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School for CFOs

Unlike training programs at many companies, GE's Financial Management Program links to other programs that extend into upper-level finance management.
Alix Stuart, CFO Magazine
December 1, 2000

How does GE do it? As the recognized leader in corporate finance training, how does Jack Welch's $112 billion conglomerate manage to funnel all its young talent up through the ranks?

Certainly, Crotonville, the famed General Electric Co. training center in Ossining, New York, is the epicenter of short-term management development seminars for 10,000 of GE's 340,000 worldwide employees each year.

But there's a separate channel, starting with the company's two-year Financial Management Program, for delivering on-the-job and classroom training to 350 college recruits each year. They are the company's prized "FMPs," spending much of their time on six-month "sink or swim" assignments at every GE business in 36 countries. They don't graduate or move on to the next level until they've succeeded in a variety of carefully monitored real-world finance assignments, designed to teach them how to be full business partners.

"FMPs are taught early on to be linked with operations, and to think of themselves as chief operating officers," says GE Medical Systems finance manager Brian Lutes, who teaches a weekly class on strategy as part of the program, and mentors two to three trainees at a time individually. And unlike training programs at many companies, the FMP links to other programs that extend into upper-level finance management: the Corporate Audit Staff and the Experienced Financial Leadership Program. Along the way, FMPs serve as an army of eager young staffers for special duty, say, in helping to evaluate Honeywell's place in the latest megamerger in the GE universe.

Such on-the-job training is a time-tested approach, used in some form at GE for more than 80 years. But it isn't easily exported to other companies. "GE has so much scale, it's really difficult to replicate a program like that," says Goodyear Tire & Rubber Co. CFO Robert Tieken, a 35-year GE veteran. It's hard to standardize across Goodyear's worldwide operations, because there is a universe of "only" about 400 finance staffers there--hardly enough to monitor on-the-job training efforts to the degree necessary. Still, Tieken has used GE principles to enhance cross- training efforts within finance at the tire maker.

Real Risks, Real Opportunities
"The idea that work projects can be a basis for learning is just now really taking hold in executive development programs," says Joe Raelin, a professor at Boston College who specializes in work-based learning. Such programs often suffer, he says, because companies fear handing critical projects over to trainees. Yet, he says, "one of the tenets of work-based learning is that it be real work: the real risks, the real opportunities."

GE's training capabilities helped convince Jamie Vassallo, an international business major at Fairfield University, in Fairfield, Connecticut, which is also home to GE's headquarters, to join the program 2 years ago, when she was 22. She soon found herself in the broadcast operations division of NBC, working with business managers to deliver financial metrics she'd never heard of in an online "dashboard" format.

"The first couple of days I was pretty overwhelmed," says Vassallo. "You're given a lot of responsibility--and a lot of freedom--right off the bat." Crucial to her learning, she says, "was support from the vice president of finance for the project. We also got coaching on issues like how to deal with people who push back."

Senior-management support starts at the top. Chairman Welch champions a corporate "learning culture," and tells shareholders that GE "would never knowingly hire someone who could not adopt that behavior." CFO Keith Sherin, who joined GE in 1981 and was an FMP, advises his direct reports to spend at least half of their time mentoring junior staff.

For his part, NBC chief financial officer Mark Begor--a 1982 FMP--lauds the "creativity, fresh thinking, and new ideas" that newcomers like Vassallo contribute, and calls FMP "a significant enhancement" to his own 400-person finance department. Indeed, he handpicks all of NBC's 16 or so future FMPs from college campuses each year. "I want to make sure we get the cream of the crop," he says.

Jack Versus Mike
In a concurrent 12-week classroom component, FMP also draws on finance managers to link finance basics and business acumen. Lutes, in his seventh year of teaching, loves case studies. "I might ask my class why Michael Armstrong is breaking AT&T into four divisions," he says. Then, for perspective, he'll "look at what Jack Welch has done with over 30 business units."

In addition to the executive support, there are monetary incentives to encourage FMPs to swim rather than sink. Salaries, for example, are recalculated after every assignment, based on work performance and classwork grades. Ultimately, more than 70 percent of the CFOs of GE's top 20 businesses, and some unit CEOs, are former FMPs.

Now on the corporate Audit Staff, Vassallo says she hopes eventually to find "a leadership position" in either finance or operations. FMP "wasn't just finance," she says. "It addressed the question, 'How can we bring operations people into this game?'"

The teachers learn lessons, too. "There's real fulfillment in knowing I helped develop people who will fill jobs I've had," says Lutes. "Or even, maybe, my current one."


Some Notable Alums

FMP GRADSYEARS AT GEWHERE ARE THEY NOW?
Lawrence Bossidy1957- 1991Retired; former AlliedSignal CEO
Robert Brust1965- 1996Eastman Kodak, CFO
Dennis Carey1969- 1994Home Depot, CFO
Dennis Dammerman1967- presentGE, vice chairman, former CFO
Chris A. Davis1976- 1993ONI Systems, CFO
Arthur Fatum1974- 1990

CNET Networks, president of international media, former CFO

Andrew Hyde1979- 1994Salesforce.com, CFO
James Loree1980- 1999The Stanley Works, CFO
George Scimone1968- 1995Reader's Digest Association, CFO
Robert Swan1985- 1999Webvan Group, CFO and COO

Source: Company spokespeople

GE Finance Training: The Trail to the Top

Financial Management Program (FMP)
Annually, 350 recent college grads enter the two-year program and get six-month-long assignments. Courses taught by senior GE finance members supplement on-the-job training. Corporate Audit Staff (CAS) Stars from FMP and programs in other departments are on four-month rotations for up to five years. Trainee teams assess operations and recommend improvement. The program is supplemented by 15-20 days of formal training per year.

Corporate Audit Staff (CAS)
Stars from FMP and programs in other departments are on four-month rotations for up to five years. Trainee teams assess operations and recommend improvement. The program is supplemented by 15-20 days of formal training per year.

Experienced Financial Leadership Program (EFLP)
This program is for midlevel employees with leadership potential, but not CAS grads. Two years of finance classes are taught by university professors in tandem with regular work assignments plus short-term projects in other businesses. The focus is on decision-making, presentation, and mentoring skills.

Sources: General Electric, press reports




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