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The end of GE’s Crotonville: What it says about L&D

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Peter Cappelli
Peter Cappelli is HRE’s Talent Management columnist and a fellow of the National Academy of Human Resources. He is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia. He can be emailed at [email protected]

Few places in the business world were as iconic as GE’s learning center, commonly known as Crotonville. It was as much a symbol of a way to run corporations as it was a location. The company, however, announced this past month that it is now selling the location and, presumably with that, moving away from the need for what went on there. Is this the last nail in the coffin of the systematic development of business leaders?

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GE build its learning center in 1956 in the town of Ossining, N.Y., which at the time was better known as the home of Sing Sing prison, a maximum security location on the Hudson River where the execution of prisoners took place.  The phrase being “sent up the river” meant being sentenced to Sing Sing. GE executives who were sent to the learning center used to say they were being sent up the river, which of course irritated the GE leaders who then renamed it after a neighboring town, Crotonville.

Before MBA business schools had their luster, the Crotonville center offered that model. Only the highest-performing managers and potential executives went there. The experience was classroom training in the kind of tiered classrooms known as “pits” because they looked like a mini coliseum where gladiator battles took place—in this case, between students and instructors. Especially in the Jack Welch era, the focus was on developing leadership skills and being dipped in the company culture in part by rubbing shoulders with the top executives who were frequently there with you.

And it was a costly approach; at its peak, learning and development at GE had a $1 billion budget.

Other companies followed with their own executive learning centers, perhaps most famously IBM with its version just down the road in Armonk, which it sold a few years ago to the Chinese company HNA. Other companies began selling off theirs as well, and the explanation is always the same: It is too expensive—but, of course, that is just another way of saying, “We don’t think what those centers do is worth it anymore.”

What does it mean that Crotonville will be no more? Every company that sells off its learning centers says that this is not a sign that they are not committed to learning or development and they are just going to find more efficient and effective ways to do it. This is like selling your beach house and saying, it really doesn’t mean I don’t want to be at the beach as much. Of course it does. There will be even less planned career advancement, fewer systematic opportunities to develop the abilities of leaders and, more generally, less opportunity for individuals in these jobs to stop and think about what they are doing and how to do it. To the extent that these facilities and the programs they run are about passing along the norms and values of operating that create organizational cultures, their closure means fewer organizations have clear and distinctive ways of operating.

In 1999, I wrote a book called The New Deal at Work about the decline of lifetime careers in corporations. In the last 20 years, we’ve watched the wheels steadily come off that model. It is difficult to make those investments in leadership development pay when we change our organizations so frequently, when we want to flip the switch on new strategies and organizational cultures, shopping the outside market for new hires that we think will allow us to operate differently. Even in businesses that are not changing much—airlines are still flying planes, power companies still making electricity—the need to appear “agile” by shaking things up is palpable.

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Who benefits from the end of Crotonville and other places like it? Business schools, which exploded along with the decline of early career management development programs. Executive coaches. Search firms and the industry that helps identify and sell leadership talent.

The Crotonville facility already looks a lot like a rambling college campus. A college might want it? The market for colleges is already pretty saturated, though, and new ones are not starting up. I’m thinking it would make a great retirement community—possibly for retired corporate executives.