It seems that #GeneralMotors
has deteriorated and is in trouble yet again with:
- · GM posted a decline in net income of 141% in 2018.
- · GM registered a $4 billion net loss in 2017.
- · GM recently announced the closure of 6manufacturing plants.
Why is #Toyota
thriving? While #GM struggles?
Does
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.
Out
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.
Absence
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.
Effective
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.
