Saving GMSloan, Brown, and the Elements of Change

• Published in: Business Finance 2010-12, Vol.16 (4), p.6
• Main Author: Sweeney, Jack
• Format: Article
• Language: English
• Subjects: Automobile industry; Business models; Corporate finance; Corporate governance; Corporate reorganization; Executives
• ISSN: 1521-4818; 1529-0018

Back in 2001, General Motors Corp's then-CEO, Rick Wagoner, did something rarely done in the history of GM: He went outside to fill a top spot. The hiring of former Ford Motor Company executive John Devine as GM's finance chief was viewed in the press as an unprecedented and transformative hire. It was neither. Back in 1946, a top GM finance executive by the name of Ernest Breech attracted the attention of Henry Ford II, who hired Breech to help rescue the company from a death spiral. In the end, Ford's risky bet paid off, while GM's did not. When the Obama administration's auto restructuring team arrived at GM in 2009, the former Ford executive was long gone and two other executives had since filled the CFO's chair. You can imagine our surprise when we got there and found that the finance function was no longer a market leader, but was in fact as weak a finance group as I had ever seen in a major company - or even, frankly, in a minor company, said Steven Rattner, the New York financier who led the government's bailout of GM. Unlike those who suggest that GM's problems were the result of having too little space to maneuver due to a legacy of costly worker and retiree benefits, Rattner points out that GM's bankruptcy had as much to do with space as it did with motion, or the ability to maneuver - a capacity dependent on management practices and organizational transparency. According to GM's Liddell, the new GM must be more agile, less bureaucratic, and lower-cost.