The Case Against Akerson, Part 1 of 3: Breach Of Trust

Renaissance_Man
by Renaissance_Man

Author’s note: When the government rescued General Motors from certain disaster, it was a chance at a fresh start. A chance to not just slow GM’s half-century of market share loss, but truly return America’s largest automaker to its place of pride. With debts erased, unions tamed and coffers restocked by the government, all things should have been possible. And yet, first under Ed Whitacre and now Dan Akerson, General Motors has consistently failed to live up to its true potential. Only new leadership can give the people of General Motors, to say nothing of the American people, an automaker they can be truly proud of.

Like every individual, every organization wants to present its best face to the world; it’s why the PR business exists, and why your 14-year-old daughter spends hours manicuring her Facebook presence. But when the desire to be seen in a positive light becomes too strong, individuals and organizations often end up hurting themselves as much as helping. Put in simple terms: if you misrepresent who and what you are too many times, you lose credibility. This seems to be what is happening to GM’s CEO, Dan Akerson.

From the very first instance of his involvement with General Motors, the story of Dan Akerson shot through with contradictions, conflicting stories and confusion. In interviews, Akerson has cast his coming to GM as his answering a “call to service,” comparing it to the motivations taught at the US Naval Academy and saying he never thought he would lead the automaker. But rather than being “called” by the government from among the nation’s CEOs, Akerson himself lobbied to be put on GM’s board. Naval Academy connections, rather than Naval Academy values, explain why Dan Akerson was “asked” to serve on GM’s board.

From this initial misrepresentation, a pattern quickly emerges. Upon becoming CEO, Akerson maintained that it was all a big surprise, and has unequivocally stated for the record that “I didn’t seek this job. The board asked me to do it.” Yet, as with his appointment to GM’s board, Akerson takes far too little credit. According to his predecessor as GM’s CEO, Ed Whitacre, Akerson volunteered for the job after earning a reputation for being one of the board’s most “consistent critics.” Whitacre writes in his book, “Dan wanted to be chairman and CEO from day one.”

Of course, the most ambitious people often take the greatest pains to conceal their ambitions, and if Akerson were simply wrapping his desire to run GM in the trappings of national service, the sin could be overlooked. Unfortunately, his entire tenure has been characterized by consistently problematic relationship with the truth.

One of the most egregious examples of this involves GM’s decision not to sell Opel. Early reports indicate that Akerson was one of two board members in favor of selling Opel, and unnamed sources even explained his logic to Reuters thus: “Europe was a market of national champion automakers — VW in Germany, Fiat in Italy and Renault in France — and pan-European luxury brands like BMW and Daimler AG’s Mercedes, a person familiar with Akerson’s thinking said. Opel is neither and Akerson believed it would be a long, uphill battle to fix it.” Then, as Europe’s economic downturn deepened and Opel emerged not only as GM’s main source of losses but as a drag on its stock price, Akerson apparently changed his story. Suddenly the NY Times reported the exact opposite story: that Akerson was one of two board members who voted to keep Opel.

The fact that Akerson has allowed these two mutually-exclusive stories to linger without clarification isn’t just a sign of his duplicity, it indicates the extent to which he lacks a strategy for General Motors. But that argument deserves its own essay, and will be explored in the second part of this series.

Thus far, the pattern of Akerson’s deception paints a clear picture of a man driven to place himself atop GM for reasons of personal gratification rather than because he had the skills or strategy to turn the automaker around. This impression is confirmed by his latest truthfulness challenge, which involves his alleged request for a pay raise. When CNBC obtained documents showing GM had requested a 20% pay raise for Akerson, GM’s official communications team hit back, denying the story and asking media outlets to “correct the record.” But, despite GM’s claims that it had not officially requested a raise for Akerson, an earlier report by the Special Inspector General for TARP revealed that GM had in fact requested pay restriction exemptions for Akerson and other executives, but had been rejected. The SIGTARP’s finding was that many of GM’s top-level executives’ compensation, including Akerson’s, were already “excessive” even before GM requested exemption from restrictions.

Men engaged in “national service” don’t typically make millions of dollars each year or request 20% raises, and in order to preserve his image as a selfless leader, Akerson used GM’s resources to imply that government watchdogs lied about his un-servant-like behavior. As a result, Akerson didn’t just hurt his own credibility, he hurt GM’s as well. But then, Akerson’s willingness to sacrifice the image of the company he is supposed to be reviving in order to preserve his personal legacy has already been established.

When Akerson suddenly and unexpectedly fired his Global Chief Marketing Officer, Joel Ewanick, he argued that Ewanick had agreed to a Manchester United worth hundreds of millions of dollars without his approval (even though Ewanick had been hired with the promise of “autonomy”). Akerson went on to sign the deal anyway, and what followed was an embarrassing series of leaks and counter-leaks that undermined confidence in GM’s already rapidly-rotating executive ranks. When the dust settled the picture was fairly clear: Akerson simply didn’t like Ewanick. But in order to hide his true motivations he put GM’s C-Suite through an unnecessary and morale-sapping public ordeal.

From his first involvement with General Motors, Dan Akerson has sought to wrap a personal ego project in the banner of national service. And as his tenure has dragged on, the disconnect between his stated intentions and his actions have created a credibility problem not just for him but for the entire company. Indeed, Akerson has been consistently willing to weaken GM in order to preserve his own legend. And, as every student of corporate culture knows, the longer this dynamic goes on unchecked, the deeper it will be embedded in GM’s culture.

Of course, if this were an isolated issue, the talented people of General Motors might be able to overcome the self-destructive behavior of its selfish and deceptive chief executive. But Akerson’s self-serving duplicity is intimately tied to his utter lack of a vision or strategy for General Motors, a topic that will be addressed in Part Two of The Case Against Dan Akerson.

Forthcoming: Part 2: Lack Of Strategy, Part 3: Loss Of Confidence.

Editor’s note: Renaissance_Man is a nationally and internationally known industry analyst who prefers to remain anonymous

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  • 360joules 360joules on Mar 02, 2013

    I am not a Bertel pawn. In fact, he once deleted what I thought was a funny post comparing the VAG up! (which he seemed very high on) to the German slang for vomiting. But in his formative professional years, he watched Opel dramatically lose market share in its home market. Perhaps he was part of the cause of Opel's decline (Ascona marketing vs. Golf), perhaps he has an axe to grind professionally against Opel or GM. Maybe he secretly blames GM for Opel's decline on the death of a beloved relative who was an Opel employee [merely a speculative example]. Perhaps some other agenda but he has allowed someone post with information he finds relevant with an editor's note. Waiting for Part 2 & Part 3.

    • Bertel Schmitt Bertel Schmitt on Mar 02, 2013

      I do not delete comments (except for the extremely rare instance where the content would be a violation of law.) Even if someone gets banned, the comment stays as an example for what one gets banned. I would have remembered it. First, there is no more VAG. Long gone. I was there when it was secretly buried. See http://www.thetruthaboutcars.com/2009/05/vwporsche-auto-union-what-the-nsfw/ Second, Up! has nothing to do with any German slang for vomiting I would be aware of. The usual slang wort would be kotzen. If your comment gets caught by the Wordpress-internal "bad word" list, it will be flagged. Simply edit-out the bad word .... I am sure "kotzen" would not be on the list. The rest of your speculations are a few continents off the mark.

  • Type57SC Type57SC on Mar 02, 2013

    Fair and balanced. The company looks underperforming, but doing one-sided pieces that are held up as the "truth" about cars isn't doing the trustworthiness of this site any favors. I'm sure he's done some worthwhile things too. Tossing Ewanick sounds worthwhile for example, but stacking up opinion and conjecture against him like above sets off my bullshit meter. Again, I'm not praising him as Mulally/Marchionne caliber, but this was an opportunity missed to write a pros

    • See 1 previous
    • Type57SC Type57SC on Mar 02, 2013

      @Lorenzo I don't assume that it's supposed to be an investigative piece; I bemoan that it is not, since that's what I'd like to read here. It certainly doesn't look to be written by a GM insider, given the lack of new information.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
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