Embracing a Positive Change
By Jeff Immelt, Guest Columnist and the Chairman and CEO of General Electric
Published on Thursday, September 27, 2007
The word "governance" has many interpretations -- and it has assumed additional shades of meaning in recent years. Thankfully, the meaning of governance at General Electric has always been clear: Investors own the company. The board's and my job is to work every day to create value for them. In the end, strong governance forms the foundation for building a world-class organization.
Today there is a debate about how my alma mater, Dartmouth College, should be governed. For some reason, this debate has become very public. Therefore, I believe that all sides deserve to be heard.
No one really "owns" Dartmouth like investors own a company. I would say that the College's "investors" are current and future students, and the alumni role is to create long-term value for them. By any meaningful metric, the current leadership of Dartmouth is providing strong returns. Last week the Board of Trustees further improved the College by making changes to its governance, including adding eight trustees selected by the board to the 18-member governing panel.
Some see this as an assault on alumni rights. I disagree.
America's learning institutions must be free to grow. Today's students will be fighting for global competitiveness, energy security, a stable healthcare system, environmental sustainability and improved education. They must be broader and deeper and hungrier than we were. But to continue to produce those kinds of leaders, the College must be allowed -- and encouraged -- to change.
I am convinced Dartmouth is doing just that. By adding seats to its board, Dartmouth will have more opportunity to recruit diverse, talented and tough-minded people to lead it in the future. Some of them might even help the school sustain its financial strength and increase important investments.
These are much needed but modest steps. Even with recent improvements, Dartmouth is still at a competitive disadvantage with other top-tier schools, which have more board seats and more opportunity to recruit outstanding trustees.
Does this change dilute the influence of alumni-elected trustees on the board? Sure. But Dartmouth still has a much higher percentage of alumni representation on its board than its competitor schools. Beyond that, who says a college has to be an exercise in absolute democracy, where every group shares an equal voice?
In theory it sounds great -- but, as much as some might wish, colleges aren't pure democracies. They are places of learning and growth -- and they need strong leaders who can listen to a multitude of voices. In this context, the primary role of the previous generation of alumni is to create a firm foundation for the future.
In 2004, consulting firm Booz Allen Hamilton developed a list of the world's 10 most enduring institutions of the last century. Purely by luck, I have been a part of two of them: GE and Dartmouth. I like to think it is because GE and Dartmouth have three things in common: a commitment to performance, a commitment to integrity and a commitment to change.
The best example of this last characteristic may be Dartmouth's decision to go co-ed, two years before I arrived as a freshman in 1974. Many alumni opposed that decision, but the board believed it was in the best interests of the College. Clearly, they were right.
One reason that Dartmouth has continued to prosper as it implemented that controversial decision was because many of the College's leaders and alumni who originally opposed the decision rallied to Dartmouth's side, putting students' interests first.
Like many Americans, my parents taught me to value education. They felt that, with a good education, anyone had a chance to create their own future. A core strength of this country is our institution of higher education. We need to help tomorrow's leaders forge their futures. To do so, we need to let go and allow higher education -- including Dartmouth -- to grow and change, freely.