The Downsides Of "Culture Change": GM Sued For Age Discrimination
I love General Motors. I’m bringing this age-discrimination suit action because it’s the right thing to do — for me, my family, as well as my GM peers who have been severely affected by GM’s conduct.
A critical aspect of GM’s turnaround was breaking a culture that has been held up for decades as an example of insularity, stagnation and inefficiency [for more read Ron Kleinbaum’s classic four-part editorial on the subject here], a task that various recent CEOs have gone about differently. Fritz Henderson had a “change agent” vanguard approach, while Ed Whitacre took more of a “set tough goals and fire regularly” tack towards GM’s culture wars. But regardless of differences in tactics, everyone’s agreed that GM’s culture needed to be seriously retooled if the company’s huge advantages after a government-backed bankruptcy-bailout weren’t going to be pissed away, and as a result a lot of GM’s “lifers” found themselves on the outside looking in. And rather than slinking away, one of those jilted lifers is suing GM for age discrimination.
The Freep reports
[Daniel Plouffe’s] lawsuit says that when GM emerged from bankruptcy in 2009, it embarked on a campaign to replace older executives with those under 50 by encouraging older executives to retire.
Many of those who didn’t retire were demoted out of the executive ranks with no chance of being considered for future promotions, regardless of their qualifications.
Plouffe, who has worked for GM since 1971, said he was demoted to a level 9 position, resulting in a 20%-25% pay cut, even though he assumed the responsibilities of three other executives who left.
He said a succession of GM officials told him that he was being demoted because the company wants to promote younger people — those under 50 — even though his last performance evaluation said he far exceeds expectations.
Plouffe is seeking class action certification, but legal experts say he’ll “face a daunting task.” After all, to defend itself GM simply needs to prove that there were business advantages to thinning the executive ranks. Still, perhaps this will make current CEO Dan Akerson think twice about saying things like
It’s just like the Communist party in China in the 1960s: There has to be a cultural revolution here.
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Suspecting Plouffe does not care/know about Tier 2 in the UAW. It's reverse racism!
Or maybe it is another case of clueless hamhandedness by GM management that has never had to do this before. I have long maintained that the bankruptcy process did not clear out enough management deadwood. If GM wanted to clear out more people and at lower levels, it could have left everyone at the old company and selectively hired at the new GM. Instead, it has always seemed to me that they tried to run the bankruptcy so as to benefit the old-boys club in management. Now if GM is really selectively demoting only older managers, you are doggoned right they are going to get sued for age discrimination, just like every other company in the country would if they do this sort of stupid crap. When the guard changed at Chrysler in the early 80s, Iacocca put strict performance goals out there for managers. Those who didn't meet goals either resigned or got fired. Not just the old ones, although this is probably how it worked out. There are some ways you can thin management ranks and some ways you can't.