"The face of General Electric (NYSE:GE) changed dramatically..." said one report. Others claimed new CEO John Flannery was overseeing a "sweeping makeover" and "tightening his grip" on the company. What does this "management shakeup" mean?

It probably doesn't mean as much as everyone's afraid it does. But it's important for investors -- whose shares in the industrial giant have been on a downward trend this year -- to understand what's happening in the upper management of GE, even if it may not be as big a deal as some people think. 

A row of Edison-style light bulbs, with only one lit.

GE's stock has been on a downward trend this year and is the worst performer of the Dow Jones Industrial Average. Image source: Getty Images.

Comings and goings, but mostly goings

The latest concerns began on Oct. 2, when former CEO Jeff Immelt announced he would step down as chairman three months ahead of schedule. Immelt had already handed the reins of the company to Flannery, but was scheduled to retain his position as chairman until the end of the year to smooth the transition. On the same day, the company announced that Lorenzo Simonelli, longtime head of GE Oil & Gas, would officially take over as CEO of Baker Hughes, A GE Company (NYSE:BKR), the result of the merger of GE Oil & Gas with oilfield services company Baker Hughes. 

Then, on Oct. 6, GE announced that longtime CFO Jeffrey Bornstein would be stepping down, along with two other GE veterans, vice chairs Beth Comstock and John Rice. The head of GE Transportation, Jamie Miller, who joined the company in 2008, will take over the CFO role on Nov. 1.

Flannery himself was promoted internally from his prior role as head of GE Healthcare. With the departure of GE Power CEO Steve Bolze immediately following Flannery's promotion, there have been top-level shakeups in most of GE's industrial divisions this year.

Amidst all the departures, there's also one notable arrival. On Monday, October 9, Flannery accepted the appointment of Trian Fund Management's chief investment officer Ed Garden to the board. Trian, which has owned approximately 1% of GE since 2015, has been pressuring GE to make major changes to its operations.

Don't be surprised

Turnover on this scale may seem shocking to the average investor: More than 80% of the top GE management staff are now in different positions, going, or gone -- and all in less than four months! But it's actually not all that surprising.

There's an old saying that an outgoing CEO's departure is always followed by another departure -- that of the person who didn't get the job. Someone who has their sights set on the top spot isn't going to want to wait around for a decade, or more, to try for another chance to lead the company that snubbed them in the first place. Instead, they're likely to try their fortunes elsewhere.

That's what happened with Bolze, who was a candidate for the CEO job that eventually went to Flannery. Now he's over at Blackstone. CFO Bornstein was also passed over for a promotion and likely is leaving to look for greener pastures.

This same scenario has played itself out at GE before, when "Neutron Jack" Welch stepped down as CEO in 2001 and was succeeded by Immelt. What followed was termed the "Welch Diaspora" and resulted in top GE executives leaving for other companies. Among them: Jim McNerney Jr., who left to become Chairman and CEO of 3M; Robert Nardelli, who left to become CEO of Home Depot; and David Cote, who went on to lead Honeywell. It's not too much of a stretch to say that this happens all the time.

What it all means

Many analysts have weighed in on these staff shake-ups in an attempt to "read the tea leaves" and figure out what it means for the company, as a whole. Nobody seems to think that Immelt's early departure as chairman is significant, but the rest of the changes are causing quite a bit of excitement. 

Scott Davis, an analyst at Melius Research, believes the departures were Flannery's way of making a statement. "He's holding people accountable. Bornstein had a tough time making his cash-flow numbers." Davis also said that this meant the company was in "crisis mode."

Deane Dray, on the other hand, an analyst with UBC Capital Markets, saw it more as a harbinger of things to come, saying in a note that the departures presaged "game-changing strategic moves."

In a note of his own, JPMorgan Chase analyst Steve Tusa saw Bornstein's departure as a reversal, cautioning that, "what the current consensus thinks it's going to get in a reset may not be the case."

Other analysts have suggested that Trian's involvement may mean more acquisitions, or possibly more divestitures. Some see this as evidence a dividend cut is coming, while others believe there will not be cut. GE is poised to take off like a rocket, or is already circling the drain. 

Take a deep breath

The bottom line is, nobody outside of GE knows exactly what CEO John Flannery is planning to do. And none of us are going to know until he tells us later this fall. But right now, he isn't talking, and as you can see, there's no clear consensus on what any of it means... if any of it even means anything. Personally, I think it means that some ambitious people are leaving the company to further their careers -- which tells us absolutely nothing about where GE is headed.

You shouldn't try to read too much into this, or let this affect your thesis on the stock. For what it's worth, I think GE has quite a bit of upside, given how far its share price has fallen this year. And these recent staff changes don't change that.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.