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Managing the CEO Sweepstake at GE
In 2000, there was a very public horse race going on at GE. Who would succeed Jack Welch? Here, GE’s Bill Conaty discusses how he and Welch handled the business world’s equivalent of the Kentucky Derby, with the media betting on one of three CEO candidates.
By Jessica Marquez
 n 2000, there was a very public horse race going on at GE. Who would succeed
Jack Welch? Here, GE’s Bill Conaty discusses how he and Welch handled the
business world’s equivalent of the Kentucky Derby, with the media betting on one
of three CEO candidates: Robert Nardelli, who at the time was CEO of GE Power
Systems, and who recently stepped down as CEO of Home Depot; James McNerney,
then-CEO of GE Aircraft Engines, who went on to be CEO of 3M and now is
president and CEO of Boeing; and Jeff Immelt, then-CEO of GE Medical Systems,
who ultimately won the top job.
WM: How did you keep morale up when everyone in the media was making bets on
who would win?
Conaty: We just banned running for office. In fact, running for office still
is the kiss of death at GE, because when you have people running for office you
have competition going on within the house. We are competitive as hell, but we
want to direct that at our real competitors. So when the media got involved, we
just let them do their thing. But internally, we just kept drilling down and
watching the top three individuals at the time.
WM: But how did you make sure that the three
candidates didn’t start competing with each other in a negative way that
affected morale?
Conaty: Jack told them within the final six months that, No. 1, we were
putting their replacements on the job. There would be one winner, and the two
that didn’t get the job would have to leave. Putting their replacements on six
months in advance was more of a shocker for them than it was for us. We also got
the opportunity to see how they managed their successors.
WM: These individuals represented some of your strongest talent. Isn’t there
something to be said for trying to keep the two candidates who didn’t get the
CEO position?
Conaty: There is, but in this case we felt—and Jack felt stronger than I did
on this—that the level of interest in the candidates as future CEOs of other
major companies would just be intolerable for us. While I personally was trying
to make the case that we could retain two of the three, Jack listened to me,
gave me my day in court, but decided that the pressures to leave would be too
intense. And he was absolutely right. There were companies that were holding
their CEO positions open at the time—3M was one of them, so was Home Depot. And
there were a couple of others. I think Jack felt that when he took over as CEO,
there was an internal horse race. There were five or six candidates in the
running and he just found that environment and internal competition to be
distasteful and dysfunctional for the company. He also felt that you have to
give one person the job and not have somebody looking over their shoulder hoping
they slip on a banana peel.
Workforce Management, July 23, 2007, p. 28
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