By on February 21, 2009

[Editor’s Note: This is the last part of a four-part series by Dr. Rob Kleinbaum. Here are parts 1, 2, 3. A PDF version of the entire editorial is available, courtesy of Dr. Kleinbaum, here.]

Serious consideration needs to be given to a radically different organization that would give people overall business responsibility and accountability and increase their contact with markets and the external world. The current direction is to move away from integrated business responsibility by creating strong functions with weak business units, and the problem is compounded by making the transition slowly, so there is continual confusion and conflict over who is responsible for what. The company is doing this to “leverage its global strengths” but the real effect is to create an organization where fewer and fewer people are actually running a business or have contact with the outside world and control is becoming more and more concentrated in a few people.

Education and training need to be made part of everyone’s life, from the most junior to the most senior. This becomes even more important in times of stress, as it demonstrates long term commitment to people and, more importantly, to the future. A portion of this education should take place outside of GM to increase exposure to people outside the industry. In the scheme of things, the costs of education and training are truly negligible. If someone asks to calculate the ROI, it should be used as a litmus test for determining candidates for structural cost reductions.

GM’s decision making processes need serious revamping. Despite improvements, most meetings are still exercises in procrastination, rubber stamping or idea killing, without anything that would pass for genuine debate and dialogue. Dealing with complex issues requires genuine discussion, feedback, and intellectual engagement. Changing the people, along with the structure, should help enable this key cultural change but there must also be a conscious choice among the leadership that they want to make this transformation.

These modifications would also disrupt patronage relationships and should permit merit to become more important, especially if there is an influx of outsiders and overseas managers. Also, in the same way that having an African American become president of the United States will change many American’s notion of what it means to be an American and what can be accomplished, having someone who is genuinely “different” will help many people in the company see GM differently. If the competent people in Brazil see that there is a real chance they can reach the top, it will change their level of engagement and the company will be much better for it.

Implementing these changes piecemeal will not be enough to make meaningful changes in GM’s culture, because they are all necessary to reinforce one another to grow a different and progressive culture that is self-sustaining. The more challenging question is whether they would ever be implemented in the climate of crisis by the people currently running the enterprise.

They are certainly intellectually capable of doing so, but seem wedded to the momentum plan and believe that their main task is to get through the current crisis and to re-negotiate its labor contracts, trim its dealer body and brand portfolio, and lower its cost structure, not deal with cultural drivers. The mainstay belief is that all will turn out well if only they have the chance to implement their plans, starting with the much heralded Volt. Then they will consider turning their attention to considering these types of “secondary” issues.

What you believe about this position depends on your level of confidence in the company’s ability to execute its plans, which have always sounded good and well reasoned. These operational issues are absolutely critical to the future of GM. The importance of dealing with the culture is that unless there is a substantial change in the company’s beliefs and values, the most likely outcome is that, once again, too little will be done too late.

The very real crisis the company is in would permit GM to make the cultural changes that would be very difficult in “normal” times and provide a once-in-a-generation opportunity to transform GM back into a global powerhouse. GM has so many talented people in it and almost certainly has the potential to turn around, but not until it develops a culture that lets it be truly progressive rather than one that continually defers the hard choices, holds it back, stops talented people from making contributions consistent with their ability, and prevents its plans from becoming reality.

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19 Comments on “Guest Editorial: Retooling GM’s Culture, Part Four...”

  • avatar

    Was not there a blip of cultural change when, in crisis-mode, John F. “Jack” Smith was brought over from Europe for the CEO position from Stempl ? Or, was it more than an blip but then the whole Lopez thing ruined the change-in-progress ?

  • avatar

    Jack Smith did effect some change in GM’s culture, as did Wagoner. The current Malibu, CTS, and Lambda crossovers could never have been created by the old GM culture. Just not nearly enough change.

    The key issue is that the “boss’ boss” hardly ever knows what’s really going on at the working level, in any organization. So to expect any leader to make key product decisions, rather than the people actually creating the product, will yield subpar products.

  • avatar

    I appreciate Dr. Kleinbaum publishing this piece but these are what we use to refer to as “B-school baby-$h!t” items that are standard suggestions from Mercer, McKinsey, Bain (you pick) consultants. (maybe I worked for large Corporate America for too long)

    These items are genuinely the type of things all large corporations should implement but frequently don’t, at least not in the U.S.

    It’s not just GM but also companies like Citicorp, Bank of America, GE (at one-time) anyway), CSX etc. all suffer from an insular hide-bound perspective that is ultimately destructive. And when most big corporations are presented with these types of fix-it recommendations, they usually say “thanks” and then put it in file 13.

  • avatar

    What about Lutz? As I recall, he was with Ford (Europe), BMW, and before that Opel. Doesn’t seem like his overseas experience changed much at GMNA.

  • avatar

    Personally, I think that the steps need to be more radical than those outlined in the article. My proposal to change the culture:

    1. Break apart the company into its constituent brands

    2. At each new company, the following rules should apply:

    a) No person can become CEO unless she/he has lead a successful vehicle development project (at any company)

    b) No person can become COO unless she/he has lead a vehicle assembly plant (again, at any company)

    c) Each person at the VP level or higher must spend 2 weeks a year assembling vehicles and 2 weeks a year working on a vehicle development project

  • avatar
    Robert Schwartz

    If GM had started changing their culture when GM Death Watch #1 was posted, they might have had a chance. But they are now out of time and out of money. They are doomed.

  • avatar

    A few more thoughts on how I think affirmative action programs are hurting GM.

    One could say …

    passion + interest — > excellence.

    The modern feminist/socialist kool-aid being sold in America is that the men = women, and that all differences are probably just a result of socialization. Yet despite the media proclaiming equality between the sexes for decades, it is clear to anyone without blinders on that men and women have different aptitudes and interests.

    How many women do you see moding engines, swapping camshafts, installing after-market brakes, shocks, exhaust systems, or installing tripped-up stereo systems? Basically nil. How about women building motorbikes or restoring automobiles from the ground up? Almost nil. How many women do you see that have a real passion/interest for things in engineering/design, such that in their spare time they have hobbies where they build and engineer things? Rare again. Go to just about any auto forum and it’s generally 95%+ males or more doing the posting. This shows who has a passion/interest in the auto industry. Go to a technical auto-forum where they are discussing things like camshafts, transmissions, performance modifications, and the gender of the posters will likely be in the area of 99.0%+ male. If men = women in all respects, then where are all the women that have a passion and interest for these things? Something is terribly wrong with the gender equality picture.

    It’s quite evident that men have more passion than women for things that have to do with the intricacies of engineering and automobiles, simply put — building things. It’s what men are hardwired for and like to do. So if women in general show no real interest and passion in engineering/design fields in general, and in the auto industry, how do you expect women to excel in these fields? The simple fact is it is unlikely they will.

    The Broken Culture in the Auto Industry …
    There, I saw the reality of the culture. White collar workers who are there purely for a paycheck, not to make something great. The thought of working late was inconceivable, because work can always wait, but their need to veg out at home could not. There was no concept of actually having better quality than the Japanese and no emotional response to always being ranked below a competitor. To sum it up, everyone was completely satisfied and comfortable with mediocrity.

    An interesting observation — but not unexpected with the excessive push for the hiring of women and the “feminization” of engineering companies like GM. Hiring under-qualified people (as evidenced by excessively high levels of affirmative action) can cause under-performance because one ends up hiring less qualified people. But additionally, hiring women to an engineering/design company can also bring other problems to the company that lead to under-performance — i.e. women generally display no real interest and passion for engineering/design (some may say they do, but actions speak louder than words).

    The more a company like GM becomes “feminized,” the more it tends towards mediocrity and poor performance because a larger and larger portion of the employees at the company (women) have no real interest/passion in the endeavor. For them, it’s simply a job or their “career.” You end up with a bunch of 9-5 women employees, who go home at the end of the day and think about shopping, their next pair of shoes, or what makeup to buy for the next day. Women rarely have any hobbies or extracurricular activities that will relate to a job in an engineering/design capacity. Male employees who spend their time doing engineering hobbies will likely learn all types of things in their spare time that may be applicable to the job.

    GM needs to abandon affirmative action programs to compete with companies that have hiring systems based on more competitive standards and amore realistic assessment of the qualifications of men and women. The outside interests of men vs women make a difference — it’s not just about the piece of paper that says you have a degree.

  • avatar

    The more a company like GM becomes “feminized,” the more it tends towards mediocrity and poor performance

    A lame excuse. How many women do you see in the upper management ranks at GM, the people ultimately responsible for the stultifying culture and current state of wreckage in the company? How many of the upper management guys do you think have any passion for tinkering with cars or engineering-related hobbies? Do you think GM finance wonk Wagoner has ever worked under the hood of a car in his life? The denigration of engineering has little to do with gender issues.

    Companies like Honda and Porsche have strong engineering-oriented cultures and their management ranks are dominated by engineers. GM is dominated by finance grifters whose grubby goals are to make profits, not cars. Who would you rather have design and build your vehicle?

  • avatar

    You have some courage to speak up, Blastman. I have seen both sides in industry, including when I worked at GM. Some women are very capable engineers and make great contributions. Other women are promoted based only on having a vagina. The latter category are the worst employees, because they feel they are entitled to promotions based on being a woman, not on performance. I think having women engineers is a plus, if they are hired and promoted based on merit.
    Promotions and hiring have to be based on merit. Otherwise the organization is doomed. I also feel though, the organization has to work as a team.

    Men should welcome women without picking on them (which many men do). Women need to try to not get men in trouble – overlook the occasional sexist comment or blue joke; men are men, don’t expect men to behave like a little girl. And women should not expect promotions over men based solely on being a woman. If men and women engineers look out for each other as part of a team, then women are a tremendous asset to the organization.

  • avatar

    Interesting comments.

    I’ve worked with organizations where there are plenty of men who have arrived at their current position without merit. The Peter Principle is applicable to any organization that does not reward results over seniority.

    Blastman is close, but a bit on the sexist side for me, perhaps it’s an element for GM. I’ve worked with companies where female engineers bring an element of practicality to a male engineer’s wild (and uneconomic) dreaming.

  • avatar

    Blastman has a point, but a well-educated female engineer that is willing to listen, yet is not ingrained in the “gearhead” culture, can be an asset, as they are like a ‘tabula rasa’, no preconceived notions about the product and more likely to innovate by asking “why not”?.

    As to Blastman’s point about the lack of passion equating to no grease under the fingernails; yes I’ve seen it, and if that inexperience is also coupled with a lack of enthusiasm to learn the ‘nitty gritty’, then that engineer generally migrates onto the management track… which is a problem in many organizations.

  • avatar

    I had an enlightening conversation with a relative who is well placed in the Union. He told me a lot of the workers are of the opinion they deserve to be on the government teat and that is that. They see the government covering any and all shortfalls in sales with tax money and tacking on annual increases in pay and benefits. Stuck in the glory days of Big 3 market domination and horsepower wars.

    You really can’t talk economics with these people, they just don’t care. if the taxpayers have to send 100 billion a year to the “American” car companies (except of course those scab transplants) then that is what we “must” do.

    So in taht vein we have management. If you are looking for drastic culture change and revolutionary thinking, forget it. Working within the constraints of the Union there is no way for them to change how these cars are built, the real costs involved, and to develop the kind of flexible constructing techniques the transplants have.

  • avatar

    Blastman: It’s quite evident that men have more passion than women for things that have to do with the intricacies of engineering and automobiles, simply put — building things.

    And I have worked in several places where the male engineers didn’t tinker and build stuff in their time off. They didn’t fix things at home and hired out as much repairs as they could. In short they were daytime engineers. Women fit right into these environments b/c they too might not do any tinkering at home.

    Maybe the problem is that the engineers are too removed from building a car and too insulated by layers of bureacracy or CAD software…

    c) Each person at the VP level or higher must spend 2 weeks a year assembling vehicles and 2 weeks a year working on a vehicle development project

    And the one I’d add is that these candidates need to work in a dealership a couple of weeks AWAY from the insular Detroit culture. Put them on the coasts where the imports sell more often. Let hem sell casrs to customers, let them argue directly to the customer why the Detroit product is the best bet. Let them see what issues the service deaprtment has.

    This could help them understand how their product fairs under the care and ownership of the average consumer, what it takes to keep them alive.

    REALLY, I would rather they “serve time” at an Asian dealer and factory but I knwo that isn’t realistic.

  • avatar

    “How many women do you see moding engines, swapping camshafts, installing after-market brakes, shocks, exhaust systems, or installing tripped-up stereo systems? Basically nil.”

    And this makes them bad engineers exactly how? Certainly, they’d be at no disadvantage at Toyota, which doesn’t heavily target pistonheads. And is successful.

    GM was on its downward trajectory before reaching out to women and minorities and I doubt that reaching out to women and minorities had anything significant to do with the DexCool, gasket and manifold disasters. It’s doubtful that they’d made it far enough up the organization in great enough numbers to make a difference. GM’s Old Guard did that themselves.

    The blog post cited has no significant reference to women and minorities, so I don’t know where Blastman gets his bizarre conclusions.

    Women and minorities come in all different temperaments, as do white men. Some will make good engineers, some won’t. Same as for white men.

  • avatar

    How many women do you see moding engines, swapping camshafts, installing after-market brakes, shocks, exhaust systems, or installing tripped-up stereo systems? Basically nil. How about women building motorbikes or restoring automobiles from the ground up?

    One of GM’s best engineers (if she’s still there) is one Anna Stefanopoulou, winner of an award in 2002 for being one of the top 100 innovators in the US under age 35 (see my brief on her for that award here

    Certainly there are fewer female pistonheads, but that doesn’t mean that they lack men’s potential for excellence in engineering. Advancement should be based on merit, not gender, or racial background.

  • avatar

    Advancement should be based on merit, not gender, or racial background.

    Yes, should…
    Then what’s the purpose of the Affirmative Action Program???

  • avatar
    jerry weber

    Oh please, now it’s the cultural debate with GM. Look it’s not that women are or are not at GM. It is much simpler than that. When a company is a perennial loser in it’s industry, the best and the brightest don’t go or stay there. GM has a culture all right, but it is populated by medicority. Thirty years of downsizing not only got rid of good talent, but stunted the hiring and retention process for GM. Engineers and designers want to be with a winner and a stable one at that. Upward mobility works best in growing enterprises with yes a rock solid culture. I predict that Toyota and Honda will weather this storm the best of any automakers because they have trust, loyalty and continuity with their employees. The German builders will be second to the Japanese in this regard. Detroit, does it even warrant a mention?

  • avatar

    I had a girlfriend in university that did her thesis on additives to alternative fuels that would allow an internal combustion to function more closely to how it worked while burning gasoline. Also, she drove a Honda Civic that rusted out so badly, the front bumper and fenders fell off. She fabricated her from materials she could find and the car remained street legal.

    So there are women out there who are more car people than most of the car guys I know. Too bad she never got hired by any car company. On hindsight, it’s a good thing she never got hired by a car company.

    GM was/is just not one of those companies that recruit the best and the brightest and give their people an environment to do their best work.

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