Oiling the Leadership Machine at GE

The nation's sixth-largest company likes to start developing its future finance leaders right out of college, as General Electric's Peter Mondani e...
David McCannDecember 16, 2011

Peter Mondani isn’t a CFO, but his to-do list couldn’t be much longer if he were. As vice president of financial leadership development and human resources at General Electric, his bailiwick seems almost infinite.

He’s responsible for recruiting, assessing, and developing future finance leaders. And for entry-level and continuing education for the company’s 16,000-plus finance employees. And for executive assessment, succession planning, and compensation planning for finance executives. And for HR leadership for the asset management, corporate finance, controllership, licensing and trading, tax, treasury, and global business-services functions.

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While Mondani serves at the intersection of finance and HR, his budget rests in finance, and he reports to CFO Keith Sherin. His line to HR is a dotted one although, he notes with a laugh, “either one can fire me.”

Mondani recently sat down with CFO to talk about how the company recruits and develops its finance staff. An edited version of the interview follows.

How do you incorporate young, newly hired finance people into the company?
We have a two-year entry-level program called the Financial Management Program [FMP]. During the financial crisis it shrunk to about 530 people, but this year we’ll end at 630. That growth was mostly in the United States, but next year it will probably grow by another hundred, mostly from growth markets like India, China, Latin America, Africa, and Australia. Those are all resource-rich, people-rich places.

The entry-level program is exactly the same wherever you are in the world. Everyone takes the same classes and tests, so they’re all grounded the same way.

What are your main recruiting sources for FMP?
We bring them in right out of college. In fact, in the United States we do not hire anybody with an MBA for FMP. Elsewhere we look at it differently, because the educational systems are so much different. But here we want new college graduates, and we’re looking broadly rather than just at those with finance or accounting degrees. We’re looking for English, history, math, physicswe just want the best athletes available who want to learn and grow. Many other companies have a very different approach.

In fact, our CFO and vice chairman, Keith Sherin, was a math major at Notre Dame. He did not take business courses. He came right out of college into our FMP. He later got an MBA at Columbia.

This year in the United States we’re hiring a little over 300 graduates. We recruit mostly from 30 core schools with which we’ve developed relationships. Maybe only 50% to 60% of them will have traditional finance, accounting, or business majors.

How do you identify those “best athletes available”?
We look first for [grade-point average]. If they’re not a finance major, we make sure they’ve have had some core analytical classes. But we want people who can be broad leaders. Have they participated in extracurricular activities? Have they been captains of sports or presidents of clubs? How are their communication skills? We don’t want them to do just one thing. We want to have a collegial environment.

It’s not a science. Just because you had a 3.8 GPA doesn’t mean you’re going to be CFO or a CEO. Some of it is gut instinct. That’s part of the art.

About 60% of our college grads come in through internships. The acceptance rate among [those who get job offers] is about 95% right now, which isn’t surprising in the current talent-hiring environment.

To that point, I’ve talked with people who tell me the market is very overstuffed with talent, while others say talent is scarce.
Well, we do have to locate the talent. We’re on campuses a lot. Our top executives, including Keith, do that, too. That is part of their role. Part of what they talk about is our inclusive environment. No matter what your background is or where in the world you come from, you can flourish in our environment.

What does GE do to develop top finance talent as quickly as possible?
After two years on FMP, there is a decision point. Approximately 40% choose to join the corporate audit staff (CAS), where they travel 80% to 90% of the time, moving every four months to a different GE business in a different part of the world doing primarily financial audits. This dramatically accelerates learning and experiences. After the first two years on CAS, it’s 50% up, and 50% out to the businesses. So by the time you’re here for three or four years, you’re starting to get recognized.

Keith Sherin spent nearly seven years on CAS. He demonstrated tremendous process skills, leadership skills, and analytical horsepower. When he left CAS, he began to assume a series of progressively larger finance-leadership roles in our aviation, plastics, and health-care businesses.

Do you also hire from the big public accounting firms?
That is a very different process. Since the days of Enron and the passage of Sarbanes-Oxley, the technical requirements have gone up tenfold. So strategically we made a decision not to teach basic accounting inside GE. We’re not developing technical experts. So we will hire people from the accounting firms with four to eight years’ experience. We also hire experienced tax people from those firms, or from industry, or from law firms. We do teach accounting topics FAS 133 and fair value, for exampleto our finance professionals.

GE is among the most multinational of companies. To what degree are you hiring local finance talent in your operations around the world?
We currently have 16,000 finance people globally, and 60% of them are outside the United States. That’s been growing the last few years, a lot of it through acquisitions. Our goal is to grow local talent, which helps us do business better in those parts of the world.

For example, if you’re in India and trying to drive growth there and put together deals, you’ve got to understand the local capital markets, laws, and regulations. A local professional based in India would be more effective.

There are probably a lot of different things you could do with your time. How do you prioritize? For example, you told me about being on a campus in Italy. That’s a pretty fair investment of your time.
A big part of my role is developing the next generation of talent. And to grow as a company, we’ve got to grow globally. In the last two years, I’ve spent at least 30% of my time in environments where in the past I wouldn’t have gone, like the Middle East, Africa, Latin America, India, and China.

We can’t be satisfied with where we are today. I’m making changes to our finance classes every semester to reflect today’s world. I’ve got to add new classes and take out cases that don’t apply anymore. Each year we have to go up a notch.

What classes do you offer outside your entry-level program?
There is a cadre of advanced finance classes. We teach FP&A in a class we call “Analyze.” There are also classes in organic growth, M&A, and risk management. Then we have another cadre of controllership classes, which cover a combination of basic fundamentals, controllership, and very technical areas.

To address a gap we’ve had, we’re developing a new course in capital markets for our industrial finance leaders who don’t have that experience base. Understanding how to get capital for deals is going to become critical.

GE is well known for rotating its finance talent to jobs around the world. Are they mostly in finance roles, or other kinds of roles, like operations?
Only about 10% do cross-functional roles, but we do rotate our finance professionals across different business models, geographies, and finance disciplines. These roles range from FP&A to controllership to operational finance roles supporting a commercial operation, supply chain, etc.

What is your view of the clear public sentiment that the pay for top executives at big companies is excessive?
It’s clearly an emotional issue, and in some sense a little bit irrational. From our perspective, our compensation goal is to attract, motivate, and retain the best talent to add value for our shareholders.

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