Talent Search: Fiat Chrysler Steps up the Hunt for Sergio's Replacement
Fiat Chrysler Automobiles CEO Sergio Marchionne has just under two years left at the helm of the multi-national automaker, after which he’ll slowly enter the cushy existence of the semi-retired professional. The sweater aficionado will continue on as CEO of Ferrari until 2021, and still serves as chairman of CNH Industrial and vice-chairman of Dutch investment company Exor.
Many hats. However, FCA needs to find someone willing to wear just one.
As Marchionne’s April 2019 retirement date grows ever near, the automaker has stepped up its search for a successor. No, don’t bother submitting your resume just yet. While it’s probable a few brave outsiders might find the prospect of figuring out what to do with the Fiat brand exciting, FCA’s CEO search isn’t taking place outside company confines. There’s already a lengthy list of possible top dogs.
According to sources who spoke to Bloomberg, the search is growing ever wider. It’s not just people in Marchionne’s close orbit, either. A number of second-tier managers could also find their names in the bucket.
Marchionne wears many unofficial hats within the company, involving himself in almost all areas of the operation. Because of his omnipresent approach to leadership, the sources claim a shakeup of the company’s management structure could be in the cards leading up to Marchionne’s retirement, with more responsibility heaped on other executives. The company doesn’t expect his successor to take a similarly hands-on approach.
“Replacing Marchionne is a monumental task for every internal heir,” Giuseppe Berta, a professor of economic history at Milan’s Bocconi University, told Bloomberg. “The only way to succeed is to avoid imitating his strong leadership’s style.”
So, who’s on tap for a potential CEO job? The roster reportedly includes two top aides — Alfredo Altavilla, chief operating officer for Europe, Africa and the Middle East, as well as Chief Financial Officer Richard Palmer. Below these two men, a host of familiar names appear.
Jeep head Mike Manley is one potential successor, as is U.S. sales chief Reid Bigland, who also heads up Maserati and Alfa Romeo. Both men are seen as rising stars in the company. Other options include Harald Wester, the company’s chief technology officer, and Stefan Ketter, head of FCA’s Latin America operations.
While the automaker has a number of choices at hand, don’t expect an official shortlist just yet, the sources say. FCA hopes to eliminate its sizable debt load (roughly $5.6 billion) by the end of the year and raise $4.5 billion in cash in an attempt to make itself look good for a possible merger. If that were to happen — a big if, as we’ve already seen the company’s lack of success in wooing General Motors and Volkswagen — Marchionne could be out the door sooner or later.
[Image: Fiat Chrysler Automobiles]
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That $5.6 billion debt is net. Sergio has been masking the real debt by keeping an inordinate amount of cash on hand, money that should have been going into new product development. The only hope for a successor is that the downturn is mild, and there's a rebound in 3-5 years. Then all that cash can be put into new models to generate profits to pay off the bonded debt. That's a one-shot deal that must work, or the company will have to be broken up and parted out. The alternative is a merger or buyout by a company rolling in cash, something Sergio has been unable to engineer. The Agnelli family wants out of the auto business, and won't want to continue to twist in the wind with FCA, like the last decade.
I hope FCA is ready to quickly identify holes in management if they want to replace Sergio with someone who isn't a micromanager. There are things mentioned in the article which reminds me strongly of the situation at Commodore after Jack Tramiel was shown the door. Tramiel, a noted micromanager (some even called him a nanomanager), had his fingers in so many parts of the business at a direct level that simply dropping in a new CEO without doing an analysis of the resulting functional management structure left large swaths of the business without a proper line of authority through a senior manager who understood what the unit was doing. Yes, Irving Gould's replacement for Tramiel was especially ill-suited for the industry he was hired into but by the time Commodore realized it had a problem it was almost too late -- if the banks hadn't believed they would recover more of their investment by propping the company up until receipts from Christmas 1985 came through, the company never would have seen 1986 at all.