Translations are in progress.
Spanish, Korean, Indonesian and Japanese, more are being negotiated.
Directors & Boards
"Book it: Best bets for board reading"
From a hotelier's secret to the secret to GE's success, from being rich to being an imperfect board member, leadership insights from a roundup of new books on business
Builing blocks of the GE juggernaunt.
From The Secret to GE's Success by William E. Rothschild, copyrighted 2007 by The McGraw-Hill Companies, Inc. Published by McGraw-Hill
In 1950, Charlie Wilson selected his executive assistant, Ralph Cordiner, as his successor to lead General Electric, while Philip Reed remained as chairman. Cordiner was an appliance salesman who worked his way up though the sales and merchandising organization for the Edison General Electric Appliance Co. In 1939, he left GE and became president of Schick Razor. Three years later, he rejoined his former boss, Charlie Wilson, at the War Product Board. When Wilson returned to GE, Cordiner returned with him as his executive assistant. In 1950, Wilson turned over the company to Cordiner, who served as president from 1950 to 1958 and as chairman from 1958 to 1963.
Management by Objectives (MBO) is born at GE:
Unlike other major companies that narrowed their product lines after the World War II, Cordienr and Reed decided to continue to pursue the diversification route. To their credit, they recognized that managing a diversified and complex company required a different management approach and organizational structure. They therefore retained the services of academic and consulting experts to determine what changes needed to be made.
The GE team decided to embrace a new management concept, which became known as "management by objectives" (MBO), and to break the company into numerous decentralzied product departments. Product departments became the building blocks of the company. They were assigned the responsibility to develop competitive and business strategies and plans to meet the overall financial objectives: 7 percent return on sales and 20 percent return on investment.
This represented a dramatic change from the company's traditional centralized organization. Before MBO's, corporat management was responsible for setting the objecitve and developing the strategies, and the operating units were expected to execute them with little or no devaiation. In effect, the shift transferred power from the centralized funcitional units to the product department general managers.
Broad (and Employee) Stock Ownership.
Cordiner was a strong advocate of having a very large number of shareholders so that GE could not be controlled by any one individual or investment groups. The company decided that when the stock price reached $100, it automatically would be split to keep it within the reach of small investors.
In order to encourage employee stock ownership, the company implemented a stock bonus program that permitted employees to invest systematically in GE stock. For every dollar they invested, the company would add another 50 cents. This program--- which is very similar to the current 401(K) programs so popular today--was arguably 40 years ahead of its time.
Outside Board of Directors.
Cordiner wanted to have a board of directors that included a diverse and experienced group of outsiders. As he put it: "To assure that the interests of the owners will be protected, General Electric has 19 men, of whom only two (the Chairman and myself) are company executives. They are national, and come from a wide variety of businesses and industries, including education, food, agriculture,mining, manufacturing, marketing, banking and transportation".
Again this approach--- although certainly not unique to GE--- can be seen as ahead of its time. Today, many companies are scramling to replace insiders with outsiders on their board.
|
