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Whitacre’s GM Culture Fix Moves Up Younger Executives, Women

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Whitacre’s GM Culture Fix Moves Up Younger Executives, Women

By Jeff Green and Katie Merx

Dec. 5 (Bloomberg) -- General Motors Co. Chairman Ed Whitacre turned to a new team that includes younger executives and more women as he tries to overhaul the automaker’s “inbred” culture and halt annual losses dating to 2005.

Engineering chief Mark Reuss, 46, was promoted to president of GM’s North American operations and Susan Docherty, 47, one of three women promoted yesterday, added marketing to her sales duties. Vice Chairman Bob Lutz, 77, ceded those responsibilities and will be an adviser to Whitacre.

“It’s a signal they are serious about getting younger people in and running the place right,” said Thomas Stallkamp, 63, industrial partner at buyout firm Ripplewood Holdings LLC and a member of the team that helped restructure Chrysler Corp. in the 1990s. “This is a culture that was so inbred, so genteel, people were afraid to speak up.”

Whitacre, 68, has said in media interviews and in meetings with staffers that employees need to shed GM’s culture and hasten efforts to cut costs and regain market share. The former chairman and CEO of AT&T Inc. reiterated the pledge this week as his board ousted Chief Executive Officer Fritz Henderson and Whitacre became interim CEO.

“Most of what has occurred this week at General Motors is about speeding things up and making people more accountable for the decisions they make,” John Wolkonowicz, an analyst at consultant IHS Global Insight in Lexington, Massachusetts, told Bloomberg Television.

International Operations

Nick Reilly, 59, will lead GM’s European business, the Detroit-based automaker said yesterday in a statement on its Web site. Tim Lee, 58, replaces Reilly as president of international operations. Whitacre also will use director Stephen Girsky, 47, as an adviser, people familiar with the plans said.

Reuss served as president and managing director of Holden in Australia prior to being appointed head of global engineering in July. He will give an update on GM’s business Dec. 8, the company said. Whitacre, who was originally slated to deliver the briefing, had a scheduling change, said Tom Wilkinson, a GM spokesman.

“I know this leadership team can count on you to step up and be responsible, do the right thing and together we can move forward,” Whitacre said yesterday on a broadcast to employees. “We can have a good time doing it.”

Whitacre took the chairman’s job as GM left Chapter 11 in July has said he wants to start repaying federal loans early. The U.S. government is owed $6.7 billion and owns a 61 percent stake in the biggest domestic automaker, which still expects an initial public offering in 2010’s second half.

More Women

Docherty, promoted to chief of sales in October from the head of the Buick GMC division, was appointed vice president of vehicle sales, service and marketing. She takes some of the duties Lutz had handled since July.

Tom Stephens, 61, remains vice chairman of global product operations and will add global purchasing to his duties.

Diana Tremblay, 50, becomes vice president of manufacturing and labor relations. Denise C. Johnson, 43, most recently vehicle line director and chief engineer for global small cars, was named vice president of labor relations.

“I was very surprised by how many women were promoted,” said auto analyst Rebecca Lindland of IHS Global Insight.

Karl-Friedrich Stracke, 53, was promoted to vice president of engineering from executive director of engineering. Chris Preuss, 43, vice president of communications, reports directly to Whitacre; he had reported to Lutz.

Change Is Good

“Almost by definition, any change is probably good for the company because GM has resisted change so heavily in the past,” said John Casesa, managing partner of consultant Casesa Shapiro Group LLC in New York. “GM’s resistance to change is one of the key reasons for its decline.”

GM has posted $88 billion in losses since the end of 2004. The company’s U.S. sales this year through November tumbled 32 percent, more than the industry’s 24 percent decline. GM’s market share fell to 19.8 percent, from 22.1 percent a year earlier, according to Autodata Corp.

Last month, GM said it generated $3.3 billion in cash from July 10, when it exited bankruptcy, through Sept. 30. The company posted a loss of $1.15 billion for the period and said it would use more cash than it brings in this quarter.

“The government has given GM a lot of runway, they should be able to use that time to develop a plan and get in their rhythm,” Casesa said.

Henderson, 51, was asked to resign after the board concluded he hadn’t done enough in the 144 days since emerging from bankruptcy to fix GM’s finances and culture, people familiar with the matter said. He became CEO in March, replacing Rick Wagoner as the former General Motors Corp. slid into bankruptcy June 1. It emerged 40 days later as General Motors Co.

“The speed these changes were made with shows this is not the lumbering GM we’ve known in the past,” Michelle Krebs, senior analyst at Santa Monica, California-based researcher Edmunds.com, said in a telephone interview. “It shows that they’re truly trying to transform the company

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