q1, FY2008. But wait! That’s not why Immelt makes it to the list of the top blunders in capitalism this century... The real reason is here – since Immelt took charge about eight years back, GE’s share price has fallen by a gut-wrenching 70.39% (from $40.83/share in June 2001 to $12.09/share as on April 28, 2009; NYSE) destroying about 95% of GE’s shareholder wealth. What’s worse, Immelt still feels that, “Amid a continued weak economy, we’re performing well and our backlog remains strong.” Now how does destroying shareholder value in the long term, and dangerous short-term double-digit decline in earnings indicate “performing well”? We fail to understand! Worse, to cover up the real ‘gloomy’ air floating around the GE campus, Immelt further announced a remorseless $12 million in bonus to reward performance.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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