Who killed General Motors and what can America learn from this?
Since everyone else has an opinion on this... I figured I would weigh in.
Greed
Why do employees continually think "they" deserve more for less effort? This can be the over paid executives or the person putting in bolts. Society needs to change what they value in order to control management pay. Who is really worth more than $1 mil /yr??? As for the bolt installer and unions, if your skills/knowledge don't justify your compensation on the open market, your strikes and black mailing management just put your company at risk. You are forcing them to pay more than needed and "killing the golden goose". (ie many bolt turning GM folks retired well at ~50 yrs of age)
American investors and their thirst for short term profits absolutely kill the ability for a company to invest in research and development during down turns. Before a company could lose money for a year and investors would accept that it was a necessary investment. Now they punish the stock price, which lowers the valuation and puts the company at risk for takeover. Therefore executives find it difficult to commit to longer term improvement.
America has way too many lawyers, and far too few engineers. Engineers , manufacturing personnel, etc add value for customers. (ie product and innovations) Lawyers, sales people, etc are a necessary tax that needs to minimized. You would be amazed at how much money the American Legal system costs you each time you buy a product. All because of greed.
Pride and Complacency
In the 1950's, a guy named Deming went to GM and other US manufacturers to offer his knowledge. They ignored him, so he went to Japan. Enough said. (wiki Deming)
Execution is hard detailed "every day" work, however it seems many American managers continually look for simple solutions or "Big Improvements For Free". Also, people that pursue these positions are often motivated by money, pride and/or power. (ie not natural Servant Leaders...) Then on top of this, they like to reward people like themselves and punish the "employee/child" that points out the king's missing clothing. This works because "conflict later" is easier than "conflict today" for most folks. Besides you may get lucky and things will work out.
The American workers don't get off free here either. Repeatedly I have coached employees that are looking for that "next position" and are unwilling to learn or do what is required. Again, you are not that "special" unless you take responsibility for your continual improvement and work ethic. If you are getting above cost of living raises without increasing your productivity, you are poisoning the golden goose and should not be surprised when it drops dead.
Governmental Ponderings
The largest group of "Managers" and "Union Employees" are in government/schools, they continue to strive for job security, their view of what is right and more income, no matter the results. After looking at GM, how do you think this will work out for the USA in the long term?
Remember, you first need to look in the mirror, because that is the only person you can directly influence and change. Thoughts?
The problem with GM is that we simply asked too much of it. A while back it became a health care company and a pension fund financed by a car company that was faced with competitive pressures from foreign companies not similarly burdened.
ReplyDeleteI agree that was one of the root causes. Now the question is how do "we" learn, change our ways, and prevent it from happening in other companies, and the country as a whole.
ReplyDeleteFree markets and competition are the only way to keep innovation up, cost down and quality up. However, they are very intolerant of waste and complacency.
Maybe there is something the USA should learn from the Roman empire... Or any other civilization that rose and later fell...
Free markets and competition cut multiple ways. It's tough to be innovative when a company is getting beaten to death in a highly competitive marketplace. One corporate executive's waste can very well be another corporate executive's promising research and development project. And while keeping costs down and quality are both good things to do, there are times when they are in conflict.
ReplyDeleteI have to admit to a prejudice here. I don't like competitive businesses. Competition is wasteful and expensive and it's devastating on profit margins. The whole point of innovation is to get companies in businesses that are less competitive, not more.
ReplyDelete"Why do employees continually think "they" deserve more for less effort?"
ReplyDeleteDo they? In a collective bargaining environment, it's never a question of what employees deserve. Rather it's a question of what they can negotiate. It seems to me at least possible that if car company compensated their employees on the basis of what they deserved as opposed to what they negotiated, they wouldn't be in the dire straits they are now in.
"American investors and their thirst for short term profits absolutely kill the ability for a company to invest in research and development during down turns. Before a company could lose money for a year and investors would accept that it was a necessary investment. Now they punish the stock price, which lowers the valuation and puts the company at risk for takeover."
ReplyDeleteCompanies shouldn't worry so much about the stock price, and they should never, ever, allow themselves to be put in a situation where investor decisions influence the business of the company.