Quality Magazine

From the Editor: Out Of Touch

October 28, 2009


In a recent article for Fortune Magazine, Steven Rattner gives a behind-the-scenes look at the government’s bailout of the automotive industry. Rattner, who headed up the task force that did most of the hands-on work, said that despite low expectations, his group was shocked by the state of affairs at both General Motors and Chrysler.

Whether you agree with the government bailout of the automakers, the article is an eye-opening account of the decisions that took place and changed the automotive landscape as we know it.

In the article Rattner says, “Looking just at the condition of GM’s finances and Chrysler’s new-car pipeline, the case for a bailout was weak. But on the other hand, as we surveyed the interconnected web of finance companies, suppliers and related businesses, the potential impact of the likely alternative-liquidation-stunned us. We imagined that the collapse of the automakers could devastate the Midwest beyond imagination. We were determined not to fail. But as we started down the road, we saw mainly obstacles.”

After years of mismanagement, Rattner’s group had to determine if Chrysler should be saved. Arguments were made that if Chrysler was liquidated, it would likely mean more money for both GM and Ford. On the other hand, when the collateral damage was weighed, the short-term effect could have been an additional 300,000 workers added to the unemployment line.

The discussion regarding GM took a different tone. Rattner states that one of the problems at GM was “perhaps the weakest finance operation any of us had ever seen in a major company.”

In a few discussions with GM’s then-chairman and CEO Rick Wagoner, Rattner concluded that Wagoner and his team “seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate and the UAW.”

Rattner also explains that the company culture itself was shocking. “At GM’s Renaissance Center headquarters, the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones).”

That approach is counter-intuitive to what many of us have been taught-if you want to know how to save money and better run a business, get to know your employees.

According to a recent Gallup Poll, the number one reason people change jobs is because of a poor relationship with their boss. As the survey points out, “Employees leave supervisors, not companies.”

Share your boss relationship stories, positive and negative, with me at campbellg@bnpmedia.com or with other Quality readers on LinkedIn at http://www.linkedin.com/groups?gid=1876808.