TO OUR SHAREOWNERS
Each year, I write on behalf of the Board and as
Chair of the Management Development and
Compensation Committee to share our
perspective on governance, how we evaluate
performance, and the strategy for creating
shareowner value. This year, I will do that in the
context of a belief that defines GE’s culture. An
organization cannot sustain itself for more than
130 years, as GE has, unless it is always striving
to improve.
“An organization cannot
sustain itself for more
than 130 years, as GE
has, unless it is always
striving to improve.”
GE works because the Company understands
that organizations must continuously evolve and
improve to stay relevant. That is the rationale for
the GE Opinion Survey, or GEOS, conducted every
two years. The survey provides an invaluable
platform through which the people who know
GE best—its employees—can candidly and
confidentially share their perspectives on the
work environment and key business issues that
influence company success: innovation, strategy,
execution, and customer alignment.
Shareowners can be proud that GE’s employees
score the Company extremely highly when it
comes to compliance and trusting executives to
do the right thing. This is essential to building the
reputation required to maintain a competitive
advantage when pursuing opportunities around
the globe. Employee engagement scores were
also very high, signaling a GE team motivated
by the Company’s mission and its ability to
foster innovation, make smart investments
and execute.
The GEOS results were not as strong in the areas
of customer alignment and complexity.
Addressing this is an imperative. GE leaders are
committed to streamlining operations and
processes to move faster, be smarter and get
closer to the customer. The effort, known inside
the Company as “Simplification,” is about
increasing margins not only by cutting costs but
also by working smarter and by removing
unnecessary barriers that stand in the way of GE
employees around the world. It is about creating
an entrepreneurial environment that fosters
innovation and allows us to move faster.
Simplification is already producing significant
results. Last summer, for instance, GE replaced
the headquarter layer of the Energy business
with three stand-alone businesses, all now
reporting directly to the Chairman: Oil & Gas,
30 GE 2012 ANNUAL REPORT
Power & Water, and Energy Management. The
restructuring saved close to $300 million and
removed administrative barriers, empowering
employees. There are many other projects under
way, and we have set bold but realistic goals.
The GEOS and the Simplification initiative are just
two of the many tools GE leaders use to listen,
learn, grow and get better year after year. This is
critical at a company such as GE. Many of our top
executives have spent most or all of their careers
at GE and have unparalleled domain expertise, a
hallmark of the Company. At the same time, we
cannot allow longevity to mean becoming insular
or stale; the ability to evolve and keep one’s
thinking and perspectives fresh and relevant is
imperative for success.
We believe that GE leaders understand this
inherently. Today, GE’s senior management is a
proven team of strategic thinkers who are always
learning and always improving. In fact, we
measure our leaders on how they adapt in real
time to an ever-changing world, perform amidst
ambiguity and execute to achieve long-term
goals. We align compensation with strong
company financial and strategic performance.
Ours is a balanced approach that, we believe,
enables us to attract and retain the best people
for the Company’s long-term success.
Just as striving to be better is a cultural marker
for GE and its executives, the same is true of its
independent Board of Directors. We will
continue to ensure that the Company never
becomes stagnant. We also will always do our
best to be transparent in explaining our
approach to issues such as governance and
compensation. When we see an area for
improvement, we will take the appropriate
steps. Simply put, we remain committed to
working on behalf of the Company’s investors.
GE works to deliver shareowner value by
offering real and sustainable solutions to the
world’s toughest problems. We’re proud to be
part of that, and we take our role seriously.
Sincerely,
Ralph S. Larsen
Presiding Director
February 26, 2013