Tuesday, May 11, 2010

The Revolving Door at GM

General Motors CEO Edward Whitacre is at it again.  Apparently frustrated with the company's lack of U.S. market share growth (it has actually fallen 0.4% since January), Whitacre replaced VP of Marketing Susan Docherty with ex-Nissan and Hyundai marketing chief Joel Ewanick [story link].  Ewanick now becomes the fourth person to lead marketing for the company in the last 12 months.

Besides the obvious effects on motivation created by demoting or firing someone, the fear that can ripple throughout the organization when it occurs over and over again can be immense.  The rapid pace of changes in leadership positions can cause significant damage to an organization that is in desperate need to pull together and focus on rebuilding its health.  It's important to note that executive-level replacements are the only ones reported - there may (or may not) be turnover in other positions that did not make the news.

The Destructive Effects of Fear

The potential effects of the fear created by this type of situation can include:
  • Teamwork:  When people fear for their jobs, they tend to shift into survival mode and focus more on their own survival than the company, as a whole.  When this happens, the level of political gaming within the company often significantly increases;
  • Risk:  People tend to be much less willing to take risks if they feel that failure can cost them their jobs.  And a careful approach to business and markets is definitely not what GM needs right now to resotre its competitiveness;
  • Creativity:  People need to feel relaxed and comfortable in their jobs to develop and use their creativity, while prolonged periods of stress has been shown to have the opposite effect.  Survival and growth in today's highly competitive auto industry will require GM to become much more creative and innovative in its products and processes;
  • Speaking Up/Voicing Concerns:  Fear can crush the willingness to disagree with or questions someone higher in the organization.
I understand that Whitacre is trying to create a sense of urgency in a company that has apeared lethargic for many years.  Developing a clear vision with aggressive objectives, getting in front of people to build enthusiasm and urgency around them, and removing the barriers that interfere with success, however, is much better than firing people to get this point across.

Short-Term vs Long-Term

Ewanick is apparently a highly talented marketing professional with an impressive resume.  However talented he is, though, I wonder it it is possible to develop programs that will quickly increase GM's share of the U.S. market.  A clever ad or marketing campaign may increase sales in the short-term, but sustaining sales and market share increases can only occur by getting close to customers and developing products that meet their needs and wants better than any other automaker.  This is not something that can happen within a few months.

Don't Ignore the Culture

I once worked in an organization where the CEO regularly fired senior leaders (among others) for "underperforming."  As a result, fear and backstabbing became the norm as people worried more about preserving their own jobs than they did about working together to improve the company.  It was a truly bad experience.

GM has suffered from a compromised immune system for many years, and to become competitive again, it must restore its health, which requires improving its strategies, systems, processes, and culture.  These things can't be done without a certain amount of stability at the top.  Continuing to hire, fire, and demote senior leaders can frighten and confuse the organization, something that GM really can't afford to let happen in its current weakened state.


Tim McMahon said...

Fear is not an effective motivator. I wonder why people tend to use it. I like to think it is a system flaw and not the person.. Maybe the CEO should look at why he can't hire the right person for the job.

Tim McMahon

Unknown said...

Notwithstanding their huge bricks n mortar infrastructure and consequent clinging to historic platforms, the first auto-maker who clearly grasps the new, (.... and not immediately visible) consumer needs, will be the winner. A company who, in the midst of a 30 year oil crisis launches The Hummer, hardly fits the bill.
Its going to take security and courage to anticipate what the consumer needs, not necessarily wants, and creating the new want is almost exclusively a marketing issue.