GM Chairman and CEO Ed Whitacre promised change but turnovers raise eyebrows

December 11, 2009

GM Chairman and CEO Ed Whitacre promised change but turnovers raise eyebrows

Some wonder where company is heading

BY GREG GARDNER and BRENT SNAVELY
FREE PRESS BUSINESS WRITERS

No one can fault General Motors Co. Chairman and CEO Ed Whitacre for delivering on his promise of change.

But the loss of executives overseeing three of GM’s four core brands — while the company continues searching for both a CEO and a chief financial officer — has some wondering where the changes lead.

Several dealers told the Free Press they had mixed feelings about the changes but were restrained in expressing them publicly.

"The culture at GM has been entrenched for a long time," said John McEleney, a GM dealer in Iowa. "Change is good, but not just for the sake of change."

Said Jerry Seiner, a GM dealer in Salt Lake City: "So far the team is composed of people I respect. … The tragic part is that good people have left."

GM spokesman Tom Wilkinson said looking at all the changes together is an oversimplification of what has transpired. "Most of these are changes that needed to be made," he said. "Not all are signs of turmoil."

Analysis

 

For GM, a company that has seen two CEOs fired in the last nine months, having two brand managers resigning or replaced is not seismic.
 

But GM has important new vehicles coming soon — the Buick Regal, the Cadillac CTS coupe and the Chevrolet Cruze — and auto show season is here.

This is the time of year when automakers like to let the sheet metal tell the story, with a clear strategy spelled out by leaders of the core brands: Chevrolet, Cadillac, Buick and GMC.

The changes at Chevrolet and Buick-GMC were different. Whitacre approved the promotion of Jim Campbell to replace Brent Dewar at Chevrolet.

The unexpected departure of Buick-GMC General Manager Michael Richards, just nine days after he began, did not seem to be part of the plan. The company, for example, had already scheduled a media Web chat with him Wednesday afternoon.

"It seems odd to take a job with a clearly troubled company and then decide its troubles are too much for you," Stephanie Brinley, an auto analyst with AutoPacific Group in Troy, said of Richards’ quick departure.

But other GM watchers accept that if Whitacre stirs the pot enough, he may spill some soup.

"This is the unintended consequence of rapid change, but change is needed," said Frank Ursomarso, a Buick-GMC, Honda, BMW, Jaguar and Volvo dealer in Wilmington, Del. "Let’s realign the chairs, get good people in place and let’s go forward. The old bureaucracy just did not work."

Others familiar with Whitacre’s widely praised leadership of SBC (now AT&T), are wondering whether his strategy of acquiring competitors and smaller companies to survive and thrive in the converging world of cable, wireless communication and online entertainment is a match for GM’s current challenge.

"He built AT&T through a lot of external dealmaking, while Verizon’s cellular business was grown organically," said Jeffrey Sonnenfeld, associate dean for executive programs at Yale School of Management. "Most of those who love him are dealmakers."

Steven Rattner, a major Wall Street private equity player who headed President Barack Obama’s auto task force during GM’s bankruptcy, recruited him. Three of Whitacre’s fellow GM directors also run private equity funds: David Bonderman, Daniel Akerson and Stephen Girsky.

But GM, under pressure to repay the U.S. and Canadian governments for more than $50 billion in taxpayer assistance, is not looking to buy other companies.

It’s having a hard enough time disposing of Saturn and selling Saab and Hummer.

Changing the culture and demanding results are admirable goals, but Whitacre needs to be consistent in the messages his personnel changes send, experts said.

"There are two things I’d like to hear Mr. Whitacre reconcile," said Edmunds.com analyst Michelle Krebs. "He’s asked people to be more entrepreneurial and risk-taking. He also wants them to be accountable. But if you want people to take risks you have to be willing to accept failure."

Stephanie Brinley, an auto analyst with AutoPacific Group in Troy, assessed Whitacre’s changes this way: "Finding outsiders is difficult. The company is still in shakedown mode."

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