Sergio sends message with quick exits

Last year, Chrysler quality chief Doug Betts praised boss Sergio Marchionne, saying the CEO’s culture of accountability was just what the automaker needed.

Last week, Betts became an unwitting poster child for Marchionne’s methods. He was let go a day after Consumer Reports ranked four of Chrysler’s brands at the bottom of an annual scorecard on reliability.

Critics of the Detroit 3 have long lamented the lack of consequences for failure. But there’s no question that Marchionne, CEO of Fiat Chrysler Automobiles, believes in public accountability.

The automaker declined to comment on the reason for Betts’ departure. But Marchionne shed light on the situation in a conference call a day after the departure: “It was pure mismanagement of the process on our part,” Marchionne told analysts during a discussion of FCA’s earnings.

The quality “function is being restructured. I’m not taking issue with the survey itself, other than it is clear that we have focused on the wrong things.”

One source with direct knowledge of Marchionne’s management style said the CEO understands that everyone is going to have a bad day and make mistakes.

“But if you’re unable to rectify the situation, then there are consequences,” the source said.

The source said Marchionne drills into his executives that each must do his or her job and deliver, or “the whole thing can fall apart. The pressure to deliver on your goals and business plan is intense."

In January, another high-level executive parted company with Marchionne after a significant failure. Mircea Gradu, Chrysler’s head of transmission, powertrain and driveline engineering, “left the company to pursue other interests,” a company release said.

Gradu’s responsibilities included making sure that the complicated driveline on the 2014 Jeep Cherokee was working as planned before the vehicle was launched. It wasn’t, and the costly delay of the launch lasted two months.

In another example, Fiat brand head Laura Soave departed after Fiat sales started slowly in the United States in 2011. The news release said she would “pursue other interests.”

To be sure, abrupt public departures aren’t the only way to demand accountability.

When Alan Mulally took control of Ford Motor Co. in 2006, few executives departed.

To meet corporate objectives, he forced top executives to work together cooperatively and break down functional silos.

At General Motors, the recent ignition-switch crisis this year rekindled longstanding calls for more accountability. Some GM managers knew of the faulty switch for years but failed to fix it and recall affected vehicles.

In October, Bob Lutz, former vice chairman of GM, said the company needs “more rigor than in the past. More rigor, more accountability and, frankly, more pressure to get the job done fast and get it done right.”

As CEO Mary Barra “said in a recent talk to employees, if you’re not comfortable working in a high-performance organization, you’re going to have to take a look at a career change, or words to that effect,” Lutz told The Washington Post.

Steven Rattner, a Wall Street executive who led a team that advised the Obama administration for the 2009 bankruptcy, has been an outspoken critic of GM culture.

In a June column in The New York Times he wrote: “Emblematic of the company’s lack of management accountability was the insistence of its chief executive officer, G. Richard Wagoner Jr., that its problems were all the fault of external forces: its unions, oil prices, the credit crisis and competition from Japanese imports.”

The Betts case was compelling because after Chrysler’s bankruptcy in 2009, he had a close working relationship with Marchionne, a source said.

Betts, who had been hired away from Nissan in 2007 by former Chrysler CEO Bob Nardelli, was handed a broad mandate to improve Chrysler’s quality results when Fiat S.p.A. and Marchionne took over.

Initially, Betts won praise for his efforts. In 2011, David Champion, then senior director of the Consumer Reports Auto Test Center, said Betts “has a single focus on bringing Chrysler back into the field” on quality and reliability.

In the magazine’s 2011 survey, Jeep was the top-rated domestic brand. The Chrysler brand had jumped 12 places and Dodge (including Ram) had jumped three spots.

But last week, Betts’ departure was announced after four of the automaker’s five mass-market brands finished at the bottom of Consumer Reports’ reliability study.

In a 2013 interview with Automotive News, Betts recognized that Chrysler needed a culture change to improve its quality and that ultimately, results were what mattered.

“I got a big boost when Sergio came here because the culture he wants to instill is really the right kind of culture to be able to design, build and deliver high-quality vehicles,” Betts said then.

“It’s a meritocracy. It’s about accountability for the results, not for the short term but in the long term.”