When columnist Daniel Howes at the Detroit News gets pissed off enough at GM to write anything other than “we shall see what we shall see,” you know the former bankrupt is doing something very, very wrong. The object of Danny’s ire: the lack of fresh faces at The New GM. “To read the announcement of GM’s new nine-person executive committee, the promotions and the retirements, as I did minutes after it was made public, is to hear the faint strains of Talking Heads singing ‘same as it ever was, same as it ever was’ and to hear more wailing about the chronically clueless GM.” Mind you, Howes isn’t calling GM chronically clueless (that’s our job). He’s angry that “the feds’ pay-and-bonus restrictions essentially make it impossible for CEO Fritz Henderson to woo outside talent for inside jobs.” Woo-hoo! Howes is on the money; out in the real world, $500K doesn’t buy you a reasonable Human Resources manager. But hey, did someone forget the GM stands for Government Motors?
In many ways, GM was born to be nationalized. Over a hundred years or so, the American automaker has gradually evolved to resemble nothing so much as the federal government. Same farrago of competing fiefdoms. Same lack of accountability. Same stifling bureaucracy. Same budgetary constraints (i.e., both too many and none at all). Same global aspirations. Same lack of strategic focus. Same inability to appreciate conditions on the ground. Same inability to make decisions in a timely fashion.
“Reinventing” GM would require massive and sustained root and branch reform; from the top down and the bottom up. Howes [rightly] seizes on Uncle Sam’s pay cap as the central impediment to GM hiring the kind of management that could even begin to refashion its dysfunctional corporate culture. But the curmudgeon fails to connect the dots. The automaker doesn’t want a shake-up.
More specifically, the idea that GM CEO Fritz Henderson’s hands are tied by the Troubled Asset Relief Program’s pay and bonus restrictions is ridiculous. Henderson is a GM lifer. The former Chief Financial Officer. Fellow GM lifer, fellow former Chief Financial Officer, and Ex-CEO Rick Wagoner’s hand-picked successor. Henderson owes his livelihood to the GM status quo. In other words, if Henderson was dedicated to upending the GM’s ossified apple cart, he’d start by firing himself. Since he hasn’t, we must assume that reshuffling GM’s motley crew of proven losers is a labor of love. An ennobling endeavor.
No joke. By convincing the feds to keep GM out of the garbage disposal of a real C11, Fritz has protected the paychecks, pensions and benefits of hundreds of white collar compatriots. Top executives like Gary Cowger and Troy Clarke must have kissed Fritz’s feet when he knocked on their door with the “bad” news. In a genuine bankruptcy, these proven losers would have been ejected from the Renaissance Center without so much as a fare-thee-well (excluding any monies they may have stashed away during decades of serious rooting). You can hear failed Car Czar Bob Lutz’s gleeful cackles echoing through the automaker’s increasingly empty cubicles, as New GM’s new marketing maven tries (and fails) to assimilate his reversal of fortune.
As far as Henderson being “forced” to promote from within, does Howes really think that the CEO considers fast-tracking GM insiders to positions of greater power is bad for GM? Brent Dewar, Chevy’s new VP of Chevrolet, started working for GM in 1978. Bryan Nesbitt, new GM of Cadillac, is a relative piker, but he’s relatively young AND he’s been with GM for eight years. C’mon; these guys are Henderson’s people. Presidential Task Force on Automobiles or not, Fritz Henderson’s desire to protect, preserve and extend his BFF’s careers (to protect, preserve and extend his own) runs so deep it’s instinctive. It’s what GM employees do.
Howes had the strange idea that the New GM would be a new GM. He’s going through the grieving process, as the writer and his fellow cheerleaders realize that GM’s talking a lot, but it’s not saying anything. In fact, the moment Old GM accepted new federal money (and thus ownership) any meaningful idea of a re-imagined GM disappeared. The whole point of the federal bailout: preserve the status quo. And so it has.
New talent? Government agencies—for that is what GM is—are not known for hiring outsiders to create and implement radical change, to improve efficiency and foster accountability. Even in those rare cases where such appointments are made, the existing workers inevitably drag their heels and destroy the outside “virus” before it has a chance to reproduce.
There is only one way GM can truly “reinvent” itself: surrender to the creative destruction inherent in genuine capitalism. It’s an answer that Howes and GM and many, many others find too horrible to contemplate. But it’s the truth.
Crew Manifest
We have heard many comparisons made between General Motors and the Titanic. Management shuffles at GM are often referred to as rearranging the deck chairs on the Unsinkable, and how the biggest difference is that the Titanic had a band. Both were most severely damaged by management error, Captain Smith attempting to set a record Trans-Atlantic crossing, and Red Ink Rick wasting Billions on the Fiat Fiasco and Delphi Debacle, all the while stripping the company of assets and enriching the Banker controlled Board of Bystanders.
Even though both were believed to be too big to fail, unlike the Titanic, GM has resurfaced after being shipwrecked. Given another lease on life by the American taxpayers, one would suppose the newly installed CEO would be sure to assemble the very best crew available. Yet he has instead exhibited “Olympic” mistakes, which make one wonder if the decisions Star White Lines?
Mark LaNeve and Brent Dewar are still even employed at GM? Give me a break, these two men shouldn’t have just been fired. They deserved to be tarred, feathered, and made to walk the plank. John Smith on the new Executive Committee? He dropped sales like an anchor to new depths. Where’s the promised accountability Fritz? You should be ashamed to offer such a Crew of Casualties (Causalities)! While Ed Peper is a keeper, Bryan Nesbitt in marketing?…questionable, although the guy has been successful in design. Susan Docherty remains at Buick? Hasn’t anyone a clue that she is completely out of her element?
As for those retiring, I’ll be kind and simply say goodbye. (Good Riddance to you know who you are).
Combining his retention of the most grossly incompetent and allegedly, perceived corrupt individuals responsble for hitting the iceburgs (then backing up and ramming them again), Mr Frederick Henderson has made the dumbest, most illogical, and disastrous choices yet seen at General Motors. His closing of Pontiac and forcing dealerships out of business with such reckless abandon will overshadow the decimation that occurred under G. Richard the Terrible. Rick only drove us to the brink of bankruptcy losing $80 Billion or so along the way. Fritz actually took us there and is now setting the course for the eventual and inevitable Chapter 7 liquidation.
Shame, I believed in the guy. Silly me.
oh, BTW, here’s the low down on our newest Board members…geez who makes these choices anyway?
New GM directors Russo and Akerson serve on D-rated Boards
Patricia Russo serves on the boards of Alcoa Inc. and Schering-Plough Corporation each of which have D-rated boards according to The Corporate Library.
Daniel Akerson serves on the American Express board (AXP), a D-rated board according to The Corporate Library.
David Bonderman is designated a ‘flagged director’ [aka Problem director] according to The Corporate Library due to his involvement with the board of Magellan Health Services, Inc., which filed for Chapter 11 Bankruptcy in 2003.
http://www.GeneralWatch.com
Silly me, when they announced they were going to trim the executive ranks I thought they might be cutting out some of the dead wood. But when I read the press release announcing the “New” GM’s executive organization, all I could think is they’re just rebadging them and shuffling them around. But then again, what should I have expected? GM has always been much better at rebadging and shuffling dead, outdated models than at introducing new ones that really make a difference.
Cue Obama Motors comment from bluecon in 5, 4, 3, 2, 1… Not necessarily unwarranted given the context of this editorial.
The government remuneration cap will certainly affect their ability to attract proven, top-notch corporate talent. But I’m sure there are a number of talented, young(er), go-getters out there that would leap at the chance to build their reputation by revitalizing GM.
But even if you replace LaNeve and his ilk with unproven nobodies, you will still be better off if for no other reason than you’ve demonstrated that accountability matters.
Death Watch, Part Deaux?
Or should we go with a Halloween theme, and draw an image of Jason in his 80’s with a greying beard underneath the mask and testicles down to his knees?
I like the living dead theme for this newest, bestest incarnation of Gumby Motors.
The only way to save GM is to cut it down to Chevy and Cadillac, and I even doubt Caddy is really worth keeping.
Eliminate Chevy models down to:
Compact Car (Cobalt) – Make it bulletproof
Mid size Car (Malibu) – Current model is a great start
Full Size Car (???) – Lutz was right on with new Caprice
Full Size Truck (Silverado) – Start from scratch. Make it smaller, base V6, optional V8. 3 Trims (Stripper/Power Everything/Retarded Level of Luxury)
Small SUV (Equinox) – Make it basic but solid as a rock. Offer a truck version to act as your compact truck. It should be RWD.
Full Size SUV (in Tahoe/Suburban flavors) – Current Model is good start
Wagon/CUV (Traverse) – Current is good
Corvette/Camaro – You do need these cars. If Camaro launch ends up a fiasco then it can be scuttled, but Corvette is a must.
Cadillac Should be:
Escalade – Money in the bank
CTS (Change Names) – Great car, now make it EXCELLENT
DTS (Change Names) – Revamp it. Needs to be BIGGER. This is the old man cruiser Caddy needs.
Put a fresh design team on the truck, cobalt, and Caprice. Bring in new people. Hire smart engineers and let them design something and don’t cheap out on the parts to save a few hundred bucks. Make them cars that people will talk about for years. It is a badge of honor to have purchased a car that lasts 10 or 15 years. It means you made a good choice as a consumer.
This is a fiasco of proportions that are simply not conceivable by mere mortals. The company goes into bankruptcy. Assets are purchased by a new company controlled by the government, particularly the Task Force with all of this supposed business and dealmaking experience. Oh yes, and also the union which used to take every opportunity to slam the old management for getting them into the wreck that became 2008 (and not without some basis).
Then who does the new entity hire for all of the top levels of management? Why it’s the same boys and girls who steered the good ship GM onto the sand bar in the first place. Everybody needs to understand that this was NOT just a reorganization. The government and union that controls this new company had to actually HIRE these people!
For some months now, I have asked the B&B for some example of a successful corporate turnaround that did not involve fresh leadership. There may be one, but I cannot think of it. The silence in reply has been pronounced. This will not be one either.
Remember as Viet Nam dragged on and on, former hard core right wing hawks eventually became doves?
I see no difference.
The analogies to Viet Nam and GM are endless…
Has anyone considered that perhaps they did try to find someone from the outside but couldn’t. I mean at some point just bringing someone new to bring in someone new isn’t going to be any better than keeping what you already had. (this is all in terms of the CEO, there are talented people at GM, there has to be, it’s a matter of cutting the dead wood to allow those people to grow/function)
@rnc,
The point of bringing someone from the outside is to inject new ideas and approaches (see Mulally at Ford), and to not simply rotate the retreads, which is all GM has done.
GM lacks the courage, gumption, knowledge, leadership and public support they need to be successful.
trust me, they didn’t try. they are birds of a feather, cloistered, isolated, insulated, arrogant, self serving, egotistical, pompous, unrealistic, incompetent, and corrupt.
But I’m sure there are a number of talented, young(er), go-getters out there that would leap at the chance to build their reputation by revitalizing GM.
Really? You think that talented, young, go-getters are chomping at the bit to be paid less than they would be elsewhere to take over an unprofitable dysfunctional domestic auto manufacturer based out of Detroit? The most talented wouldn’t rather work somewhere else unless there were severely compensated for working for GM?
commando1, yes.
GM is claimed (by Obama and UAW) to be too big to fail.
Back then Viet Nam was supposed to be vital as not to trigger a Communist domino effect. As it turned out, it didn’t even after the American defeat.
You didn’t read my post. Perhaps they tried to find a Mullally and couldn’t. My point was if they couldn’t find someone better than Fritz to take the job, just bringing in someone to bring someone new in and say look “we’re making changes” isn’t a better strategy than keeping Fritz (would be called lip service actually). I mean do you think Mullally would have left Boeing for the 1.3m that Fritz is receiving? He was given a reason ($$$) to want to come to Ford. But even with that how many Mullally’s are there? I was thinking of the Brazilian cost cutter who stole plant X designs on his was to VW b/c VW promised to implement his new fangled ideas for producing cars (sorry can’t remember his name, but I’m sure everyone remembers the story).
wsn:
Gee I thought it was claimed by Bush when he loaned them $15 Billion?
The ‘General’ sentiment from my immediate group still clinging to the ship:
99% of us can’t believe LaNeve and Smith are still here, and that Lutz has been brought back. Three guys who were not quite at the helm, but certainly on the bridge, are somehow not responsible at all for our situation. So much for accountability at the New GM!
On the other moves: Mixed reactions, some good (Cowger, Clarke), some not so good. Everyone mostly waiting to see how this impacts them. Not a whole lot of work getting done as the whole organizational structure is still up in the air. And oh yeah, that nice 20% headcount reduction on the horizon (by Oct.1) doesn’t impact morale at all…
Never mind all the “Why they did what they did”
Here’s what we have:
The exact same union contract
The exact same products
The exact same managers
Less credit available to less dealers
Less money for advertising
How could it not fail?
Gee I thought it was claimed by Bush when he loaned them $15 Billion?
Something that Obama was in favor of and only those nasty right-wing Republicans (including McCain) held up in the Senate until Bush did it anyway.
Sure, not a lot of difference between Obama and Bush on the bailouts.
If you wanted someone who was unlike Bush on this issue, you didn’t vote for Obama.
None of this makes sense. I don’t mean the editorial, I mean the conventional wisdom about executive pay.
On the one hand, half a million dollars per year is considered too little compensation to attract top talent. Yet I see dedicated, knowledgeable, intelligent, decisive, hard working people in all sorts of managerial positions, who don’t make anywhere near $500K p/a. I’m a bit doubtful that the salary cap is really the problem.
But lets say we lift the cap. Who gets hired? People with industry experience? The top 45 people at GM,(and Chrysler, and Ford) are not top talent, as evidenced by the fact that they’ve driven their companies to the edge of the cliff and their fall is only broken by the govt. (And Ford has taken re-tooling loans and left itself an option to take bailout money, so don’t give that “not Ford” jazz) With no salary caps, the D3 should have been able -theoretically- to buy the worlds top talent. But it didn’t happen. It hasn’t happened in over 3 decades. Something is wrong with the conventional wisdom.
Either I’m right that people at much lower levels would be competent to do these jobs (and tickled pink to get $500K) or I’m wrong. If I’m wrong, then apparently the only competent execs have already been hired by Toyhondissundai – at what salaries, I don’t know. Pehraps the D3 aren’t paying well enough? (Though I’m guessing the Tohondissundai execs make substantially less than their incompetent American counterparts)
As I say, it doesn’t make sense. GM never hired the best when there was no limit on what they could pay. What difference does the cap make? At least the incompetents won’t be quite as grossly overcompensated.
One suspects that the buddy buddy relationship between execs and the BOD is circumventing the real market. If the BOD was doing their job, they’d try to put some downward pressure on these astronomical salaries – or at least expect results commensurate with the salaries being paid.
You are of course completely correct that GM (read Fritz) does not want a shakeup.
#
Buickman :
July 24th, 2009 at 4:07 pm
trust me, they didn’t try. they are birds of a feather, cloistered, isolated, insulated, arrogant, self serving, egotistical, pompous, unrealistic, incompetent, and corrupt.
Don’t sugar coat it, just tell us what you really think :-)
Lokkii, dont forget scalping suppliers for every penny meaning OLD GM reliability. More plastic intake manifolds, anyone?
@ Dynamic88
these guys haven’t seen the ball since the kickoff, they are the Detroit Lions of the car business.
rnc,
You’re thinking of Lopez. (Who was a douche bag IMHO.) I think the only way any outside talent comes to GM is if he or she is a retired or close to retired exec that Obama personally approaches about taking on the challenge. When the President says, “Your country needs you…..”, it becomes difficult to say “No thanks”.
Tex
If Govt Motors produces a good product at a competitive price, it’ll sell.
Let’s see: Old management, supervised by a Obamaloon clown who’d flunk engineering 101 and couldn’t even get past Law memorization school
Don’t bet on GM.
“The exact same union contract
The exact same products
The exact same managers
Less credit available to less dealers
Less money for advertising”
This is “new” GM? Gosh… how to even describe it? Meanwhile the competition is stepping it up into high gear with elite, world class products and refined methods.
rnc :
July 24th, 2009 at 4:17 pm
wsn:
Gee I thought it was claimed by Bush when he loaned them $15 Billion?
——————————————-
I am a Canadian. So I don’t favor any of the two American parties.
My point (analogy to Vietnam War) still hold, if the phrase “by Obama and UAW” is changed to “by Bush, Obama and UAW.”
But really, Bush gave the initial amount because he just didn’t care and didn’t want to be constantly bugged.
The whole point of the federal bailout: preserve the status quo.
Exactly. Saying anything more is superfluous.
BTW, I think the $500k threshold is high enough. Higher salaries do attract talents. But it’s hard to identify that one talent out of 100 cooperate ladder climbers.
A true leader would gladly accept $500k and fix the problem. When the problem is fixed, shareholders will reward him with a contract renewal and consequently better pay and stock and options.
Currently, the government is the problem of GM. No talent can fix that problem without a violent revolution against the establishment. (And that kind of fix is not worth the collateral damage, even by my standard.) Thus, no talent has stepped forward.
GM should have acknowledged Cadillac and Buick are dead brands and pulled the plug. Instead, they capped Pontiac (the G8) and Saturn. Penske is going to kick GM’s ass with Korean made Nissan’s. He will make Saturn work, where GM never could. Having the same clowns at the helm won’t keep the Titanic from sinking. I don’t know a single person where I work who has any desire to buy a GM car. A truck, yes, but not a car.
wsn:
“Back then Viet Nam was supposed to be vital as not to trigger a Communist domino effect. As it turned out, it didn’t even after the American defeat.”
Wsn, there are over 2 million dead Cambodians, Laotians, and those killed by communist insurgencies in Thailand and Burma who would like to have a word with you (if they could).
@jpcavanaugh
The only turnaround I can think of that comes close is the management buyout of Harley-Davidson in the early 80s.
Of course those guys immediately tooled up new product (the Evolution engine), engineered a protective tariff and slashed ruthlessly, including giving the last Harley in company a pink slip.
Nobody will ever admit this, but I think at this point it’s obvious that Toyota has threatened to shut down their NA operations unless GM is rendered impotent.
Part of the deal for them not leaving is that GM must ONLY promote from within.
A genius move if you ask me.
GM comparisons with the RMS Titanic need to stop; the Titanic is in better shape/less pieces, more is known about the Titanic’s future, a thorough investigation was had with people held accountable and management was (forcibly) changed on the Titanic.
RF,
More specifically, the idea that GM CEO Fritz Henderson’s hands are tied by the Troubled Asset Relief Program’s pay and bonus restrictions is ridiculous. Henderson is a GM lifer.
The idea that Henderson wants to promote other GM lifers and the idea that salary and bonus caps are making it hard to recruit new talent are not mutually exclusive. Henderson may like the fact that his hands are tied, but they are tied nonetheless.
Who (tf) would want to be a GM executive these days? Who needs the headache and stain on their resume if they aren’t going to get the big bucks?
BTW, based on Prof. Bernstein’s paper, letting Maureen Kempston-Darkes go was a mistake. She’s only 60, five years from retirement age, and managed GM’s Latin American operations, the part of the company that Bernstein says has a corporate culture the rest of GM should emulate.
Another notable difference between GM and the Titanic is that when the Titanic went down, both her captain and her principle builder went down with her. GM’s officers saw no reason to share the fate of their workers.
I hope folks come to realize the clear message from a lack of new management is that it’s already planned GM will unwind and die over the coming years.
They probably tried to find suitors for it, but most likely none of them could come up a plan better than the slow but controlled death, nothing came of it.
I don’t understand the criticism, especially since everyone knows the bad shape GM’s been in. If carlos ghosn can’t come with a better game plan, you think you could?
Zombie Watch is the perfect category for the GM story!
I don’t get what’s so new about The New GM other than they were able to write off a bunch of debt, get rid of some brands they couldn’t make work, and receive a huge infusion of public cash. Hell, Fritz even resurrected good ole’ Maxi Bob to act as the Wal-Mart Greeter to listen to customers to figure out what they want.
Yeah, right.
This is so painful to watch, but the last 20 years have helped manage my expectations. Too bad, as GM used to be a great American institution.
Bluecon,
my father-in-law works in a factory making professional cookware. The plant he works in is about the only plant owned by the company that is still located in America; the rest have been moved to Mexico, and now to China. Did these plants move because of some onerous governmental regulations regarding pots and pans? Is it because all the workers in the small midwest towns where the plants were located forgot how to work hard? I think the reasons are a bit deeper than these platitudes you offer.
I hate to double-post, but today’s Wall Street Journal carried a story about how CITI is getting several new board members. These new members have significant experience in banking turnarounds and other areas where CITI needs some hands-on talent right now.
So who is on GM’s new board? From what I have seen, nobody with a skill set even close to what GM really needs.
I don’t put much stock in the notion that hiring people up from the lower rungs of a corporate hierarchy guarantees that nothing will change within a company. As anyone that has ever worked for a large company will tell you, sometimes keeping quiet about your ideas and opinions is the only way to preserve your job.
Look at the “Inside GM: Mystery of Crap Interiors Solved” article from TTAC’s semi-recent past to see just one of what is assuredly a long and full history of lower-level managers and executives obfuscating and clamming up just to keep their jobs. If they were the ones calling the shot, perhaps they wouldn’t see the need to do this, or would otherwise ensure things were different. They may be very familiar with the current corporate culture at GM, but when it comes to actually getting things done knowing how the system works can be a major asset that an outside hire won’t have.
I agree on Buick and Cadillac. I have no interest in driving one, and neither do most people in their 20s and 30s that are interested in luxury/sport automobiles.
I believe that the ‘reinvention’ of Buick will be much like the experiment tried at Oldsmobile.
GM has a long history of too many brands/managing brands and not delivering product, but delivering haphazard marketing.
>>out in the real world, $500K doesn’t buy you a reasonable Human Resources manager
Seriously? Where should I send my resume (sans any HR experience). Sounds like I’m perfect for a job at GM!
And I won’t even argue about the signing bonus….
BILL
windswords :
July 24th, 2009 at 7:21 pm
Wsn, there are over 2 million dead Cambodians, Laotians, and those killed by communist insurgencies in Thailand and Burma who would like to have a word with you (if they could).
————————————————–
1) The propaganda for the Vietnam War was all about containing Communism for the safety of Americans. The result is that no Americans are really hurt after losing the Vietnam War.
2) Those dead people are not killed by “Communism” per se. Around the world, there are hundreds of militant groups and governments killing innocent people in the name of religion, or Communism, or anti-terrorism. Whatever ideology used as a cover, the reality is about over-population and fighting for resources.
3) The death toll would have been much shorter, had the Americans not joining the war and killing half a million Vietnamese.