ANALYSIS-GM culture: a problem that cash can't fix?

By Kevin Krolicki
DETROIT, March 1 (Reuters) - America's largest automaker
has been left dependent on the kindness of strangers -- its
fate in the hands of bureaucrats as much as car buyers.
But as the Obama administration weighs whether and how to
proceed with a request from General Motors Corp for up
to $30 billion in federal aid, some experts and even
consultants who have worked for the automaker, say a massive
cash injection now may not cure everything that ails GM.
What GM needs, they say, is a radical shake-up of an
inward-looking century-old corporate culture dominated by
financial executives focused on chasing the next deal in a
failed effort to reverse the automaker's decades-long decline.
Many middle managers and other salaried workers, they say,
have been too comfortably cocooned for too long.
"GM has developed a lot of bright people but it has also
bred insularity," said Harley Shaiken, a professor at the
University of California, Berkeley and an expert on
labor-management issues in the auto industry.
"GM for much of its history was so large that it thought it
was a proxy for the world. It is not," he said.
Through $82 billion in losses over the past years and a
close brush with bankruptcy, GM's board has remained firm in
its backing of Chief Executive Rick Wagoner.
Now, even some former critics have come around to the view
that Wagoner should stay on to guide the company through its
cash crunch, but others also say the time is right to begin
thinking about what kind of GM emerges from this crisis.
"There are people who are saying, let's fire the coach, but
that's not the answer," said University of Maryland economist
Peter Morici. "This is the fourth game of the World Series and
you have to play with the team you've got."
GM has already taken $13.4 billion in emergency government
funding, and the autos task force assembled by President Barack
Obama will have to decide how much more it needs and where to
draw the line as the political and fiscal toll of bailouts of
the banking and auto sectors mount.
But nothing in GM's 117-page turnaround plan submitted to
the U.S. Treasury discusses how it plans to reinvent itself or
change decision-making at a one-time industrial powerhouse
credited with pioneering professional management under its
legendary Chairman Alfred Sloan in the late 1930s.

LIFE OR DEATH?
"My contention is that a lot of the changes they are facing
now could have been made five years ago," said Brad Coulter, a
restructuring adviser at O'Keefe & Associates near Detroit.
"They had the opportunity to act while markets were strong. Now
we're facing a life or death situation."
Case in point: In 2006, Jerry York, a GM board member and
adviser to billionaire investor Kirk Kerkorian, had urged the
automaker to unload Saab and Hummer. GM resisted.
Now Saab is in court-supervised reorganization in Sweden
and Hummer could be shut down in the coming weeks if a buyer is
not found at a fire-sale price.
Other GM deals in the eight years under Wagoner have fallen
short of promise or plain backfired.
In 2005, just as its U.S. operations began to face deeper
trouble, GM agreed to pay Fiat SpA $2 billion to avoid
having to take over all of the Italian automaker.
That was on top of the $2.4-billion in GM stock paid to
Fiat in 2000 to get access to its small-car technology.
Now Fiat is ready to move on GM's home turf as the
potential suitor for Chrysler LLC after a proposed GM merger
with Chrysler was dropped by the larger automaker.
Fiat stands to get 35 percent of Chrysler without putting
up any cash by offering access to the same kind of technology
GM had once sought.
Critics cite examples such as those as evidence that any
new GM will have to reach outside of its ranks for senior
talent and drive home a message at every level of the sprawling
company of responsibility when things go off plan.
"There is no accountability," said Rob Klienbaum, a former
GM executive and a longtime consultant for the automaker. "The
company has always drawn from the same pool of talent forever
and a day -- sometimes to disastrous results."
Klienbaum said he expects to lose all of his business with
GM after posting a critique of GM's corporate culture at the
University of Michigan's Transportation Research Institute --
http:www.umtri.umich.edu/content/RetoolingGM.pdf.
His verdict: GM's culture shows little tolerance for
dissent, little appetite for making hard decisions and an
insularity that has made it seem sometimes "tone deaf" to
broader societal concerns like the environment.
"GM has promised profound and fundamental changes to the
taxpayers," Klienbaum said. "But there is little evidence that
they are addressing the fundamental cultural issues that have
driven so much poor decision making."
Klienbaum said his adult children have warned him to be
ready for a "Jerry Maguire"-like backlash from his decision to
go public with his long-brewing concerns about GM, but he says
he believes he had to do just that.
"If they don't make these changes, they aren't going to be
around at the end of the day," he said.
(Editing by Peter Bohan and Maureen Bavdek)
((kevin.krolicki@thomsonreuters.com; + 1 313 967 1902))
Keywords: GM/

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