Higher Power

How internal training programs molded one CFO.
Sylvia Yu and Yang JianSeptember 30, 2005

Brandishing MBA degrees from universities in the United States, Europe, and Australia, Chinese nationals return in droves to make their mark on their nation’s booming economy. But only a relative few can match management education with experience in the real world. Many multinationals, keen to hire local employees but wary of the knowledge gap, are pouring money into management training programs. Credit General Electric, the U.S. multi-industrial giant, with tackling the problem with the biggest investment and most direct approach. GE has matched its recent expansion in China, to 12,000 from 7,000 employees in only four years, by importing its education methods and infrastructure along with its businesses.

GE is among the biggest investors in employee training worldwide — spending roughly US$1 billion each year. The company’s China Learning Center is located in the US$60 million GE China Technical Center, which opened for business in March 2003. Employees from GE and its partner companies typically come to the center for anywhere from half a day to three weeks of training. In 2004, the first full year after the center was built, 6,500 people attended training there.

Says Jeff Barnes, a GE employee for 21 years and now the company’s chief learning officer for China: “The desire of Chinese employees for education is something I have not seen in any other place I have been.” There is a rich range of courses offered at the Learning Center, including five levels of leadership, professional skills, quality and finance, and compliance and integrity.

But classroom training is only a small part of GE’s people development system. “It accounts for only 10 to 15 percent,” says Jiang Hongkuan, a leader and instructor in GE’s customer education and learning center operations. “Based on research, 40 percent of learning comes from stretching one’s abilities and 20 percent from role models,” he says. (The remainder comes from actually doing the job.) GE moved knowledge-based content out of the classroom a long time ago, putting it instead on-line to be shared globally internally. Classrooms are more like “workshops,” in which GE executives go through case studies and deliver motivational talks. This takes working time away from them, but does not dampen their commitment.

Barnes says that whenever top GE executives visit Shanghai, “I am always a priority. I seldom have people saying ‘no’ to me.” In China, GE tailor-made a China Leadership Development Program (CLDP) for its young workforce. Under the program’s methodology, trainees study for ten days in the center, go away to complete a project, then come back to the center to make a report.

A Test Case

The company has had its business established long enough in the People’s Republic to gauge the results of its educational systems on talented Chinese recruits. Nine years ago, William Wang joined GE Lighting (China) in 1995, fresh out of Fudan University in Shanghai. Now 32, he’s CFO of GE Medical Equipment (China). His experience is a case study in the range of leadership and training programs offered by GE to its employees, and how they helped him rise to the CFO job.

Wang completed his undergraduate courses in corporate finance at Fudan Universitya year earlier than usual. At the very first multinational recruitment session he attended, which was GE’s, he was attracted to GE’s FMP (financial management program) and gave up the place Fudan offered him on its corporate finance graduate program. He also declined a job offer from a local investment bank. In 1995, Wang joined GE’s first FMP class in China, a program that had been around for 85 years in the rest of GE.

“My first rotation was collecting overdue accounts receivable all over the country — northeast, Chengdu, Hunan, and Guangxi — I was all over the place,” says Wang. “I learned to negotiate with customers and eventually did get roughly 200,000-300,000 renminbi back. It was my biggest achievement in the first six months,” he says. FMP is a two-year program divided into four to five rotations, each lasting six months, during which trainees also study practical financial skills. Wang spent the first year in GE Lighting, starting as a sales financial analyst and moving on to fixed-costs analyst six months later, at which time he also took courses in manufacturing costs. In the second year, after fierce competition, he was sent to the headquarters of GE Plastics in the United States as a sourcing financial analyst. There, he mingled with FMP participants from the United States and Europe. “Everything moves much faster there,” says Wang. “It was 1996, and there was no email in China. I was very excited.” Six months passed quickly, and Wang returned to GE Lighting (China) to become senior costs planning analyst. He was also asked to be the finance manager of a US$10 million GE sales company in Hong Kong at the same time. The end of this rotation marked William’s graduation from FMP.

He was immediately promoted to the post of financial planning and analysis manager of GE Lighting (China), involved in procurement, manufacturing, sales, marketing, and human resources decisions. And he started to manager others — he had four direct subordinates. Six months later his team expanded to 16 when manufacturing finance responsibilities were added to his job description. On his team, Wang had several senior cost accountants who had worked on the factory floor for more than ten years. The pressure was intense. “I had yet to grasp the inside-out of the manufacturing costs of bulbs. However, I had to sign off the in-tray day in and day out. In the first few months, I signed off whatever came in.

Then I visited the shop floor and figured out the cost framework.” New challenges came immediately. The cash and treasury manager left the company and Wang was asked to take over those additional responsibilities. At that time, there were huge accounts receivable and cash was always tight. To make sure the company paid employees’ salaries on time, he had to monitor the cash balance in the banks and work out the optimum moment to cash in letters of credit — thereby maximizing interest income. “It was like fighting in battles all the time,” he recalls.

Tested and Stretched

Wang says his boss at GE Lighting would have liked him to stay on and assume responsibility for Asia. But Wang had his own plan. He was drawn to CAS (corporate audit staff), an elite team of more than 400 people headed by the former CFO of a major GE business unit who reports directly to the global CFO and the auditing committee. Trainees work in teams auditing GE business units across the globe. It is GE’s way of grooming future financial and business leaders. Nine of the 13 top GE CFOs are CAS alumni, and around 25 percent of GE’s Corporate Executive Council members graduated from CAS. CAS recruits internally those “who delivered excellent results”, primarily from GE’s entry-level leadership programs in finance (FMP), operations, IT, engineering, and sales. The top 5 to 10 percent of an FMP class makes it to CAS, which lasts two to five years, and even fewer make it to the fifth year to become executive audit manager. The longer a trainee stays, the higher the position he or she eventually lands. When the trainee becomes a senior audit manager in the fourth year, the global CFO gets directly involved in his career.

“The main missions of CAS are controllership, compliance, acquisition integration, and corporate initiatives,” states an internal memo. Auditing is inherently boring — big accounting firms recruit bright young graduates each year, only to see many of them leaving after a few years. Those impatient twenty-somethings tend to get quickly fed up with labor-intensive work and quit once they stop learning new things. But Wang’s auditing job in GE was “full of excitement”. CAS trainees are assigned to three four-month projects each year. On each one, their team members, reporting manager, auditing client, business environment, location, and job description are all new. Familiar with revenue recognition? Sorry you have to do an IT project now. An energy expert? Please figure out plastics. Comfortable with China? You are to board a plane to Tokyo. Trainees are exposed to different cultures, working environments, and leadership styles. Their potential is tested and stretched.

Wang joined CAS in 1999, and was immediately sent to Europe on an intellectual property rights project. He had to kick off meetings in a room filled with lawyers. “The pressure was enormous. I studied hard, trying to think imaginatively about possible breakthroughs. I realized that there were so many aspects having such a big impact on the company which I knew nothing about.” Surviving the first CAS project, the emboldened Wang volunteered for other projects outside of Asia and the familiar finance area. “I wanted to see whether I could survive again,” says Wang. GE dispatched him to a finance company in the United States, asking him to outsource the company’s back-office processes to India. Employee resistance to the idea was unimaginable, he says.

CAS auditors “do not define success in auditing merely as identifying problems. We are there to help make things better and create value,” says Wang, who remembers when he was promoted to audit manager and led a multinational team to audit a GE European reinsurance business. He and his team detected a portfolio with unclear profitability. After further investigation they found it was indeed a loss-making portfolio, neglected because of the disconnect between finance and operations. After consulting the business unit’s CEO and the European CEO, a consensus was made that the portfolio had to be closed. The team proved its value.

After that were more exciting projects — audit of a railway coach business; investment decisions on a large portfolio in a U.S. finance company; digitization in a Japanese reinsurance company; integration of a back office. Wang spent six years in CAS before becoming CFO at GE Medical Equipment (China) in February. Today Wang helps to run FMP in China. “At any time we have 40 to 50 people in FMP,” he says. “FMP is designed to gradually expose trainees to ever more in-depth financial knowledge. There are case studies, and learning and practice are tightly integrated. Be it management accounting or cost accounting, auditing or controlling, trainees have opportunities to apply what they have learned in classrooms. Rotations are in different business units, functions, and locations.”

Wang has also been teaching at the Learning Center for the past two years. “In GE, the heroes are not those who achieve number one in sales,” he says. “We look at people’s values, whether he or she helps other business units, has integrity, can innovate, and spends time and effort cultivating people.”