Why Ford's new structure might make sense

Revamped organization fits industry's push toward leanness, collaboration

June 19, 2017 01:00 AM

DETROIT — Ford Motor Co.'s C-suite shake-up last month went much further than simply switching the nameplate outside the CEO's office.

The automaker drastically altered its senior management structure by bestowing wider power on three senior executives, combining the critical roles of purchasing and product development and installing Executive Chairman Bill Ford as the company's public voice in a bid to reassert his influence over his family's namesake company.

One month after the shocking moves, the company still is working internally to sort out the new structure. While it may be new to Ford, management consultants say the structure is not unique in the automotive industry and is part of a growing wave of car companies looking to tweak operations and get leaner.

Hackett: Tasked with being faster

"The whole world is shuffling the deck right now," said Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. "The industry's being divided into haves and have-nots. Ford is a 'have' company. They have the resources to do whatever it takes to be successful, but they just have to move themselves aggressively in the right direction."

Pressure from new-age tech disruptors in Silicon Valley, as well as questions about future prospects from investors on Wall Street, has automakers approaching their century-old industry in a new way, Cole said. Successful car companies are moving from rigidly controlled bureaucracies to free-flowing, collaborative teams.

During Jim Hackett's introduction as CEO in Dearborn, Mich., on May 22, Bill Ford acknowledged that Hackett will need to focus on quickening the company's decision-making.

"The clock speed at which the world is moving, and our competitors, really requires us to make decisions at a faster pace," he said then. "And we have to trust our people to move fast. It's not command and control."

How that happens remains to be seen. Four weeks after reorganizing key positions, Ford is distilling the finer details of how everything will work.

It needs to manage the egos of longtime executives, control decision-making whenever spheres of influence overlap and figure out how its ambiguous mobility branch fits into each part of its business.

Industry observers are optimistic the company can succeed, thanks to its new CEO.

"Hackett has a rare combination of uncommon personal humility and tremendous vision," said Jeffrey Sonnenfeld, associate dean of the Yale University School of Management. "Somehow, he's able to catalyze professionals to get the best out of them."

Sonnenfeld was quick to praise former CEO Mark Fields when he took the reins at Ford in 2014. He called the board's decision to remove him "bewildering," noting that the team must overcome "internal confusion" from Fields' departure before it can move forward.

"I think Ford is especially well-positioned," he said. "Hackett's streamlining the bureaucracy and has created fewer baronies he needs to sign off on and check. He's making the right moves."

Direct reports

■ Bill FordExecutive chairmanJim Hackett (CEO), Mark Truby (vice president, communications), Ziad Ojakli (group vice president of government and community relations)

■ Jim HackettCEOJohn Casesa (group vice president, global strategy), Jim Farley (president, global markets), Felicia Fields (group vice president, human resources and corporate services), Bradley Gayton (general counsel and chief administrative officer), Joe Hinrichs (president, global operations), Marcy Klevorn (president, mobility), Bob Shanks (CFO), Ken Washington (chief technology officer)

■ Jim FarleyGlobal marketsSteven Armstrong (president, Europe, Middle East & Africa), Peter Fleet (president, Asia Pacific), Kumar Galhotra (president, Lincoln), Sherif Marakby (vice president, autonomous vehicles and electrification), Raj Nair (president, North America), Stephen Odell (executive vice president, global marketing, sales and service), Lyle Watters (president, South America)

■ Joe HinrichsGlobal operationsBruce Hettle (group vice president, manufacturing and labor affairs), Hau Thai-Tang (executive vice president of product development and purchasing), Bennie Fowler (group vice president, global quality and new model launch), Kim Pittel (group vice president, sustainability, environment & safety engineering)

■ Marcy KlevornMobilityJeff Lemmer (vice president and COO of information technology), Raj Rao (CEO of Ford Smart Mobility), Neil Schloss (vice president and CFO of mobility), Paul Ballew (vice president and global chief data and analytics officer)

Fewer direct reports

Hackett has eight direct reports, down from 18 that reported to his predecessor.

The discrepancy includes the areas of communications and government affairs, two positions assumed by Bill Ford.

His direct involvement in business decisions has ebbed and flowed over the decades, but Sonnenfeld said it appears "a switch has been flipped" in his mind recently.

"I think he's an honest, well-intended family patriarch with pressures on him as the family gets larger and per capita wealth diminishes," Sonnenfeld said. "He feels like he's the standard-bearer for his family's wealth creation."

There are few concerns that Bill Ford's involvement will muddy the waters and create confusion among lower-level reports.

One former executive, who asked not to be identified, said the shake-up was overdue and that operations should improve under the new senior management team.

Cole said many of the changes — breaking down the president of the Americas role to two separate positions for North and South America or combining product development and purchasing — won't have negative impacts.

"If you operate with the same structure, it's very easy to fall into business-as-usual," Cole said. "The idea of change is important in a company. One reason to shuffle the deck is to get people's attention."