Lessons from General Motors

As Barra nears her five-year anniversary as GM CEO, the full scope of her imprint on the nation’s largest automaker is becoming clearer. 
She’s made GM sharper, lighter and more focused on the future.


Source: USA Today 

General Motors CEO Mary Barra recently announced plans to close several plants in North America and cut 15 percent of its salaried workforce. Based on the early coverage, these steps are part of her efforts to get ahead of the curve  

“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” Mary Barra stated in GM’s press release announcing the cuts. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.” 

HOW DOES THE ACTION SUPPORT THE MISSION? 

The decision to cease production of product lines and to reduce staff are both difficult decisions – but leading an organization can require these types of decisions.  And these decisions must be made to ensure the organization achieves its mission. 

The GM mission statement is “to earn customers for life by building brands that inspire passion and loyalty through not only breakthrough technologies but also by serving and improving the communities in which we live and work around the world.” 

Based on Barra’s statement, it seems that the mission statement was a guiding light for the decisions.   

For colleges and universities, the decision to stop offering existing programs and services, as well as lay off faculty and staff, can often be driven by financial shortfalls while the mission and vision of the institution get put aside. By making certain your institution’s mission and vision statement are addressed during the decision-making process, you increase the odds of strengthening the institution rather than unintentionally weakening it further. 

THE DEVIL IS IN THE DETAILS 

When decisions are made based on financial drivers, businesses can overlook opportunities to strengthen itself for the longer haul. 

There doesn’t seem to be a great deal of information about how GM is addressing the details, but hopefully, they looked at the people and places impacted and asked: “What do we need to keep?” 

When you focus on the people, you can identify the expertise you want to retain. But when you focus on the positions and costs, you lose sight of the knowledge and expertise, which can lead to decisions that significantly weaken the institution and cause the institution to struggle. 

Yes, I am suggesting the time be taken to make decisions on a personal basis so that you position the institution for the next level. You want to come out of this situation stronger, so make certain you retain the right expertise and experience on your team. 

OVER COMMUNICATE 

Who needs to know what and when should they know it? 

What happens to those that are laid off? What happens to those that stay? How do these decisions impact all key stakeholders? Goals, objectives, tasks, milestones, along with who is responsible for what – these all need to be agreed upon and communicated so there are no surprises that might cause more damage. 

The answers to these key questions don’t appear to have been answered by the people at GM. Uncertainty and confusion are, understandably, running high among the stakeholders – and this is not a good thing.  The lack of valid information from those in charge is going to negatively impact the attitude and performance of those that stay and those that leave, as well as the other key stakeholders’ perception of the business. 

What you need to communicate and then deliver is that things are under control and moving ahead as planned and that the business is stronger because of this action. 

PRICING STRATEGY – NO MORE STEEP DISCOUNTS 

This point jumped off the page at me: 

Under many of her predecessors, it was common for GM to heavily discount vehicles to keep sales humming.  No more. From the beginning, Barra has placed GM’s emphasis squarely on maintaining and boosting profitability. That meant the company could no longer rely on steep incentives.


Source: USA Today 

Speaking about tough decisions – saying no to a sale because the prospective buyer is not willing or able to pay the stated price is near the top.   

In higher education, with institutions offering discounts as high as 70% and even more, there needs to be someone at the top who says “No!” Colleges and universities need to generate the revenue necessary to cover the expenses and invest in growth, and on-going severe discounting is not going to allow your institution to make those important investments necessary to achieve your mission. 

WHAT TO DO ABOUT MONEY-LOSERS? 

Ms. Barra took a hard look at the return on investment for several product lines and decided to cease production. 

That’s an important decision.  A difficult decision. But sometimes it is the best course of action. 

But you want this to be a business decision that is based on performance and agreed upon metrics because it’s all too easy to get caught up in the emotional factors such as the impact on faculty, staff, students and others. 

Performance must drive the decision to no longer offer a program, and the failure to achieve the agreed-upon metrics should be known to all involved so that the decision is not a surprise. There should be a process in place that identifies the program as ‘at risk’ so that current measures can be taken to improve performance – and there is a deadline for returning to acceptable levels. 

Did Ms. Barra have that level of transparency with the product lines identified to cease production? I don’t know – but I certainly hope so.   

And I also hope that there is an exit strategy in place — an exit strategy that will ensure that the key stakeholders are aware of what will happen, when it will happen, who is responsible for specific tasks and the overall process and other key issues. An exit strategy is important because of uncertainty which can cause more problems that your organization doesn’t need at this time. 

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Strategic turnaround consultant and writer.

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