The video discusses a strategic talent acquisition and retention plan implemented by GE in the 1950s. Facing a challenge of acquiring top talent already employed by competitors, GE devised a 'non-qualified deferred compensation' plan, essentially a pension. This plan offered a pension to individuals who committed to working for GE for at least seven years. GE would identify and recruit these individuals, often in their 50s, from rival companies. Upon hiring, GE would purchase a whole life insurance policy on each recruited executive. The cash value of these policies was built up over time. The strategy leveraged the fact that executives in the mid-20th century often had shorter life expectancies due to lifestyle factors like smoking and high-stress work environments. The accumulated cash value from the life insurance policies was then used to supplement or even cover the pension payouts for these executives. A key benefit for GE was that upon the executive's death, all the money from the policy would return to the company tax-free, effectively replenishing the funds spent on the pension and insurance, and generating a profit.

Garrett Gunderson

So, in the 1950s, GE had this concept. We want to be number one or number two in every category we're in, but we're not. What are we going to do?

And they said, there's one factor that will make the difference, the right talent. But these people are already employed. They're already working for their competitors. So, they said, how in the world can we recruit them?

They came up with a plan called non-qualified deferred compensation. It's basically a pension. So, they said, "Look, if you come work for us for at least 7 years, we're going to give you a pension."

So, they'd find these people in their 50s, recruit them away. But the moment they started working there, they bought a whole life policy on them. They built the cash value. When that executive back in, you think the 1950s and 60s, they didn't live as long. They were all smoking like crazy and, you know, working too hard.

They would use the cash value to supplement the pension, sometimes cover the pension depending on how long the person lived. But when the person would die, all that money would come back in tax-free to that company, replenishing all the money they spent plus a positive rate of return.

Smart companies don’t just pay talent—they design systems that replenish capital

So, in the 1950s, GE had this [music]
concept. We want to be number one or
number two in every category we're in,
but we're not. What are we going to do?
And they said, there's one factor that
will make the difference, the right
talent. But these people are already
employed. They're already working for
their competitors. So, they said, how in
the world can we recruit them? They came
up with a plan called non-qualified
deferred compensation is basically
[music] a pension. So, they said, "Look,
if you come work for us for at least 7
years, we're going to give you a
pension." So, they'd find these people
in their 50s, recruit them away. But the
moment they started working there, they
bought a whole life policy on them. They
built the cash value. When that
executive back in, you think the 1950s
and60s, they didn't live as long. They
were all smoking like crazy and, you
know, working too hard. They would use
the cash value to supplement the
pension, sometimes cover the pension
depending on how long the person lived.
But when the person would [music]
all that money would come back in
tax-free to that company, replenishing
all the money they spent [music] plus a
positive rate of

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Smart companies don’t just pay talent—they design systems that replenish capital

Transcription