Powerful Divisional General Managers Are History in New GM Management Restructuring

By Michelle Krebs March 8, 2010

An executive position at General Motors Co. with a long tradition for power and attracting GM Mark Reuss at Holden - 200.JPGambitious -- and often quirky -- personalities has been eliminated in the top-to-bottom management restructuring GM unveiled for its four sales divisions last week.

The role of division general manager -- the executive who for decades wielded the almighty last word on everything from marketing to manufacturing -- is gone, the historic position replaced by a structure that assigns sales and marketing functions to separate executives at each of the Chevrolet, Cadillac and Buick/GMC divisions.

"It's become extremely clear to me since taking this role that there is a better way to structure this organization," Mark Reuss, GM North America president, said in detailing the new management configuration. "The premise of the structure is simple -- a clearer marketing focus to sell more vehicles, and freeing our sales and service experts to focus on customers and dealers.

"We've worked with a small group of executives to align this model and appoint the best candidates for each job," he added.

Say goodbye to one of the last vestiges of GM's management-style history: the single and all-powerful division general manager.

History's Most Commanding GM Roles

Almost since the time the GM divisional structure we recognize today was adopted, the role of general manager was one of the company's most authoritative -- and sought-after. Serving as a general manager often was the requisite path to higher GM executive positions, but it was said general managers actually were the company's most influential executives, more powerful than  GM's president or even CEO.

In the pre- and post-World War II eras of GM's greatest might, division general managers commanded an empire that controlled a division's entire business operations, from design, engineering and manufacturing to sales and advertising. Each of GM's longstanding major divisions -- Buick, Chevrolet, Cadillac, GMC, Oldsmobile and Pontiac -- effectively operated as an independent car company. Except perhaps for major underbody structures and certain ubiquitous components, little was shared between the divisions.

And when GM accounted for 50 percent of all U.S. auto sales, it worked. GM's market dominance almost guaranteed intense and bizarre internecine battles for corporate resources, as a division's primary competition often was another GM division.

The atmosphere dictated that only the most intelligent, resourceful and ambitious executives could handle the general manager's position. A strong personality inevitably was a part of the curriculum vitae, and the general manager's personal opinions, preferences -- and eccentricities -- could deeply influence a division's products. Sometimes for decades.

Those days are over, said David E. Cole, chairman at Michigan's Center for Automotive Research and son of Edward N. Cole, one of GM's most famous engineer-executives who served as president of GM and prior to that served five years (1956-'61) as probably the most influential general manager ever at the mighty Chevrolet division.

"I don't believe the personality of a person -- tied to a brand -- is as important today as in the past," David Cole told AutoObserver. "The independence of individual car divisions is a thing of the past at all car companies."

GM has for years been diminishing the role of divisional general manager, of course: As with engines or transmissions, commonality -- not personality -- now calls the shots. Long past are the times when a Chevrolet could have a totally different engine from a Cadillac.

"Everything is controlled centrally to give scale and minimize cost while addressing multiple market segments," Cole said. "Divisional general managers of the past were almost larger than life. They had tremendous autonomy and often competed against their own brands. That is now a part of history."

Ed Cole and 1960 Corvair.jpgBig Company, Big Characters

Since at least the 1980s, the all-encompassing influence of a division's general manager has steadily eroded, as engineering became more centralized and marketing and sales experience more specialized.

But the now hard-to-imagine power of general managers when GM was the most important company in the world produced more than a few larger-than-life examples - executives the likes of which are certain never to be replicated.

Ed Cole, for example, was a titanic engineering mind. Before becoming Chevrolet general manager from 1956-'61, Cole was Chevy's chief engineer who, in 1952, designed the legendary small-block V8 that started production in 1955; its basic design continues today, more than a half-century later.

Cole also guided development of rear-engined Corvair, the car that represented GM's first development of small cars. He went on to became president of GM in 1967.

John DeLorean in car.jpgWhere engineering dominated Cole's legacy as a general manager, cult of personality colored the tenure of John Z. DeLorean, famously known as the father of the Pontiac GTO and the executive generally credited with birthing Detroit's muscle car era.  

 The flamboyant DeLorean did not start his career with GM and was himself a not-untalented engineer. After joining Pontiac in the early 1960s, DeLorean became a protege of Pontiac General Manager Bunkie Knudsen and later eclipsed Knudsen's record for being the youngest general manager at Pontiac when, at age 40 and largely as a reward for the GTO's success, DeLorean was named the division's general manager in 1965.

DeLorean also was later to become Chevrolet's youngest general manager before GM's corporate staidness proved too much for the former Pontiac wild child who had become the poster child for the 1970s-style "rock star" executive. DeLorean left in 1973 to form his own star-crossed car company.

Another notable general manager was Oldsmobile's John Rock, son of a longtime Chevrolet dealer whose entire career was spent at GM.

Rock ran GM's Australian Holden unit for a few years and headed up GMC for a decade before really stepping out from the crowd and establishing his maverick reputation as general manager at Oldsmobile in 1992.

The opinionated, always blunt-talking and often entertainingly profane Rock probably was the prototype for the role today served by soon-to-retire GM Vice Chairman Bob Lutz -- only Rock had the benefit of serving in a less politically correct time.

In a Motor Trend magazine interview in 2006, Rock recounted how he was called to a late-1996 meeting with the brand-focused but product-illiterate president of GM North America, Ron Zarrella -- a man whose marketing-driven vision for GM many have credited for cementing the company's inevitable trip to bankruptcy court.

In the meeting, Zarrella effectively said he did not see a future for Oldsmobile, which had been fading for decades. And, by association, no future for Rock.

"If you want my ass outta here, I'll gladly do that" Motor Trend quoted Rock as saying. By the next year, Rock retired.

Rock retired shortly after in 1997 and by 2000, GM announced Oldsmobile would be shut down and the division was eliminated four years later. At the time of Rock's death in 2007, AutoObserver Senior Editor Michelle Krebs wrote an extensive review of Rock's contributions.

Making GM More 'Corporate' Than Ever?

Now, with the role of division general managers well and truly abolished, one of the last and most interesting vestiges of the "old" GM's management history is gone. Since general managers haven't been as powerful or as colorful for a long time, the legacy probably won't be missed.

But one has to wonder if it's yet more loss of whatever of GM's "personality" remained.
Recently installed president Reuss, whose own father Lloyd Reuss -- an engineer as is his son -- was general manager of Buick, later became GM president and was ousted by the GM board, proclaims the new structure to enable "the best team for the task ahead of GM North America," and adds that he thinks dealers will appreciate the new and more direct lines of reporting.

CAR's David E. Cole, meanwhile, says, "I'm not sure how to react to the changes yet. My guess is that there still will be a person or team to be the 'face' of the brand.

"We will have to wait a few years to determine if this is successful," Cole added. But he concedes, "In the current industry, I don't think we will see the identifiable personalities of the past. I will miss that dimension of the industry -- but such is life, I guess." -- Bill Visnic, Senior Editor

Photos

1 - GM President-North America Mark Reuss

2 - Ed Cole and the 1960 Chevrolet Corvair

3 - John DeLorean

4 - John Rock

 

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LEAVE A COMMENT

kcram says: 12:41 PM, 03.08.10

Interestingly, Chrysler has done just the opposite - Marchionne has created brand CEOs who are responsible for most of the functions that GM has just axed from the division executives.

cwc1 says: 7:39 PM, 03.08.10

This is exactly how not to design and build cars - take away the passion, ownership, and accountability, and replace it with corporate controlled "brands", and you get bland cars. It may work for toothpaste, but not for products as complex and individualistic as cars.

This is one of the key things that killed GM, starting with Roger Smith's reign in 1981, as he began dissolving the success formula of GM. Of course, the unions are another key thing.

So this isn't anything new at GM at all -- it's more of the same centralized planning that we've been seeing the results of for 20 years.

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