What’s wrong with General Motors?

It seems that #GeneralMotors has deteriorated and is in trouble yet again with:

Meanwhile, Toyota actually increased net income almost 40% in 2018, and earned a net income of $17 billion in 2017.

Why is #Toyota thriving?  While #GM struggles?

ŸDoes corporate staff dominate decision making?

To support its line management large companies develop staff organizations that include advisory services for corporate planning, manufacturing services, market development and finance. Line management produces sales and profits through the functions it manages including manufacturing plants, sales force, supply chain, plant cost accounting, etc. These are separate organizations.

Is General Motors’ driven by its staff organization versus line management driven? In actual practice does General Motors’ staff organization run the company? Do they set goals? Do they develop and write the strategic and operating plans? Do they specify what products are to be sold? Are line officers subordinate to the directions from staff officers?

If its staff organization dominates decision making, this is a serious fault that will lead to continued failure.

Line management leads successful companies, Staff organizations do not.

ŸOut of touch management.

It was once reported in a #Bloomberg article that General Motors’ senior management may not have been informed of the infamous ignition switch failures that resulted in consumer fatalities. The astonishing reason provided was simply,“people didn’t want to push bad news upward” within the company.

Was GM management truly unaware of this stunning problem for a decade?

Depending on a company’s culture, lower ranking employees may not come to a chief executive officer’s office to reveal a problem. Some may not speak up in a meeting with higher ranking officers. Even senior officers may remain silent so as to not violate an unspoken pecking order, keeping vital information from being considered.

If we are to believe that management was unaware of this extremely serious defect for a decade, it suggests General Motors is dysfunctional, lacking an informed leadership. This raises the question of what other hidden operating problems remain at GM its #CEO may not be aware of today that can affect its performance and reputation.

One example: The Chevrolet Volt electric vehicle was first introduced in 2010. It will be discontinued in 2019. Why did it fail? Why did it take 9 years to realize it was a failed product? It was reportedly considered a failure some years ago – well prior to the decision to discontinue production. Was senior management even aware of this failure?

Does GM have a hidebound culture that isolates senior management from accurate and timely information? Thus failing to have a basic understanding of GMs’ operating fundamentals and its internal operation.

ŸAbsence of hands-on management by senior officers.

Focused hands-on management requires that the Chief Executive Officer and senior officers submerge themselves into lower organization levels. One must enter into the “bowels” of the company. Go down to the plants, warehouses and administrative offices to talk to hourly employees, non-exempt office and exempt individual contributor employees. The goal is to develop healthy and candid relationships. This grows insight, understanding, functionality, and success. It will result in improved morale, problem resolution, efficiency and reduced costs.

Does GMs’ CEO and senior line officers meet face-to-face with car and truck dealers? Do they occasionally physically visit manufacturing plants, warehouses and remote offices? A couple of times a year is sufficient. Relying purely on staff memos is not going to provide the essential knowledge for sound decision making.

Establishing broad based communication is not hard to do.  It just takes time, effort, discipline. If GMs’ senior management does not have the time in their schedules to periodically do it, they are working on the wrong priorities.

If not, GM will continue to stumble and decline.

ŸEffective headcount reduction.

Reportedly General Motors’ will attempt to reduce costs with a salaried headcount reduction.

In my experience, management will often report the salaried headcount reduction has been executed. Yet, later examination of this action reveals only the removal of hourly employment. To be truly cost effective, headcount reductions must include all within the company beyond just hourly employees. It must include senior and junior officers, managers, salaried exempt and non-exempt staff.

This is important, as this action will affect the morale of the company. Without a reduction across all levels of the organization, a sense of unfairness will be established within the business. Also, the workload will most likely be disproportionally increased on lower ranking employees, ensuring the greater possibility for mistakes. Other essential tasks may not be addressed. In this case, costs will increase as profits decline.

For any corporation with a staff organization, it is best to reduce it to a skeleton organization. This creates a lean, focused, informed, unified leadership. With a streamlined approach, dedicated to promoting healthy relationships, it will become quickly apparent if other levels of the company need improving.

#TurnaroundCEO #GeneralMotors

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