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After Bankruptcy, G.M. Struggles to Shed a Legendary Bureaucracy
Published: Friday, 13 Nov 2009 | 11:44 AM ET
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By: Bill Vlasic
The New York Times

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.”

For all its financial troubles and shortcomings as an automaker, no aspect of G.M. has confounded its critics as much as its hidebound, command-and-control corporate culture.

When G.M. collapsed last year and turned to the government for an emergency bailout, its century-old way of conducting business was laid bare, with all its flaws in plain sight. Decisions were made, if at all, at a glacial pace, bogged down by endless committees, reports and reviews that astonished members of President Obama’s auto task force.

“Everyone knew Detroit’s reputation for insular, slow-moving cultures,” Steven Rattner, head of the task force, wrote recently in Fortune magazine. “Even by that low standard, I was shocked by the stunningly poor management that we found.”

G.M. will present its first postbankruptcy scorecard on Monday, when the company reports third-quarter earnings and its cash reserves. The company said on Nov. 3 that its financial health had “improved significantly” in recent months.

Even as it labors to change its culture, G.M. must convince consumers that it is building better cars. One sign of its challenge: Fewer than a dozen of the company’s models were recommended in a recent Consumer Reports survey.

But instead of playing down the survey, as G.M. might have in the past, its chief executive, Fritz Henderson, ordered it sent to every employee in the company.

“Have we made some missteps? Yes,” said Susan Docherty, who last month was promoted to head of United States sales. “Are we going to slip back to our old ways? No.”

G.M. emerged from bankruptcy this summer as a much smaller company, 60 percent owned by American taxpayers and free from much of the debt and health care obligations that had crippled its balance sheet.

But its cultural change is a work in progress. G.M.’s new chairman, Edward Whitacre Jr., and directors have prodded G.M. to cut layers of bureaucracy, slash its executive ranks by a third, and give broad, new responsibilities to a cadre of younger managers.

Replacing a binder full of job expectations with a one-page set of goals is just one sign of the fresh start, said Mr. Woychowski.

“You know there’s not much good that comes out of a bankruptcy,” he said. “But it is a force that helps you change a culture.”

Mr. Henderson, said he was aware the company was being scrutinized to prove it had learned from its mistakes. “Above all, we need to be faster,” Mr. Henderson said in a recent interview.

Speed has never been G.M.’s forte. In 1988, when G.M. still dominated the United States market, a senior executive named Elmer Johnson wrote a stinging internal memo that summed up the company’s biggest problem.

“We have not achieved the success that we must because of severe limitations on our organization’s ability to execute in a timely manner,” wrote Mr. Johnson.


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The memo fell on deaf ears, mostly because G.M.’s top executives prized consensus over debate, and rarely questioned its elaborate planning processes. A former G.M. executive and consultant, Rob Kleinbaum, said the culture emphasized past glories and current market share, rather than focusing on the future.

“Those values were driven from the top on down,” said Mr. Kleinbaum. “And anybody inside who protested that attitude was buried.”

But the shock of bankruptcy has prompted changes that would have been unheard-of in the old G.M.

In the first week of August, Mr. Henderson told Jon Lauckner, the new head of global product planning, to scrap G.M.’s organizational chart for vehicle reviews and start over.

In the old G.M., any changes to a product program would be reviewed by as many as 70 executives, often taking two months for a decision to wind its way through regional forums, then to a global committee, and finally to the all-powerful automotive products board.

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