Daniel Howes

GM dumps seniority to find success

There's a reason General Motors Co. CEO Ed Whitacre is promoting fortysomethings into top jobs:

It turns the automaker's decades-old entitlement ladder upside down. It says you don't get the next big job just because you're next in line. It prizes performance and perspective over longevity and cynicism. It rewards working to succeed over working to retire, a time-honored Detroit tradition that hastened its decline.

The dispatching of CFO Ray Young to a new job overseeing international operations, announced Monday, is only the latest move by Whitacre to reload GM's executive ranks, to accelerate its turnaround and to prepare the company to sell itself anew to would-be investors, perhaps as early as the second half of next year.

Net-net, this is just what the General needs -- fresh eyes, hungry new leadership, people less tarred by the past and more focused on a future unencumbered by the weight of GM traditions, group-think and self-justification. The art will come in the balancing -- of who to fire (as Whitacre & Co. clearly are prepared to do), who to promote from the inside, who to woo from the outside.

But everyone will know who will be held accountable -- and what's likely to happen to them should they stumble for very long. That's a dramatic cultural shift for GM, a company that, more often than not, rewarded operational failure with either a) promotion or b) multiple second chances or c) an endless litany of excuses usually intended to defend the CEO's often flawed personnel choices.

My guess is that neither Whitacre nor his fellow directors would accept a head of GM-Europe delivering five-plus years of red ink and declining market share (as former CEO Rick Wagoner tolerated). Or a continual slide in North America whatever the state of the national economy. Or perennially meager showings in Consumer Reports' "recommended" list.

To know the history of GM, with its own peculiar sense of executive accountability, is to know that there was an explanation for every shortcoming. Some of my favorites:

The Germans at Opel blocked a turnaround in Europe. Union obligations in the States weighed too heavily on financials and product decisions back home to deliver anything close to profitable results. The methodology Consumer Reports used to evaluate cars and trucks was flawed.

And these: Paying Fiat SpA $2 billion earlier this decade to exit a problematic tie-up was a strategic victory that yielded significant results, even if it looked like nothing of the kind. Underperforming brands could not be cut. Executives with dodgy performance needed more time in the jobs to make things right instead of getting a one-way ticket out and leaving the mess for the next sap.

All of it, in the cold light of post-bankruptcy GM's second chance, sits somewhere between "indefensible" and "absurd" on the continuum of corporate dissembling.

Wonder how many of these old GM dodges would fly with Whitacre or the directors whose tolerance for the excuse factory is almost nil? Answer: very few. A new CEO who asks a lot of questions, many of which begin with "why," quickly can sniff out an awful lot of bad practices and flawed assumptions.

Whitacre, I'm told by two ranking sources, "asks a lot of questions." Monday, he met with top executives to review GM's product portfolio and to study the metrics the company uses to track and test its business plan.

All good. And something GM desperately needs right now -- fresh, outside perspectives asking basic, if challenging, questions about why perhaps the greatest destroyer of investment capital in American business history does what it does.

For Whitacre's GM, the choice isn't between insiders and outsiders. It's between performers and those who can't -- which is the way it should have been for years. But it wasn't.

dchowes@detnews.com (313) 222-2106 Daniel Howes' column runs Tuesdays, Thursdays and Fridays.