There is no quick, Viagra-like remedy for the General Motors minority dealer program.
It will take time, common sense and hard work from every GM operating group plus more accountability from minority dealers to make the program successful, according to a much-anticipated blue ribbon report by Washington attorney Weldon Latham.
Latham, senior partner at Shaw, Pittman, Potts & Trowbridge, was retained by GM in August 1997 to figure out why so many minority dealers are failing. Thirty-six percent of GM's 232 minority dealers were in the red as of Dec. 31, 1997, according to the report.
The 3-inch-thick report, delivered to GM on June 2, contains 215 recommendations covering virtually every aspect of its minority dealer program including selection and training of candidates, dealership acquisition process, and interaction between dealers and various GM operating groups.
The report is to arrive at minority dealerships today, June 8.
The next step will be a review by GM officials to determine what can be adopted. Joint factory-dealer implementation teams will then begin making changes.
Last week, civil rights leader Jesse Jackson said he was pleased with the report. Jackson had called on GM to conduct an independent study of the minority dealer program in May 1997, after learning that several minority dealerships were on the brink of failure.
Jackson said the report should be a model for minority dealer development programs at other manufacturers.
'We'll be meeting with GM to follow up on this report,' he added.
The report contains no magic pill but reiterates just about everything that minority dealers have been telling GM for years, said Martin Cumba, chairman of the GM Minority Dealer Advisory Council. The council reviewed a draft of the report about a month ago and saw the finished product on June 3.
Cumba, owner of Fairfax Ponti-ac-GMC in Fairfax, Va., and Northtowne Chevrolet in Temper-ance, Mich., said regardless of the top management's dedication to the success program, the people who work with dealers on a day-to-day basis - zone and district personnel, and employees at Motors Holding and General Motors Acceptance Corp. - must be onboard, too.
The report recommends that GM make the success of the minority dealer program a stated job objective within all GM organizations on which employee evaluation, compensation and corporate advancement are based.
Over 10 months, Latham and his staff of 16 interviewed 70 of GM's 232 minority dealers, four minority former dealers, 10 white dealers and about a dozen GM executives, including Chairman Jack Smith and Roy Roberts, general manager of Pontiac-GMC.
Latham, an African American and an advocate of minority-owned businesses, said the report took so long because the evaluation was uncharted territory and because his mission was to do a thorough job.
'We learned as we went along. We were not investigators; we were studiers and reviewers,' he said.
Latham said the one thing that surprised him was how many minority dealers were quite naive about the complexities and risks of owning and managing a dealership. And GM, he said, did little to enlighten them.
For example, some dealers said GM discouraged them from hiring their own attorneys during the negotiation and acquisition process.
Among the recommendations, the report urges GM to eliminate 'paternalistic practices' by including minority dealers in every aspect of the evaluation, negotiation and acquisition of their dealerships. The training process should encourage dealers to take responsibility for their own success or failure and make it 'unquestionably clear that failing dealerships are common among both majority and minority dealers,' the report states.
'I don't think that those who failed saw failure as an option,' said Latham. 'GM didn't do anything to change that; their priority was to create more minority dealers. There was an unbelievable amount of naivete on both sides.'
The report says that GM should:
Upgrade dealer candidate selection and training by providing every reasonable opportunity for success for well-qualified candidates, without allowing unmotivated or poorly qualified candidates to remain in the program.
Eliminate practices and procedures that give a perception of favoritism in the assignment of dealerships to candidates, the assist- ance given to dealers, the 'exit package' offered in terminations or dealer removals, and the availability of new dealerships to dealers whose previous dealerships were terminated.
Improve the development of comprehensive written procedures covering all aspects of the program. The minority dealer program and Motors Holding have manuals, but they are not current, comprehensive or well distributed.
Eric Peterson, 45, general director of minority dealer development, said he and others at GM are still digesting the report. He said review and implementation teams are being put in place.
The review team will be made up of himself and top GM executives such as Ron Zarrella, group vice president of North American sales, service and marketing, and Edd Roggenkamp, manager of dealer network investment and development.
The implementation team will include minority dealers and representatives from each car division, the minority dealer program and departments such as Motors Holdings.