Management Turnover as Change Agent

Monday, December 8, 2008

CEO Watch, Rick Wagoner, GM, Update 10

It has been close to one month since my last warning on the possibility that Rick Wagoner, GM's CEO,  may be forced (and I contend should) to take a permanent vacation from General Motors.  According to stories in the press the pressure increased on GM to force Wagoner out if the firm is to get a government bailout.  According to a story by Gregg Stoll and Greg Hitt in today's Wall Street Journal,
On Sunday, Sen. Christopher Dodd (D., Conn.), a supporter of emergency loans for Detroit, suggested Mr. Wagoner should go if the government follows through and provides billions of dollars to help the auto giant restructure and return to profitability.

"I think you've got to consider new leadership," the senator said on the CBS talk show "Face The Nation." A Dodd aide said later the senator's demand for change would not be a "condition written into the" rescue package coming together on Capitol Hill, and draft legislation prepared by top Democrats doesn't make that explicit requirement. But Mr. Dodd's displeasure was clear. "If you're going to restructure, you've got to bring in a new team to do this," he said. "I think [Mr. Wagoner] has to move on."

...In a statement, a GM spokesman said the company "appreciates" Sen. Dodd's comments but added GM's employees, dealers, suppliers and its Board of Directors "all support Rick Wagoner and are confident he is the person to lead GM through these difficult times."

But calls for Mr. Wagoner and others to step down appear to be growing. In a statement from his office Sunday, Sen. Charles Schumer (D., N.Y.), said that, "while it can't happen tomorrow because of the urgency of the companies' financial situation, I would like to see management changes as part of any restructuring."

On Sunday, Jerome B. York, an adviser to billionaire investor Kirk Kerkorian who served as a GM director in 2006 when Mr. Kerkorian owned a stake in the company, called publicly for sweeping change at GM.

"Aside from a failure of leadership at the most senior executive management level, GM has five long-serving directors who have been on the board 10 years or more," Mr. York said in a telephone interview. "They have approved of and overseen many of the moves that have contributed to the company's troubles. They should also resign."
We will just have to wait and see how this all plays out.  Unfortunately, it is very late in the game to be considering new management but at a minimum it's a start.  Of the big three Wagoner has to be the first to go.  Mulally at Ford has shown he understands the situation and has made a start at turning Ford around. 

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