General Motors, Renault and Nissan have agreed to conduct a 90-day study to determine whether the three automakers should form an alliance.
No matter how the study turns out, GM's board of directors must ensure that the company's culture of complacency is permanently vanquished.
In addition to the proposed alliance, GM is in the midst of a plan to revive its North American operations. Last week, CEO Rick Wagoner said GM's financial results, scheduled to be released Wednesday, July 26, will show that the automaker's turnaround is succeeding.
That would be welcome news, although one improved quarter does not a revival make. A comparison with GM's last major financial crisis is instructive.
In 1992, GM's outside directors revolted after the company posted $9.6 billion in operating losses. The board fired CEO Robert Stempel, and board Chairman John Smale charged that GM had become complacent.
This time, GM's board has given Wagoner a vote of confidence, despite signs of corporate complacency that include eroding market share, a $10.6 billion loss last year and an embarrassing investigation by the U.S. Securities and Exchange Commission.
Moreover, the board has left it up to Wagoner to evaluate the proposed alliance with Nissan and Renault and make a recommendation. The directors rejected a proposal from board member Jerry York for an independent study.
Very well. The board still has the responsibility to decide whether the alliance would be in the best interest of GM shareholders -- even if it means a change in leadership.
It will not be an easy decision. Directors must be prepared to challenge management and not just accept what they're told. More than ever, GM needs a board that is fully engaged in holding management responsible for its actions, no matter who is CEO or who ultimately owns the most stock.
Now is the time to get it right.