How can General Motors rebuild its organization performance to regain competitiveness on the market? It implies a huge involvement of the leaders of the firm to maximize motivation of the employees in this restructuring context

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General Motors  

EDHEC Business School


General Motors – Consultancy Proposal

Organization Performance

Name:                 Guillaume LEJEUNE, Jacques MOUIREN, Romain RICARD, Andreas Verykokos

Submission Date:         December 2th, 2011

Table of Contents

Table of Contents        

1        Problem Statement        

2        Introduction to General Motors        

3        McKinsey OHI Model        

4        Problem Analysis based on the OHI Model        

4.1        Leadership        

4.2        Direction        

4.3        Environment and Values (Culture)        

4.4        Accountability        

4.5        Coordination and Control        

4.6        Capabilities        

4.7        Motivation        

4.8        External Orientation        

4.9        Innovation and Learning        

4.10        Focus of Problem Solving        

5        Strategic Recommendations        

5.1        Leadership        

5.2        Culture        

5.3        Motivation        

5.4        Innovation        

6        Team        

7        Budget        

Reference List        

List of Abbreviations

GM      General Motors

R&D   Research and Development


  1. Problem Statement

On June 8, 2009, General Motors filed for reorganization under the provisions of Chapter 11, Title 11, United States Code. On July 10, 2009, after negotiations for a huge help with the US government, General Motors emerged from reorganization. After a new IPO on 2010, the shares were still losing value: General Motors has not regain the trust of the market yet.

Indeed, bankruptcy has raised the problem of the competitiveness of the firm. According to many surveys that have been done on the firm, it is due to structural problems that implied a lack of reactivity, and therefore, an inability to follow the trend of the market.

So we can raise the question: how can General Motors rebuild its organization performance to regain competitiveness on the market? It implies a huge involvement of the leaders of the firm to maximize motivation of the employees in this restructuring context, in order to bring back the company at the top of the innovation in the car market.

  1. Introduction to General Motors

  1. McKinsey OHI Model

  1. Problem Analysis based on the OHI Model

In the following, a detailed analysis of General Motors’ operations is conducted in order to identify strengths and weaknesses as basis for the strategic recommendations. The organizational performance is measured with regard to the 9 outcomes of the OHI Model: Leadership, Direction, Environment and Values, Accountability, Coordination and Control, Capabilities, Motivation, External Orientation, as well as Innovation and Learning.

  1. Leadership

The leadership situation of GM has been unstable, causing an uncertain work environment for employees and thus jeopardizing their trust in the future. Within 18 months including the bankruptcy period, GM engaged four different CEOs: Wagnor 06/00 – 03/09, Henderson 04/09 – 12/09, Whitacre 12/09 – 09/10, and Akerson 09/10 – present. Consequently, the employees had to adapt to changes and to be convinced to follow a new head every 8 month, leading to confusion and mistrust in the management. The changes stimulated by the new CEO never had the chance to be implemented properly. Especially in uncertain times like a bankruptcy, a clear structure and a leader guiding the way can help employees not to lose their faith and trust in the company (Ciulla, 2009).

Instead of choosing a visionary CEO knowledgeable in the field of automotive as a fresh start, the Executive Board of GM placed former executives in the CEO position, who continued the work of their predecessor and thus didn’t inspire a new way of thinking and managing. After the ineffective mismanagement by Wagnor leading into insolvency in 2009, Henderson was named as his successor, who inherited the management style from Wagnor and hence did not initiate change. The drop in market share from 60% to 22% over the last decades has been ignored by the management, illustrating their ignorance towards change. Strategic actions taken like creating start-ups (Saturn), Joint-Ventures (NUMMI with Toyota) and acquisitions (EDS) failed, but the management didn’t learn from it and changed little from the past (Galbraith, 2009).

Since GM struggled with high costs and low profitability, the CEOs have been “Finance Guys”, meaning graduates from Ivy schools majoring in finance instead of visionary “Car Guys”, for instance engineers having experience in the automotive industry. They focus on cost-cutting and short-term profits instead of long-term investments in technology and therefore missed the trend of more environmental friendly cars (green development). Successful companies in the automotive industry are, however, driven by new, market-leading innovations according to customers’ needs and market environment (Galbraith, 2009).

The new CEO in place since September 2010, Dan Akerson, was appointed by the US Treasury Department to stimulate the transformation of GM. Although he also has no automotive background, he has experiences in top management execution and military service. His aim is to quit the old “GM work morale” of the employees and inspire a new work ethic with stronger commitment. However, he seems foster this change process without sensitivity and to put too much pressure taking into consideration the employees’ uncertainty. During his time at GM, he brought fast changes in operations and management, for instance he promoted a new CFO, Chief Technology Officer and Head of Marketing. By cutting costs and driving sales with rebates and incentives, Akerson pushed short-term profits but failed to implement long-term improvement so far, which are more difficult to catch up the competitors (Welch, 2011).

  1. Direction

Based on the confusion created by the alternating management, the employees must have lost the track which management way to follow. GM suffers under a lack of communication which is especially important in difficult times like a bankruptcy to create trust in the future among the employees. With the entrance and the strict management of Den Akerson, however, the employees seem to be aligned with the new vision of GM (Keith, 2009).

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  1. Environment and Values (Culture)

Before its bankruptcy in 2009, General Motors appeared like a highly bureaucratic, hierarchical and top-down company with very strong and independent divisions not working in collaboration but parallel. It is only in the 80s that GM started to slowly implement a corporate governance and therefore to build a “GM culture” despite managers being highly reluctant to change. At that time, the decision-making process was slow due to unproductive meetings.

The file for bankruptcy forced GM’s top management to take decisions, to lead organizational changes and to accept cultural changes. The newly defined corporate culture ...

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