When Dennis Dammerman became CFO of General Electric Co. in 1984, at the age of 38, he was still, as he puts it, “wet behind the ears.” He thought he knew a lot about finance, he says, “but this was a different world, and I was operating at a whole different level.”
That insight is key to the emphasis Dammerman puts on developing a broad and deep finance team–broader and deeper, in fact, than his own finance operations need. Graduates of GE’s finance training program now head 5 of the company’s 12 businesses; others have landed CEO and CFO positions at such companies as AlliedSignal, Delta Airlines, Goodyear, and Readers Digest–a graduation record that Dammerman takes in stride. “A winning finance team is one that continually renews itself,” he says.
The demand for GE finance talent is easy to explain. “Under Dennis’s leadership,” says GE chairman and CEO Jack Welch, “the GE finance team has learned to cross every traditional functional boundary in search of ways to enhance the company’s performance and global growth.” And no one can deny that the Fairfield, Connecticut-based giant has grown. Since Dammerman became CFO, in fact, the company’s revenues have increased threefold, from $27.9 billion in 1984 to $90.8 billion in 1997, while net earnings have jumped from $2.28 billion to $8.2 billion. It is also estimated that over the past 20 years, the company’s stock price has outperformed the market by 40 to 50 percent.
Although much of that growth can be attributed to Welch’s leadership, backing him up is a deep bench–7,500 well-rounded finance professionals, whose development entails a rigorous process run by a team that reports directly to Dammerman. The team’s main goal is to groom finance professionals who are adept at growing the beans as well as counting them. At its core is the Corporate Audit Staff, a four-to-five-year assignment awarded to top performers, many of them from outside the finance function. GE auditors perform compliance, controllership, and operational audits around the world, in four-month rotations, interspersed with periods of intense training. The program serves not only to train potential leaders, it’s also one of the most significant vehicles the company has for disseminating best practices across its wide range of businesses.
The rotation may be the company’s best-known and most widely copied technique, but it’s far from the only one. GE offers an entry-level financial-management program, and recently developed a two-year program for more- experienced financial managers who choose not to pursue the audit staff. It also offers numerous stand-alone courses. “GE offers the best in hands-on experience and prepares young people for as much responsibility as they can handle,” P. Norman Roy, president of the Financial Executives Institute and a graduate of the GE training regimen, said in CFO’s October 1991 look at the “Corporate Ivy League.” More recently, Dan Cowen, manager of finance training and education at Chrysler Corp., added that “GE is considered the benchmark. It’s one of the leaders in innovative training and cultural change. And it’s very open on sharing its breakthroughs with other companies.”
While formal training programs like these are essential, Dammerman says, even more important are the processes–both formal and informal– that keep leadership development at the top of the agenda. Top finance officials visit different business units annually, in what the company calls a Session C, to identify promising talent and help it flow up through the pipeline. In addition, Dammerman says, the company tries to keep top executives’ attention continually focused on talent development. “Every meeting I go to, every time I run into a group of people, I’m not only learning what they’re trying to tell me, but I’m appraising them,” he says. “For us, every meeting becomes a Session C.”
On a recent visit to Hungary, for instance, Dammerman and Welch took time for lunch with a group of more-junior employees. “When I visit a business,” Dammerman says, “instead of hanging around with the mucky-mucks, I make a point of hanging around with young, high- potential people.” In addition, Dammerman, who has 25 to 30 direct reports, makes it a point to mentor top talent. Although he says he “can’t spend half an hour a day coaching each of [my reports],” he tries to coach one or two.
A central concept at GE is the “stretch” job– a job that gives talented people just a bit more than they can handle. That’s what Welch gave Dammerman when he made him CFO. “Jack believed that even though I wasn’t ready, I’d get there,” Dammerman says. “That’s the way I like to go with other people.” GE’s finance track includes time spent out of finance; audit staff members, for instance, spend around 30 percent of their time in operations. That kind of varied career path gives finance officials a higher level of credibility within GE. “Their peers know they’ve lived with operating pressures,” he says.
Diversity of experience is also good for the finance function, Dammerman argues. “I think I’m a better CFO because I ran a couple of businesses.” He’s running finance for the good of the company, he says, not for the good of finance. “It used to be that if you left finance to go into another function, you were blackballed. But we train people, and if they’re attracted to another function, that’s great. If I can’t attract them back to finance, that’s my problem, not theirs.” Dammerman himself ran GE Capital’s real-estate business and was the person Welch tapped in 1994 to rescue the floundering Kidder, Peabody unit, which was finally sold to Paine Webber Group Inc.
Dammerman’s current preoccupation is with increasing the global diversity of GE’s leadership. “I purposely use the word global,” he says, “because diversity has to encompass people of other cultures and nationalities. We always need more women and African-Americans and Hispanics, but we also need to have more Asians and more Europeans.” In pursuit of that goal, he’s set up a task force of talented minority employees to determine what the company needs to do to help move them into its top ranks. “We’re going to run workshops, get feedback, then go back in six weeks and see what more we can do,” he says. “I don’t know any other way to do this except by getting people together.”