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Thawing out GM’s frozen middle

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in Best-Practices Leadership,Leaders & Managers,Profiles in Leadership

The good thing about General Motors’ bankruptcy, says chief executive Dan Akerson, is that it took only 39 days. And the bad news is that it took only 39 days. “If we had been there longer, people would have asked these questions and looked at these things,” he says.

The “things” that should have been examined are the ghosts that turned the old GM into an unwieldy company, ultimately leading to its bankruptcy.

In the 1980s, CEO Roger B. Smith called GM’s bureaucracy the “frozen mid­­dle”—a set of middle managers that pushed back on just about every decision, from engines to office furniture. Some executives say the company still has too many employees and overlapping operations.

Akerson is making progress in steering GM toward a common vision and chipping away at the old bureaucracy. Here’s how Akerson is trying to turn things around:

• Redrawing GM’s organizational chart. He’s eliminating redundant functions and a rewards system that allows executives to focus only on their individual business units.

• Revamping the accounting system. That will allow GM to track how and where money is being spent across divisions, so that everyone will be playing on the same team, says Akerson.

• Wresting control from executives who operate their business as fief­­doms. Example: When marketing chief Joel Ewanick looked at advertising costs for the Chevrolet division, GM had 70 contracts with ad agencies in 140 countries. None of the executives had pooled resources or coordinated messages. He spent months regaining control.

• Setting a different standard. When Akerson moved into the executive suite, the company handed him an office furniture catalog and a $55,000 budget. Discontent with the high budget and the catalog offerings, he instead requested a conference table from Costco, plus a few things from Target and IKEA. Cost: Under $5,000.

The GM facilities team rejected his request, saying his choices didn’t meet standards. Akerson bought them anyway.

— Adapted from “GM’s Chief Labors to Get Rebuilt Car Maker Into Gear,” Sharon Terlep, The Wall Street Journal.

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