Chairman's blunt talk rocks GM execs

[rickaren]

September 4, 2009

Chairman's blunt talk rocks GM execs


Ed Whitacre Jr., the blunt-speaking new chairman of General Motors Co., is clearly rattling the long-too-comfy cages of GM's management ranks.

On Wednesday, Whitacre told a group of GM salaried staff -- in one of several "diagonal slice" meetings, so called because they mix people from all levels -- that he expects to see lots of changes in the next 12 weeks. Changes every day.

And that if progress on fixing GM doesn't come rapidly, there will be consequences.

"I found it stunning," one GM executive told me Thursday, after hearing that Whitacre had spoken so pointedly to the employee group about the urgency of producing visible changes in 12 weeks. A week earlier, he had told Bloomberg News that Chief Executive Officer Fritz Henderson was the right leader for GM "at this point in time" and said the board had not set a deadline for judging Henderson's success.

Another GM officer described Whitacre as "frighteningly direct" in conversation, making it clear that every top executive's job at the automaker is on the line, and that heads could roll in the next two or three months if there's not significant progress in vehicle sales, market share and profitability.

No one at GM would comment publicly Thursday on exactly what Whitacre said at the employee gatherings because they were internal, closed meetings. But Chris Preuss, GM vice president of communications, said, "Ed Whitacre has been meeting with employees, and he has been very candid, very direct about the need for accountability and speed."

Whitacre, 67, was tapped by President Barack Obama's auto industry task force to lead GM's reconstituted board of directors after the automaker, now 61% owned by the U.S. government, emerged July 10 from Chapter 11 bankruptcy.

Here's why Whitacre, a former chairman and CEO of AT&T Inc., is so insistent on holding GM top management's feet to the fire for rapid results:

# The White House wants to dispense of its ownership stake in GM as quickly as possible. That means a public offering of stock, hopefully by mid-2010. But no investors will put a dime into GM stock if they think it's "business as usual" for the embattled automaker.

# Henderson and GM's other top executives were all part of the team that lost $82 billion in the last four years of the old GM. The only way to shed the business-as-usual tag is to stop the long market-share slide and improve profits -- fast!

At the first meeting of the new GM board in early August, directors received a withering assessment of GM management from Obama's auto task force leaders.

The company's balance sheet had been a nightmare. Its marketing strategy had been a debacle. Quality and styling of GM vehicles had clearly improved in recent years, but public perception still stunk.

In other words, fairly or not, nearly all of GM's existing management was portrayed as guilty until proven innocent.

But GM's board couldn't just jettison the entire management group. You can't go pluck saviors off the street for a business as complex as automobiles. And with the feds in charge, all executive pay must be approved by Uncle Sam's pay czar. So how could the board recruit an all-new management team right away if they couldn't even promise what salaries would be?

At Wednesday's diagonal-slice meeting, Whitacre conceded as much.

He told employees that GM won't be completely fixed in 12 weeks. And he told them that the board will do what it can to compensate the best-performing workers appropriately.

But he left no doubt. There will be change. It will be quick. Or there will be new names after the big titles.

LINK:Tom Walsh: Chairman's blunt talk rocks GM execs | Detroit Free Press | Freep.com