"The auto industry is in a real crisis (the Chinese symbol for crisis shown at the left is a combination of the characters for danger and opportunity). Crises bring opportunities, sometimes once in a generation opportunities. Poor leaders squander such opportunities. Great leaders take full advantage and create a new and potentially prosperous future". These statements comprised the closing paragraph to my posting of six weeks ago concerning the auto industry. Unfortunately continuing evidenceproves (as if further proof were necessary) that GM and Chrysler should go into bankruptcy proceedings as their managers still (unbelievably) don't get it, and further bailouts just lead to further bailouts. Here are some snippets of that continuing evidence:
1. Chrysler in November offered all white-collar employees a buyout package to leave. Reducing a workforce via offered-buyouts is retarded; it signifies extremely weak and timid management and has many glaring flaws such as (a) no clear target for the resulting staffing levels (at a minimum shouldn't the white-collar force be at or less than the levels that existed in the previous year when the same number of cars were produced--maybe 15 years ago or so?), (b) the more capable people leave, (c) the number of management layers remains the same, and (d) the results are sporadic and random resulting in structural imbalances and even more cumbersome decision processes. Taking this approach demonstrates unbelievably poor judgment, generally leaving a mess whose negative effects offset the savings. When a force reduction is required, management needs to achieve many objectives clearly and cleanly, and have as a result a progressive outcome--see the "Progressive Downsizing" summary chart on the left,
presented with some more detail, and the
accompanying entries.
2. An official spokesman for GM this week said that the company had "accomplished a lot already.....is reviewing the possible sale of its Saab and Hummer units, and is evaluatingthe future of its Saturn division". Hmmm--real words of action there; reviewing, possible, evaluating! Two years into their exceedingly clear crisis, obvious then by the continuing decline of billions of dollars of cash each quarter, GM springs into "reviewing", "possible", "evaluating" actions. Excellent, heck even good, managers know you need to take real action in the early days of a crisis, not feeble strokes at 11:59 pm. Read more at Positive Crisis: Danger or Opportunity.
3. The list is endless, but here's just one more illustration. Every MBA student, every manager of any savvy, knows that focus is a key precursor to execution. A strategy must be constructed with clear and communicable points, and points of action. In contrast, the GM plan that will be presented this week contains 600 pages! I summarized the ten points of action GM needed to take in about 5 pages, which you can read in 2 minutes.
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Posted by: reputation management | February 12, 2010 at 09:18 PM