Sergio Marchionne Is Not Superman, Will Delegate Responsibility

Edward Niedermeyer
by Edward Niedermeyer

Every time Sergio Marchionne makes the headlines, I half expect him to announce that he is not merely a mild-mannered accountant with a fondness for frump, but a mighty superhero, born to rescue failing automakers and the American and Italian ways of life. Having scored a sizable stake a bankruptcy-rinsed Chrysler for no money down, Marchionne has been ruling his Italian and American empires with resolute authority… and 50 direct reports. But Automotive News [sub] isn’t reporting that Marchionne spends his spare time in tights and a cape fighting Russian bandits and Italian labor unions… the word is that Sergio Marchionne is ready to delegate some authority. According to AN’s sources, Marchionne’s plans includes three basic planks:

  • Create four regions — Europe, North America, Latin America and Asia-Pacific — each with a regional boss.
  • Require brand bosses, who are powerful in the current organization, to work closely with the new regional bosses.
  • Establish a new layer of management, tentatively dubbed the steering committee, that would help run Fiat and Chrysler.

But is this new structure really going to end what AN terms “the one-man Sergio show,” a routine of 18-hour days and “catching catnaps on the plane as he flies constantly between Turin and Detroit”? Will it really “help overworked Chrysler executives catch their breath and adopt a saner work rhythm,” as AN puts it? That question remains to be answered…

In a move that’s symbolic of Fiat-Chrysler’s new regional flavor, Marchionne will announce the new 25-member steering committe when Fiat’s board meets in Belo Horizonte, Brazil next week. The only other details about the restructuring are as follows:

During the past 40 days, the workaholic CEO has been selecting the 25 executives who will run the two automakers. Characteristically, he is keeping his own counsel. He is talking with candidates about joining the steering committee.

Below Marchionne, Fiat and Chrysler now are largely run by brand bosses. The new plan would create four regions with a boss for each. Brand CEOs are tentatively scheduled to report to the regional bosses and not to Marchionne.

Marchionne would lead the 25-person steering committee. The four regional bosses would sit on the panel with heads of functions such as engineering, purchasing and sales.

The sources expect Marchionne to choose roughly an equal number of Chrysler and Fiat executives to sit on the steering committee. Executives of Fiat Group subsidiaries also may sit on the committee.

Executives who do not get a seat on the steering committee will continue to lead their functions in the Fiat and Chrysler organizations.

There’s actually one more bit that’s especially interesting:

The committee could take some operating pressure off Marchionne. But 50 executives, split about evenly between Chrysler and Fiat, would still report directly to him. The new structure would create many dual reports: Regional executives in, say, purchasing would report to their boss on the steering committee and to Marchionne.

The bulk of this AN piece is spent making it seem like Marchionne singlehandedly keeps Chrysler afloat, and that the impetus for reform is to take some stress off of him. But if he has the same number of reports and is merely adding in another layer of management along with the confusion of dual reports, it’s hard to see what this accomplishes in terms of either efficiency of management or reducing Sergio’s workload. Which leaves only one motivation for the change, namely succession (a motivation that is sure to nurture the inevitable dual report-sparked infighting). So maybe Marchionne is a superhero after all… only his superpower is the ability to add a level of management while not reducing his reports and getting the media to report it as his company growing independent of its supernatural benefactor. The real question that none of this answers is how does Marchionne pull of his rescues of Fiat and Chrysler if even he has failed to rescue himself from his 50 reports?

Join the conversation
  • Advo Advo on Jul 18, 2011

    From now on, he'll be known as 'The Big S'. (With the meaning of 'S' to be determined later by how well his company does.)

  • Lorenzo Lorenzo on Jul 19, 2011

    What he's doing is diluting the power and influence of Italian unions and politicians on the overall company by limiting them to Europe so he can use the Latin American and Asian regions as counterweights, and setting up a global company likely based in North America. The duplicate reports idea is inefficient, but an effective divide-and-conquer strategy. The Auburn Hills HQ trial balloon was shot down by the proud Italians, and he's making sure they can't thwart him again. It's not about corporate structure, but crafty power politics.

    • LanciaDave LanciaDave on Jul 26, 2011

      Ah, yes, I see. Like when Michael Corleone met with the other families in Cuba. Here's a deal that's completely new and differrent that sounds good to everyone... and allows better long term plans... especially for some.

  • Tassos And all 3 were ordered by Fisker's mother. Seriously, given Fisker's terrible record of Failure in the past, only an utter loser, (for example, VGhost or Art Vandelay?), looking for a BEV terrible enough to be a proper replacement of his 11 mile range Fiat 500E, would order one of these. (apart from Fisker's mother)
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