The Face of Change

DETROIT -- As Dan Akerson nears his two-year mark as General Motors CEO on Sept. 1, executive upheaval has emerged as a hallmark of his tenure. And more may be coming.

The turnover -- including last week's ouster of marketing chief Joel Ewanick -- has accelerated in Akerson's second year, while GM's U.S. market share slipped, losses in Europe widened and GM's stock price languished. The management flux has created an air of uncertainty -- and an undercurrent of fear, some insiders say -- that impedes progress.

Asked last fall whether he was happy with his executive team after a rookie year also marked by management churn, Akerson said he thought "a lot of the turmoil" was behind him.

"We're now settling in as a team," he told Automotive News in October.

Since then, Akerson has twice replaced the head of GM's troubled Opel European unit and installed new global heads of manufacturing, vehicle quality, r&d, information technology and OnStar, among others.

An even deeper shake-up could be in the works. Akerson is laying the groundwork for a major overhaul of GM's organization chart.

A person with knowledge of the plan confirms Akerson wants to break apart GM's regional divisions -- North America, South America, Europe and International Operations -- and give broader authority to the global heads of manufacturing, purchasing and other functions, a change that could take several years to implement.

Akerson hinted at the change in June, telling The Wall Street Journal that he envisions running GM's two most important brands, Chevrolet and Cadillac, as autonomous divisions with global presidents.

Akerson's published comments caught many on his executive team off guard because he hadn't discussed the plan with them in depth, the source says.

After the latest executive moves, Akerson, 63, finds himself buffeted by questions about GM's direction and whether his fluid executive team can overcome the company's hidebound culture and solve entrenched problems such as chronic losses in Europe.

"Does GM face challenges of leadership or culture?" Morgan Stanley analyst Adam Jonas asked in a note to investors last week. "We believe both."

Executive overhauls under new CEOs are common -- especially at a company emerging from bankruptcy and with the deep dysfunction that plagued the old GM. Some analysts say the frequent shake-ups are preferable to the blind eye that GM execs used to cast on incompetence.

Mark Reuss, GM's North America president, says GM critics will point to just about any management change as a sign of turmoil. In fact, he says, the moves usually are "part of a broader structure that's positioning us for success long term."

He cites a recent shake-up that elevated former Chevrolet sales chief Alan Batey to a newly created spot atop Reuss' sales team. It will allow better coordination on retail strategies among GM's four brands as the company readies one of its busiest vehicle-launch schedules in its history, Reuss says.

The problem is that Akerson's executive shuffling has accelerated just as GM should be hitting a sweet spot in its recovery, say pundits and some insiders.

Ewanick had been spearheading what is perhaps Akerson's most concrete directive as CEO: to transform Chevrolet and Cadillac into truly global brands.

Last week, Ewanick, 52, who arrived at GM in spring 2010 with near rock-star status, was forced to resign.

Two people with knowledge of the matter say his superiors accused him of failing to disclose financial details about a sponsorship deal he negotiated with British soccer club Manchester United.

Ewanick has declined to comment.

Akerson talks often of the need to break GM's bureaucratic ways and reduce its complexities. He makes no apologies for the frequent turnover.

"You've seen that we will not hesitate to act when change is required to make the business stronger," Akerson told analysts last week during a conference call about GM's second-quarter profits, which were dragged down by losses in Europe. A spokesman said Akerson was not available for an interview.

Akerson said of GM's European operations: "Progress always comes faster if you approach the business unconstrained by the past. That's why we've hired change agents to help us accelerate our progress." Last month he named a former consultant with turnaround firm AlixPartners to head Opel.

Akerson removed Karl-Friedrich Stracke from the job after the GM lifer disappointed his boss with a series of worsening financial projections, according to two people familiar with the matter.

"We just never seemed to move beyond damage control," one former executive says.

And yet, in many ways GM is in better shape than it has been in decades. Last year it delivered a record net profit of $7.6 billion. Its $2.49 billion in net profit for the first half of this year edged that of rival Ford Motor Co.

Some GM insiders praise Akerson's quick trigger on decisions as an antidote to the plodding ways of the old GM.

He has a cut-to-the-chase style in one-on-one meetings, an insider says, and typically expects a brief, well-reasoned rationale for business decisions. He readily offers advice, too, often citing examples or strategies from his days in the Navy or the companies he has led, especially MCI.

To the uninitiated, he can appear disengaged in meetings, one insider says, sometimes doodling on a notepad during a conversation -- before responding in a way that makes clear that he had been listening intently.

But his executive changes feed into Akerson's reputation for impatience with lengthy development times.

Last year Akerson asked his executive team to accelerate by six months the planned launch of the redesigned Chevrolet Malibu. He got a cool response. The base engine wouldn't be ready in time for the launch Akerson sought. Debuting with a different powertrain would be costly and potentially delay the launch of higher-volume models, Akerson was warned.

"He was told that it was a mistake," one a former executive said. "But he couldn't understand why it would take so long."

His team dutifully fast-tracked the launch by fitting the car with a readily available 2.4-liter engine paired with a mild hybrid system to create the Malibu Eco. Since its January debut, though, sales have been tepid as GM sold down discounted versions of the outgoing 2012 model.

Harry Criswell, who owns a Chevrolet store in Gaithersburg, Md., and is vice president of the Washington area Chevy dealer advertising group, scratches his head at GM's executive churn. "They're always preaching to us that consistency is everything," Criswell says, from the appearance of the stores to the way salespeople greet the customers.

"Maybe we ought to take some of our own advice," he says. "I don't think you can keep changing your people and have consistent results."