Thursday, April 2, 2009

Reflections on the firing of Rick Wagoner

I worked for GM during most of Rick Wagoner’s tenure as President/CEO and chairman of GM.
On balance I believe Rick was a good chairman. He reputedly got GM’s management into the computer age by requiring managers to take courses in computer literacy, and he pushed for GM to develop its internal and external web presence.

He certainly had his share of mistakes. The abortive deal with Fiat comes to mind. GM purchased a 15 or 20 percent equity stake in Fiat, which was perhaps defensible. But the contract also required GM to buy the remainder of Fiat if the management of Fiat decided to sell out. They did and GM had to pay several billion dollars to get out of that obligation. Perhaps that infusion of cash has made Fiat healthy enough to be able to contemplate an alliance with Chrysler.

On another occasion, before he was chairman, Wagoner orchestrated one of GM’s many reorganizations. This reorganization had people all over the corporation not knowing who they should be talking to in order to get things done. In the midst of all the confusion Wagoner said, “If we didn’t get this one right, we’ll do another one tomorrow.” That of course was the exact opposite of what was needed. Like many GM managers Wagoner seemed to think that you could change how something functioned by renaming it.

But at least he didn’t get caught in any major snafus like Roger Smith’s BOC/CPC reorganization which did away with Fisher Body – the only organization in GM responsible for maintaining standards for making dies.

Whether or not Wagoner was an able chairman, it must be asked whether the Obama administration made a wise choice in asking him to step down. It seems incredible that a government task force, after few months of study, can make such a decision. Other corporations should look at this example carefully before accepting loans from the government

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