The Talent Masters

Why Smart Leaders Put People Before Numbers

Book Review
By
Mandeep Singh
DGR2015

Abstract
The Talent Masters: Why Smart Leaders Put people Before Numbers written by Bill Conaty
and Ram Charan is the guide to build an organization by putting people first, how to take a
business to the next level. Conaty and Ram Charan argue that the talent masters put people
before numbers for the simple reason that it is talent that delivers the numbers. Success comes
from those who are able to extract meaning from events and the forces affecting a business,
and are able to look at the world and assess the risks to take and the risks to avoid. The book
makes it case through a number of anecdotes and examples from corporate world. While the
book largely focuses on the western models, it does include Hindustan Unilever as one of the
companies which have institutionalized talent management. While it is written in an easy to read
style, without using too much of business and management jargon, there are some obvious
drawbacks notably amongst them the failure to critically analyze and compare the GE way.
Overall, it is a good read not only for corporate leaders and students of management.

The Talent Masters

Why Smart Leaders Put People Before Numbers

Book Review by Mandeep Singh

Introduction
Jack Welch served as Chairman and Chief Executive Officer(CEO) of General Electric (GE)
from 1981 to 2001. During his 20 years of leadership in this position, Welch increased the value
of the company from $14 billion to over $400 billion. A chemical engineer by training, he joined
GEs Plastics division in 1960 and was elected the company's youngest Vice President in 1972.
In less than a decade, he became the 8th Chairman and CEO of GE and served in that position
until he retired in September 2001. In 1980, the year before Welch became CEO, GE recorded
revenues of roughly $26.8 billion; in 2000, the year before he left, they were nearly $130 billion.
The company went from a market value of $14 billion to one of more than $410 billion at the
time of his retirement, making it the most valuable and largest company in the world, up from
America's tenth largest by market cap in 1981[1].
The secret of this remarkable success is that Jack Welch and his team at GE were the Talent
Masters, as Bill Conaty and Ram Charan explain in their book The Talent Masters: Why Smart
Leaders Put People Before Numbers. The opening line of the book If businesses managed
their money as carelessly as they manage their people, most would be bankrupt sets the tone
and tenor of the book. The 300 odd page book celebrates the Jack Welch Way of managing
and nurturing talent at General Electric(GE). Though it refers to the talent management
practices of some other organizations, viz Hindustan Unilever, Agilent Technologies, Procter &
Gamble and Novartis, the book is largely about the GE Way. Written ten years after Jack Welch
left GE, it has been co-authored by Bill Conaty the former senior vice president for human
resources at GE, and Ram Charan, the business adviser and author who often collaborates on
books with ex-CEOs.
Bill Conaty has had a four decade long career at GE during which he worked closely with CEOs
Jack Welch and Jeff Immelt, and had the opportunity of being centre stage as GE built its talent
machine. In this, he is the best person to write about the GE Way. Ram Charan, a Senior
Wharton Fellow, with his experience of having advised and collaborated many a CEO brings
with him the intimate knowledge functioning of the other organizations.
Summary of content
Often described as a tour de force by many a critic, Talent Masters argues that the main job of a
CEO is developing future talent ie people who will nurture the corporate value and who at
opportune time will take over the mantle from the current executives. Institutionalized systems
are required to ensure this process fructifies and also to see that talent management is not
merely a support function but a core business element.

The book is laid out in four parts. After initialing discussing about the talent masters- the basic
principles of talent management and who are the talent masters, the book discusses the much
talked about GEs talent management system at great length. The authors refer to GE as the
go-to company for students of talent management, though the admiration may be more due to
their long association with GE.
The Talent Masters was written purposely, although not exclusively, for the Executive Education
market. As Ram Charan explains in the Wharton Executive Education magazine, The
executives who attend programs such as High-Potential Leaders and the Advanced
Management Program are already working on their own development. After all, a drive to
continuously learn and improve is an indicator of leadership potential. My role as an educator
and an author is to accelerate that growth. By teaching the discipline of personal development
and identifying the specific, unique areas that need to be developed, I can help them get further
faster. [2]
The book includes a number of case studies and illustrative stories about the talent masters and
the varying styles of talent management adapted by different companies. One of the first stories
with which the book opens is about Sue, one of the rising starts at GE. Hired out of Wharton,
her talent was spotted early on by the talent masters and she was fast tracked from sales to
general management. In this the masters took a risk, based on an in-depth and critical review of
Sues performance and capabilities. Sue had been differentiated as a promising candidate with
a future leadership role - A key function of the talent masters. As Conaty and Ram Charan say
Talent Masters spot, find and develop people like Sue through predictable, consistent,
repetitive processes that develop candor and trust through the give-and take of vigorous
dialogue. This system, based on intimate knowledge through the observations of actions,
decisions and behaviors, grows raw talent to its full potential [3]
Identifying and nurturing talent is also explained through the story of Mark Little who in 1995
was promoted to vice president of engineering at GEs power systems group. Following his
appointment, the group missed its numbers three times in a row, and Little had to be shifted out
to a lower job. Shunted out, Little suspected that his career at GE was over. Instead, the GE
management worked with Little to help him rebuild his career in a position that made better use
of his talents, and he went on to become the senior vice president in charge of the corporate
R&D center, one of the company's top 25 executives.
Of the other companies, one of greater interest is the story of human resource management at
Hindustan Unilever(HUL) of which the book has a separate chapter. HUL, Unilevers $3.5 billion
Indian subsidiary has a different approach to nurturing talent as compared to GE and is a true
institutionalized talent master. The basic philosophy followed by HUL is laid out by Dr AS
Ganguly, who led HUL in 1980s, is that You cannot make leaders. All you can do is look for,
find, and polish leaders. To find these leaders HUL has a very rigorous recruitment and
selection process of which group discussion is a critical part as it is used to evaluate future HUL
manager for more than just academic qualifications. Another aspect that sets apart HUL is the
involvement of senior executives in the recruitment process- rarely seen in other companies.

Conaty and Ram Charan describe the HUL method of spotting the potential leaders - zero on to
people with leadership qualities, more so by the line management as thirty five to fifty of the
approximately nine hundred it hires every year are selected to be put through the Business
leadership training(BLT) program spread over fifteen to eighteen months. Another unique
process adopted by HUL is of giving challenging assignments at relatively younger service to
check if the trainees measure up to the challenge. Conaty and Ram Charan use the example of
challenge posed by Nirma, the low cost detergent and how Vidi Bangas team at HUL
developed Wheel and in three years had managed to stave off the Nirma challenge.
The informal interaction between the senior executives and the people out in the field is an
integral part of the HUL culture of evaluating and nurturing talent. The book showcases the way
HUL cuts through the hierarchy and always follows through. What it leads to is a unique and
unparalleled culture of developing talent in a very institutionalized manner. As Conaty and Ram
Charan put it In no other company we know of do senior mangers work so directly with those
rising leaders.[4]
Though the book does not elaborate, HUL follows a very transparent system of appraisal. The
e-card of each individual is vaialble online and can be downloaded. This ensures that each
individual know where she stands in the organistaion. This is best explained by Ms Leena Nair,
Executive Director, HR, HUL This is an e-card, you can download it, which tells you everything
you need to know, how you are rated, whether you are a lister' (a company phrase for fast-track
leaders), which box of the matrix you are in, what is your potential, what is your likely next job,
what does the company think about your potential, what is the kind of development plan that
you have So every person has clarity, where he or she stands. This is shared transparently. I
can't think of any other organisation which has so much transparency for employees telling
them how they are perceived by the organisation[5] As this is a unique and transparent
method, it is felt that Conaty and Ram Charan should have elaborated on this aspect in their
book.
Another instructive anecdote comes from Adrian Dillon, Skype's chief financial officer. Mr. Dillon
tells of how, early in his management career, when he was working at Eaton Corp., he was
accosted after a meeting by his boss, the company's CFO. "That was a great meeting, but your
problem is that you still think your job is to be the smartest guy in the room. It's not," the man
told him. Instead, Mr. Dillon was told, his job was to "make everybody in the room think that
they're the smartest guy in the room. You've got to teach them what you know and what you do,
not tell them."
The book uses examples from other organizations also as Conaty and Ram Charan argue that
there are three basic postulates that makes companies talent masters are:
People are known in depth the book mentions that the CEO and head of HR at GE intimately
know the top 600 people. While this may seem a unrealistic number, Conaty explained in an
interview The fact of the matter is that we did know the top 600 intimately. We knew probably
another thousand beyond that, or at least had a pretty good understanding of who they were.
., wed always see people elbowing each other and reacting in disbelief. Youd see people
thinking, No, they couldnt know that many. The fact is we do.[6]

 Good judgment is institutionalized no opinion or assessment is taken at face value and the
management provokes the managers, questioning and disputing their judgments so that the
managers are forced to defend their opinions. It is done as a matter of routine - so that making
good judgments about people becomes the norm.
Talent discussions are candid discussions about peoples strengths and weaknesses are not
just polite conversations, they are candid and revealing.
Lastly, the book has how-to sections on Mastering Talent, Developing Leaders, Making
Leadership Assignments, Assessing Leaders, Recognizing and Retaining Leaders, and there is
even a FAQ on leadership development. The toolkit also provides a section: Guidelines for Your
Next Talent Review and because the authors have GE experience advice on how to create
a Crotonville on any Budget. (GEs John F. Welch Learning Center is also known as
Crotonville.)

Conaty and Charan have identified five specific organizational How-Tos and explain them in
detail in their book:

Get all senior leaders centrally engaged in talent recognition and selection

Hire for demonstrated leadership, not just for credentials

Learn as much as possible about values and behavior before hiring

Be humble enough to hire outsiders but ensure cultural assimilation

Be totally honest about who has greatest leadership potential

There are five specific How-Tos for the individuals also:

Make talent development an obsession.

Drill down deep to the specifics of each persons talents and potentiality

Give frequent, honest, and specific feedback

Make talent development a core competency with strict accountability

Provide intellectual challenges and opportunities for continuous personal growth and
professional development

Analysis and evaluation of the book

While the book is a great read, there are some shortcomings and certain issues glossed over.
One is obvious accepting that the Welch way as still being relevant. As Betsy Morris, senior
writer at Fortune magazine says The practices that brought Welch, Goizueta, and others such
success were developed to battle problems specific to a time and place in history. And they
worked. No one questions today that bloated bureaucracy can kill a business. No one forgets

the shareholder - far from it. Yet those threats have receded. And they have been replaced by
new ones. The risk we now face is applying old solutions to new problems.[7]
The GE Way was one method of managing the human capital. Is it the only way or even the
best way? Doubts remain about this and matters are not helped by Conaty and Ram Charan.
The book in its approach seems overly celebratory about the GE way, missing out on an
opportunity to critically evaluate it. There is a good reason to be critical of this aspect. While GE
had a great run under Welch, and succession plans executed with finesse, not all was as good
as it was portrayed. Of the three contenders for the top job at GE, two left GE, quite
understandably. While one of them, ie W. James McNerney Jr. did fine at 3M, Home Depot
which recruited Robert Nardelli had to let him go due to lackluster performance. This raises an
obvious question if the GE method of training so good, why did Nardelli fail? He was not the
only such failure. Lawrence Johnston, another high- flying GE executive who left in 2001 had
a troubled tenure at Albertson's, among the alumni who did not live up to expectations [8].
One thing that stands out is that former GE managers do well in companies that are similar
to GE- big industrial concerns. But they fail when it comes to managing more people
intensive companies. A similar case has been made out by Thunnissen M, et al in their
paper, Talent management and the relevance of context[9] in which they argue that all
management techniques need to be contextualized and cannot be taken as gospel applicable
in each and every scenario. Though Conaty and Ram Charan touch upon this aspect, it should
have been discussed at greater length.
The system of appraisals and employee evaluation is at the heart of talent management. After
all, thats the way to find people with talent, to shortlist people for fast tracking. The famous rank
and yank method of GE worked fine under GE but today the entire culture at GE has undergone
a shift. Nothing reflects this more than the doing away with its much vaunted appraisal system.
As Susan Peters GEs head of human resources, explains It existed in more or less the same
form since I started at the company in 1979. But we think over many years it had become more
a ritual than moving the company upwards and forwards.[10]
There is a reason for this change. Years of research has found that the GE practice is
ineffective at boosting performance, it actively alienates employees, is based on a flawed
understanding of human motivation, and is often arbitrary and biased. People simply dont fit
neatly on a bell curve. It ends up being an exercise in paperwork and bureaucracy instead of an
agent of change. As the need for a change is the system of appraisals arises, new questions
arise. How do the talent masters now manage their flock? This important facet of talent
management is sadly largely ignored by Conaty and Ram Charan.
The question central to all this is- was the GE way successful only because of the sheer
personality of Jack Welch? It seems so as GE as an institution has changed and even
overturned many a past practice.
Should the book then have focused more on other companies? HUL seems to be doing fine.
Even with increased competition, its performance has been praise worthy. The relevance and
more importantly the need of applying management practices of HUL could have been given out
in greater details. HUL also has a future leaders development program[11]. In our context it

could have been examined, say in comparison with Reliance Industries leadership program[12],
or even of UniCredit[13]. This is essential as the how of developing leaders is the most critical
part of HRM. What may be known, when can be appreciated but how remains the missing link in
talent development. While it is understood that the book is not meant solely for Indian business
leaders- and students, focusing only on non- Indian practices makes the book lose some of its
appeal to an average Indian reader.
Conclusion
With all its faults, The Talent Masters is a good read and adds value to the learning curve of
students and practioners of management. The focus remains throughout on the need and
importance of talent development. While the Welch Way is time and again lauded to be the best
way ahead, at the end of the book however one does wonder In this time of growing
uncertainty and flux in the rapidly evolving world of business and the e-way taking centre stage,
will this concept still work?
Maybe its time to revisit the Talent Masters and tweak it a little, if not completely reboot it.
Maybe just. The article in Business Insider GE Is Abandoning Jack Welch's Old Management
Philosophy [14] says it all if one was looking for a reason.

Notes
1. Jack Welchs profile at GE. http://www.ge.com/about-us/leadership/profiles/john-f-welch-jr
2. Wharton Executive Education August 2012 Leadership - People First, Strategy Second
http://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-atwork/2012/08/people-1st-strategy-2nd
3. Conaty Bill and Ram Charan The Talent Masters p14-15
4. Wharton@Work December 2010 issue
http://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-atwork/2012/08/people-1st-strategy-2nd#sthash.0I5mbCDQ.dpuf
5. Vinay Kamath/Aarati Krishnan HUL's school for leadership The Hindu Business online
September 18, 2011 http://www.thehindubusinessline.com/specials/new-manager/huls-school-forleadership/article2465229.ece

6. David Creelman Bill Conaty: Talent Masters HRVoice.org December 1, 2010

http://www.hrvoice.org/bill-conaty-talent-masters/

7. Betsy Morris, Tearing up the Jack Welch playbook Fortune July 11 2006
http://archive.fortune.com/2006/07/10/magazines/fortune/rules.fortune/index.htm

8. Claudia H. Deutsch The GE way isn't for everyone International Herald Tribune The NY
Times Business Published: Thursday, January 4, 2007
9. Thunnissen,M.,etal., Talent management and the relevance of context: Towards a pluralistic
approach, Human Resource Management Review (2013)
http://dx.doi.org/10.1016/j.hrmr.2013.05.004
10. Why GE had to kill its annual performance reviews after more than three decades Quartz
online http://qz.com/428813/ge-performance-review-strategy-shift/
11. HUL Future Leaders program https://www.hul.co.in/careers/post-graduates/uflp/
12. Reliance Accelerated Leadership Program (RALP) http://www.ril.com/Careers/RALP.aspx
13. Unicredit Leadership Program https://www.unicreditgroup.eu/en/careers/what-set-usapart/leadership-development.html
14. Kim Bhasin GE Is Abandoning Jack Welch's Old Management Philosophy Business Insider
March 8, 2012, http://www.businessinsider.com/ge-is-abandoning-jack-welchs-oldmanagement-philosophy-2012-3?IR=T