My Challenge to GM: A Change You Need to Make If You Really Want Cultural Change

Today's New York Times has a very encouraging article about the cultural and organizational changes that are happening at GM in the wake of their bankruptcy.  I was simply delighted to read about changes like this, where GM is finally beginning to tackle what Jeff Pfeffer and I call "The Otis Redding Problem."

In the old General Motors, employees were evaluated according to a “performance measurement process” that could fill a three-ring binder. In Terry Woychowski’s case, for example, his job as director of G.M.’s vehicle engineers was spelled out in exhaustive detail, and evaluated every three months. But in his new job as vice president — a promotion he was given 20 days after G.M. emerged from bankruptcy — his performance review will be boiled down to a single page, something he had never seen in his 29 years with the company.Mr. Woychowski said he felt the grip of G.M.’s legendary bureaucracy start to loosen, something he never imagined possible. Now, such reviews are being scaled down and simplified across the company. “We measured ourselves ten ways from Sunday,” he said. “But as soon as everything is important, nothing is important.”

As regular readers of this blog may recall, last November, I wrote a rather scathing post on GM's "no we can't mindset" in which I argued that GM's core competence seemed to be coming-up with reasons about why the couldn't stop doing seemingly dumb old things and start doing seemingly smart new things. I provided quite specific suggestions that stemmed from my now nearly 30 years of intermittent contact with diverse parts of the company. I am not especially good at figuring out the impact of different posts, but from the number of page views, number of comments, and the strength of the emotional reactions to it, I think this post had more impact than anything else ever written here.  This Times article suggests that they are making real progress and committed to making more.

In that spirit, I have a pet peeve that I have been complaining about openly and repeatedly to GM managers and executives about for years.  This is a change I believe they can  and should make immediately, and that will help reverse two of GM's biggest cultural problems:

    1. Management and senior executives don't quite understand and are insulated from the experience of owning and buying a GM car -- and how it stacks-up against their competitors.

    2. They think and act like too much like they are just selling cars, when in fact, they are selling a car ownership experience -- yes, the car itself is an important part, but there are many other parts such as shopping for a car, buying it, having it serviced, and so on that are treated as separate and less important.

To me the single most destructive thing they do to themselves is to have a program -- one they still have -- where managers and executives are given a free GM car to drive.  I have heard a lot about bits and pieces of this program over the years, but I confess to not knowing every detail.  My understanding, as I wrote last November, is that it goes something like this:

GM has a perk for managers down to fairly low levels where all are given a GM car to drive – they rotate from one car to another.  I am not sure of the exact details, but answers to the questions I’ve asked over the years  suggest it goes something like this: the lowest level managers have to buy their own cars, the ones at somewhat higher levels get a new car to drive every six months or so but have to do some servicing, the managers who are somewhat higher-up get somewhat fancier cars and are freed from any servicing (gas is even put in the cars of some executives so they don’t have to go to the service station), and the highest level executives get a car and a driver.

In other words, this system effectively insulates people in management – especially those in senior management -- from experiencing what it is like to shop for, bargain for, purchase, service, and sell a car. They only get the driving experience. Well, except for the most senior executives, who don’t even get that experience -- they watch a person in the front seat drive a big car.  Now, it is true, that the most senior executives do own GM cars for personal use, but it is my understanding that when a car is delivered to a senior executive, special attention is devoted to the car – even during the production process –to make sure the top brass aren’t exposed to a car with any flaws. Wouldn’t that be nice? 

Here is my challenge to GM, and frankly, since you are running on U.S. taxpayer money, my money and the money of millions of us who would rather see the money going to things like education, I think that you owe to us -- and yourself -- to do the right thing:

1. Get rid of the program immediately.

2. Use the money spent on the program (even though I know it won't have the tax advantages of the old program) to give each manager and executive money to help buy a car for work --- they only get the money if they buy a car.

3. Get rid of the GM employee discount program completely, so that when managers and execs walk into a GM dealer, they have to do the same negotiation as everyone else.

4. Stipulate that not only can people buy non GM cars, only 25% of those participating in the program at any time can own a GM car.  That way, there will be information in the company about the experience of owning a wide range of cars.

5. Everyone -- from the CEO on down -- will be required to partake in the full car ownership experience, from selecting, to shopping for, to servicing, to getting gas, to selling and trading in their cars.

There are a lot of other things about GM that need to change -- or more optimistically --- perhaps are already are changing. See this amazing story provided by Matt May about how badly their managers sometimes listen. But I believe that this single change will have a large and positive impact, forcing GM management and executives to break out of their isolation, to learn about competitors' car and car buying experiences, and to come to grips with what the GM ownership experience actually entails.

Dear GM Executives: you know these problems exist, you know that this program contributes to these problems, and you are at a juncture in your history where change is possible.  Why can't you end this program immediately?  Rather than falling back on your old core competence of explaining why it is impossible for you to do the right thing, how about showing the American taxpayer and yourself too that it is possible for you to do the right thing and to do it fast?

Comments

[Property Management Chicago]

I'm doing a research on management and this post is helping me a lot. I also appreciated the comment thread. Thanks for giving me bright ideas. Thanks for this post. Very informative.

[Bob Sutton]

One more update on the program. I just got a long email from a former GM employee who was in the program. When she first was promoted to the level that she eligible for the program it was free, then after a few years it was raised to $150 a month, and then finally in late 2008, to $250 a month. So it was free for many years.

Also, here is how another former GM employee --who also participated in the program after several years there -- described the program when he first got there. He explained that senior executives were permitted to order more expensive cars than the less-senior managers, engineers, and other white collar employees eligible for the program. But so long as those guidelines were followed, “employees could order any car they wanted (there was a full-time office staff and room where you went to spec out and order your car). There was no cost to the employee, insurance was free, and you filled up at a pump next to the building. Execs I think had some way to signal they needed gas and someone would fill it for them.”

Every time I read this description, it boggles my mind. Not only were thousands of the most powerful people at GM insulated from the typically dreadful experience of selecting a car, haggling over the price, dealing with the financing, and trading in an old car -- they were spared the hassle of visiting a gas station and the feeling of forking out the money for their gas-guzzlers.

The upshot is that -- although the program has changed over the years -- my description fit exactly how it worked for many years (years the company suffered mightily from being detached) and to this day it is facilitating the insulation that has been damaging the company's success for years. It never should have existed and should be abolished right away.

[Bob Sutton]

Roshan,

Thanks for following and I am very relieved that you folks at Tesla are not falling into the same trap -- Indeed you may or may not know that we worked a little with the folks in sales for a Stanford executive program, and I certainly saw that people were breaking out of the industry box. Also, I want to thank you for the corrections despite my snarls. I have since dug into the GM program which still exists. Until 2008 it cost employees $150 a month (not bad, huh?) and now is up to $250. I am currently trying to find out other details like whether they have or had to go to a dealer to get gas, and also other differences between the perks given to people at different levels. Thanks for uncovering my errors. And I am looking forward to that Tesla sedan, as that mighty be the care for me. I hope so.

[twitter.com/roshanthomas]

Bob,

First of all thanks for taking the time to provide your feedback. If you noticed I did mention that it is not my opinion but the opinion of my colleagues who have worked at GM, Ford, Chrysler etc. Since I have no prior automotive background as an employee I forwarded your post to them to get their feedback. So I was being a messenger here of a contrary opinion.

At Tesla we are thinking differently. Thats one of the reasons we don't have any dealerships. All the stores at which the cars would be sold and serviced will be owned by Tesla. That way we can control and provide consistent customer experience. Tesla oil-free service centers are part of the open floor plan. We are planning to have premium amenities which include lounge with snacks, high speed Wi-Fi, free international phones, LCD screens etc. Service technicians and salespeople would be company employees and own company stock hence it would be in their best interest to provide the best service to the customers. We also recently announced a mobile service program featuring house calls for customers in the United States and Canada. Specialized technicians known as Tesla Mobile Service Rangers will visit owners’ homes, offices or parking garages equipped to perform an array of procedures, including annual inspections and firmware upgrades. So we are thinking differently...

Roshan

[Bob Sutton]

Roshan,

Honestly, although the right word is "subsidized" rather than "free," I stand by my point and challenge. The point is that the program insulates a big piece of the top half of the company for the car ownership experience and from the experience of driving and owning other cars. There is a good reason the CEO got fired, GM has been so out of touch with experience of OWNING a car for a long time, and I continue to submit that this program is part of the problem. There is a reason that the CEO just got fired for being insular and that the whole board is concerned with that problem and how slowly they are moving... and I assert that this program, nuances aside, hurts them because just about everyone participates in it, which effectively isolates them from the car shopping, haggling, maintenance, and trade-in/selling experience in their own company and from learning about different cars or different car ownership experiences. I think they should get rid of it immediately as it is part of their problem rather than solution. I would also add that your positive comments about the program -- that employees find problems and make suggestions -- reflect a mindset that helped sink the company, that the car buying experience is different than the car ownership experience. I hope that people at Tesla are thinking about this rather than importing the same old bad habits from Detroit. I am strongly of the opinion -- and I have 25 years of intermittent contact of multiple kinds with the industry -- that this program and even your defense of it to me are signs of the problem. As readers of this blog know, I am rarely combative, but in your comments, I see someone looking at the trees and in doing so missing the forest, In this case, the forest is: 1. Car ownership experience not just the car and 2. looking outside the company and at other cars and car ownership experiences. The current system, details aside, is a a force against both and as a taxpayer I want this program ended immediately.

[twitter.com/roshanthomas]

Bob,

I work at Tesla motors and I have colleagues who used to work at Ford, Chrysler and GM. I forwarded your post and here is what they have to say.

Ex-GM person: In this program at GM employees who are in manager/supervisor positions pay a set monthly fee and get a new GM vehicle every 6 months. Participants pay for their cars – they are not free. They have some say in the type of vehicle they get (car, SUV, etc), but are randomly assigned a specific make/model. Gas and servicing are included in the lease and as you get more senior in the company, you get additional lease vehicles, if you want to pay for them. But you don't get a driver, except perhaps if you are a CEO/CFO.

Ex-Chrysler person: A perk of working for an OEM is the employee lease program – at Chrysler lower level manager can order a company lease car that includes service, insurance and unlimited mileage and pay a percentage of the overall vehicle cost every month. The higher level managers get one car + gas for free but are taxed on it like earnings. The benefits of being able to order and drive a new car every 6 months for the customer and the employee is the frequent input on vehicle problems or suggestions for improvement. At Chrysler they were required to report on the leased vehicle every month – mileage and any open issues and whether or not they were resolved. If there was an issue the functional engineer would contact to obtain feedback and sometimes to resolve the issue. They were also sent very extensive surveys to be filled out as part of the employee lease benefit. That was a way to tap into the customer experience as they were configuring and paying for the vehicles like a “regular” customer, they just weren’t forced to deal with the dealerships. So although they agreed that the employees did not get the dealership experience, but overall they felt this post needed more research and that lot of assumptions were made without enough fact-finding.

Roshan

[John McCoy]

Right on, Bob!

As I read your article, I thought about my time in government. I had the "pleasure" of designing a performance management system for a city/county government some years ago, and the biggest challenge came from the hide-bound managers who wanted to hold on to the incredible complex system of non-accountability they were used to.

We made some giant steps toward simplicity. I just met with the HR and OD leaders there and it appears I will get a second bite of that apple. They believe are ready for the next round of truth and simplicity. I am going to make your article and some of your other thoughts on GM required reading.

[dblwyo]

Bob - you're definitely on a roll. Book must be going well. Two back-to-back dead on posts.
GM has been its own worst enemy for decades and its insularity has resulted in ignoring Hispanics in Fl., the starvation and emaciation (emasculation) of Volvo and the death of Saturn, among other things.
Two points here. First off looking at the total experience is a great "Design" idea.
What would give it real teeth is if managers and then employees were continuously polled about their buying and driving experiences. Lexus built a national service DBMS with IBM that's been an invaluable marketing, design and product research tool. Think what GM could do with a similar infosys that tracked those experiences. And it would be cheap, easy and powerful - an appreciating asset.

[Scott B]

Great points Bob. Another reason the program is detrimental to progress is that rotating cars every 6mo means senior execs never experience the real quality challenges that only appear after a year or so of driving. For example, a family member owns a latest-gen Escalade and one year into ownership the "wood" trim on the center console is separating and flopping around. It's one thing to look at excel spreadsheets of defects/K or whatever metric is popular, it's much more impactful to have to drive around in a $50K+ car that is literally falling apart!

It's great news that GM products appear to be getting better and I have been encouraged by recent marketing efforts by GM. The Bob Lutz Challenge (77 yr old Bob in a CTS-V vs the world) was brilliant and refreshing. I hope they take your advice and return GM to a position of respect.

[Rodney Johnson]

I've coined the term silent problems, which refers to problems that are being avoided, neglected or go unnoticed in my book Without Warning. What is interesting is that you've described one of the seven warning signs that a silent problem is present. It is "#2. When there is a willingness to embrace complexity, while simultaneously sacrificing transparency. Symptom: the business becomes to convoluted and complex to understand. Nothing makes sense anymore."

While this may not be a big surprise that GM grew into a non-transparent behemoth, I don't think this was the silent problem that killed GM. This would be "#1. When the risk of making a decision for employees inside the organization is considered to be greater than the benefit of making one. Symptom: Slow and indecisive decision making."

Bob, thanks for your continuous contribution to thinking and challenging.

[Hendrick Lee]

http://blogs.ft.com/management/2009/11/10/fond-farewell-to-a-brilliant-thinker/

"The scene is Detroit, a training room at the headquarters of one of the three great US car companies. A group of corporate vice-presidents is attending a course being given by a distinguished management thinker.

“What you are telling us is great,” the VPs say, “but you are talking to the wrong level. You should be speaking to the next tier up.” The next week, working with more senior managers, he hears the same thing. “This is great, but you are talking to the wrong level. You should be speaking with the chief executive.”

The week after that, our thinker finally gets in to see the boss. “This is great,” the CEO says, “but you should be speaking with my subordinates – I’d need their support in order to do it.”"

[Mike Wagner]

Can you hear me yelling "amen" from here in Des Moines?!

When leaders can't accurately answer the question, "how do customers experience your company?" --- the end is near.

Keep creating,
Mike