GE: Still Holding Women Back?

After being taken off the fast track, one of GE's top lawyers is filing a suit charging the company with gender discrimination

Since coming to the top job at General Electric (GE) in 2001, Jeffrey Immelt has basked in the aura of being today's man. He wants his businesses to help save the environment, he waxes eloquent about China and obscure markets in the Middle East, and he talks often about the necessity of diversity in the top ranks (see, 9/11/06, "General Electric, the Immelt Way").

Now one of the company's top lawyers has slapped Immelt, GE, and a slew of other senior executives with a $500 million lawsuit that claims she—and other executive-level women at GE—are systematically discriminated against. Not only does the company underpay women in comparable jobs held by men, she says, but it promotes them at a slower rate and has failed to make any progress under Immelt's watch.

GE spokesman Gary Sheffer says the suit is without merit, noting that "it's clear that more women are in senior roles than ever before." He notes that women are running businesses that generate more than $40 billion of revenue—close to one-quarter of sales—within GE. " GE has even won an award from Catalyst, a group that researches women in business, for its progress in promoting women (see, 4/16/07, "A Little Shame Goes a Long Way").

The Classic Old-Boy Club?

But Lorene Schaefer's story offers fascinating insight into the challenges of tearing down an old-boy culture and the perils of handing a demotion to someone who has previously been told they're on the fast track. Schaefer, 43, is general counsel of GE Transportation, the $4.2 billion rail business within GE Infrastructure.

In Schaefer's view, everything changed in her career after Charlene Begley (see, 7/28/03, "Crashing GE's Glass Ceiling") left the business for GE Plastics two years ago. "Charlene had a wonderful, inclusive style," says Schaefer. The new chief executive of GE Infrastructure-Rail, John Dineen, would interrupt women in meetings, she charges, and simply talk over their heads. Junior male colleagues were invited to poker games with senior executives while she was left out. Women allegedly were not invited to a number of important meetings and didn't enjoy them when they were. "He tended to yell and curse," Schaefer told BusinessWeek on May 31. "He felt much more comfortable with men." GE wouldn't respond to specifics of the case.

More important, Schaefer says she was hired into the job at a level below her male predecessor—and at a level below most other general counsels at comparable or even smaller GE units. She bit her tongue, she says, and bided her time. But she noticed the same pattern with female colleagues. Sheffer disputes that Schaefer was hired into a level below her male predecessor, and notes that there are male general counsels at her level at some larger businesses within the company.

Bumped Off the Track

Then GE held its famed annual Session C review of top employees in April. "I had every reason to believe I would be promoted," she says. Instead, after a meeting that involved Immelt, GE Vice-Chairman John Rice, and Dineen, among others, Schaefer was allegedly told she was "not big enough" for her current job and moved to a smaller role as Dineen wanted a "big-time GC." Schaefer calls it a demotion. GE says she is still in the same job, at the same pay.

The facts as Schaefer tells them have yet to be corroborated. Even Schaefer's lawyer, David Sanford of Sanford, Wittels & Heisler, is quick to say there's more statistical data to be examined. And Schaefer, herself a former labor lawyer, arguably has little to lose in fighting for money when she has been essentially bumped off the track she thought she was on. She went on paid administrative leave a few weeks ago after she told the company that she had retained counsel in light of her demotion, and was banned from attending a high-level women's leadership conference.

Could GE have handled her situation better? Probably, though it's hard to believe that yelling and all-male poker games are accepted hallmarks of management at a company that these days prides itself on innovation and social responsibility (see, 3/28/05, "The Immelt Revolution"). Schaefer's experience would certainly seem to debunk the idea that GE has absolute transparency with employees on where they stand and what their prospects are. To hear her tell it, everything was looking good until she was moved into a smaller job.

And GE is rightly skittish about matters involving women at the company. While its record on women has improved—with 14.5% of officers and 15% of the top 400 senior executives now women, vs. 9% and 10% in 2001—it still has a long way to go.

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