All in the Grooming

GE and American Express have developed fast-track programs for the top talent in their finance teams. But is the star system the best approach?

Building in corporate efficiency and accountability through in-house training is not, however, a route that all companies can take. As Hellmut Schutte, dean of the business education institution INSEAD in Singapore, points out, most companies don’t have the resources. And even if there is money for grooming would-be finance chiefs, human resources may be a problem. Not every company can afford to lose 20 or 30 people to a training program, and not every one of those same people is likely to be capable of training. “If you’re a good manager, it doesn’t mean you are a good teacher,” says Schutte.

Even if you are, it may not be enough, according to Larry Lang, professor of finance at Chinese University in Hong Kong. A textbook-perfect teacher dedicated to turning out the “exceptional finance professionals” of a GE-scale training program may find the textbook itself is inadequate. “You know these general kind of training materials are not successful for China. There’s nothing wrong with the theory but you need in-depth discussion, you need local cases, you need to adapt for the local environment.”

Getting the right local spin on training materials for CFOs is not as important as it is for CEOs, says Lang, but it is still vital for finance chiefs to know the market and to be more than aware of the law from liability down to the ever-changing minutiae of the rules on IPO reporting.

The other, perhaps lesser problem is that instilling a strong sense of corporate culture could result in narrow-minded rather than single-minded leaders. “That’s the drawback with any internal program,” says Schutte, “it leads to in-breeding. Some companies have a corporate culture and they manage—although I don’t like to use the word—to clone each other.”

That said, Schutte concedes that big in-house training programs can spawn plenty of healthy debate among “graduates”, particularly if their corporate alma mater has a diverse range of businesses. He also points out that there are Asian companies that have enviable training facilities. “Korea and Japan have large institutions, particularly Japan, and many business schools would pale in comparison.” And large institutions, inevitably, can seek out the best of the young high-fliers.

Talent, and Hype

GE, of course, is famous for this type of talent scouting, and many cliches that have sprung from its “culture”. Readers of business magazines have for years heard of the wonders of Six Sigma, the program used by GE and others to promote excellence, stretch goals, and, pace GE’s famous former CEO Jack Welch, doing things “straight from the gut.”

Given GE’s rocky performance in the last year, skeptics have questioned whether creating a star system within a company is an effective method of harnessing an organization’s creative energy. After all, the focus on talent and dynamism at Enron under former McKinsey consultant Jeffrey Skilling, who served as the energy trader’s president, led to a kind of creative destruction that was a wonder to behold: the biggest corporate bankruptcy in the US up until that time and, in addition, thousands of people out of a job.

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