June 9, 2014 at 1:39 pm

GM board seeks quick culture changes amid recalls

Solso )

General Motors Co. Chairman Tim Solso had only been leading the automaker’s board a few weeks when the first ignition switch recall was issued in mid-February. As the crisis grew to encompass 2.59 million recalled cars now linked to at least 13 deaths and 54 crashes, a sense of urgency grew among the directors: that the corporate culture at GM must change so that nothing like this happens again.

While GM’s board is well-informed on the recall issues and has been “extraordinarily” involved, members aren’t satisfied, Solso said in an interview last week with The Detroit News.

He said they want problems corrected as soon as possible. They want the company to be more transparent. They want GM to be fair to customers and families affected by accidents in recalled vehicles. And they want to see change.

“The board has complete confidence in (CEO) Mary (Barra) and her leadership team. And the leadership team has the board’s support,” said Solso, who will run GM’s annual stockholder meeting Tuesday — five days after the release of a scathing internal report that largely blamed GM’s corporate culture for taking 11 years to finally recall the cars.

“It’s just that everyone is disappointed and frustrated with these recalls and we want to make changes as fast as we can.”

Solso and Barra are likely to face some tough questions from shareholders on the scope of its recalls, which total 34 so far this year. Four were announced just Friday.

The callbacks have cost the company $1.7 billion this year, with more charges expected with additional recalls, lawsuits and a compensation plan for families who lost loved ones or for people who were injured in crashes linked to the faulty ignition switches. GM’s stock price is down about 14 percent this year.

The retired CEO and chairman of diesel-engine manufacturer Cummins Inc. said in a half-hour telephone interview that there are positive cultural changes underway at GM, but he hopes to help move things further in the 220,000-employee organization. He said he wants to recruit more board members who are passionate about GM, speed up the company’s product development, improve safety and customer satisfaction, and develop leaders.

“Mary and her team are working effectively together, but we can drive, we can get better and we can drive it in to the organization,” Solso said. “And if you have high-performance teams and quality leadership and the right people in the right jobs — and they’re aligned around guiding principles, vision, mission, values and strategy — a lot can happen. And I think that’s the first step in terms of really making long-term permanent change in a company.”

Management stronger

In addition to running the board, Solso sees his role at GM as an adviser to Barra and leaders — someone who can offer 40 years of experience in the industry. He hopes by talking, asking questions and thinking about things differently the company can further transform itself. While Solso said he’s not a “hands-off” leader, “We need to be clear that Mary and her team are running the company. I am not.”

Solso said GM’s management team is much stronger today than it was when he joined the board in June 2012. Executives are working more effectively together than prior teams, with better communication and integration.

“This recall issue has brought them together and has demonstrated an incredible need to change the culture. And they’ve bonded over that,” Solso said. “And I think as tragic as the recall is, that one benefit is that it’s going to be a catalyst to change General Motors much faster than if it hadn’t happened.”

He said GM has become more focused on customers, is more transparent and is working to be more accountable.

“General Motors has unlimited committees and there was a real reluctance for an individual to stand out and say ‘I’ve got this and this is my responsibility,’ ” Solso said.

“I think Mary and her management team are really pushing for single-point accountability and holding people accountable for delivering what they say they’re going to do and doing that every time.”

Solso said the recall has made accountability that much more important, and he believes Barra knows reform is needed. GM dismissed 15 employees and disciplined five others upon the completion of the internal investigation.

Accountability cited

B. Joseph White worked at Cummins with Solso. They graduated in the same Harvard University MBA class. White interviewed Solso for his upcoming book, “Boards That Excel: Candid Insights and Practical Advice for Directors.”

White, who is president emeritus of the University of Illinois and a business and leadership professor at the university, describes Solso as a leader who is intense, tough, demanding and results-oriented. He said Solso diagnosed what needed to change at Cummins, and as CEO boosted shareholder value by a factor of 10.

“What’s clear is there has not been a culture of strong accountability at General Motors,” White said. “And I absolutely expect that Tim Solso will bring that culture of accountability for safety, for quality, for profitability to GM just like he did at Cummins.”

Solso and Barra have talked about extensively about GM’s plan to implement the Six Sigma quality program across the entire company as a driver of permanent cultural change. GM has used Six Sigma mainly in engineering.

Solso has tapped Alicia Boler-Davis, GM’s senior vice president of global quality and customer experience, to use Cummins as an example for its use of Six Sigma, a process that saved the Indiana-based company billions of dollars and transformed itsculture, Solso said.

'Common language'

“It provided a common language, it provided for transparency,” Solso said. “So at one level we want Six Sigma at General Motors for eliminating waste and variation and reducing costs, but in another way, it’s a way of saying, ‘You know, we’re going to be different.’ ”

Still early in his tenure, Solso has spent time learning about the product development, supply chain management and recall processes. He’s led two additional board meetings and five extra teleconference calls, mostly related to the recall.

Solso said the challenge of the recalls and their importance is “extraordinary,” and that the board is very engaged and is giving oversight to ensure problems are fixed.

“(They) want to understand what happened, want to make sure that we’re putting processes in and people in places so it never happens again, and are monitoring it closer than what they normally would,” he said. “And that’s what a board should do when there’s a crisis.”

Tim Solso

Current position: Chairman of General Motors Co. and GM board member since June 2012. Also on board of Ball Corp., Earth University, Earth University Foundation and MasterCard Foundation
Previous work: Chairman and CEO of Cummins Inc. from 2000 until retiring in 2011; on board of directors for Ashland Inc., American Transportation Research Institute; chairman of Cummins Foundation; chairman of U.S.-Brazil CEO Forum
Age: 67
Residence: Indianapolis
Education: Bachelor’s degree, DePauw University; MBA, Harvard University
Source: General Motors Co., Detroit News research

Q&A with Tim Solso

Q: How did this chairman’s job come about for you?
A: Pat Russo, who is the lead director and former CEO of Lucent, contacted me actually before I retired. So I agreed to meet with Dan Akerson in Detroit and have dinner with him just to learn more about it. And I was so impressed with Dan and what he was trying to do that I considered it. I met some of the management people, including Mary, and was just basically blown away with how important General Motors is and how committed the management was to creating a great car company. So I joined the board in June of 2012. And then Dan announced in November to the board that unfortunately his wife had been diagnosed with cancer and that he had to retire early (and) that we would have a meeting, an unscheduled meeting in December to select a CEO and a non-executive chair. And I had no idea that I was being considered. And when I showed up for the meeting, I was basically drafted into the non-executive chair role primarily because my experience at Cummins paralleled lot of the challenges that General Motors has.”
Q: Tell me a bit about why you decided to take on the role.
A: The reason I accepted is pretty much the reason I went on the board. I think there’s a huge opportunity here to have a great American company regain its stature and become not only a great company in the U.S., but a global leader in cars. And I feel that my experience at Cummins can help; I think I can help as an adviser to the management team. And I know how to manage boards. I was a CEO for 12 years, and I’ve served on many boards for many years. And I understand the board processes. And I could handle that so Mary could focus on running the business.
Q: What have you been doing so far in that role, what have you been doing in Detroit?
A: I’ve been spending anywhere from four to eight days a month in Detroit. And the first probably 10 to 12 days, I interviewed all the executives that report to Mary and report to Dan (Ammann) and spent an hour and a half with each of them, where they could tell me anything they wanted and I would answer any questions they had. And that gave me a feel not only of the people but how effective they work together and what they’re concerned about. And then I spent another several days where I wanted to look at the flow of the business, so I would go to advanced engineering, design, pre-production, manufacturing, the customer experience and call centers, and then ended up going and seeing four dealers. And that way I could get a feel as to how the company was being run. And I’ve done town hall meetings, I’ve met with the supply base, I’ve spoken to senior management on leadership development.
Q: Have you thought about how long you’d like to stay on the board?
A: There’s a retirement rule when you reach the age of 72. As long as I think I’m adding value, as long as Mary and her team think I’m adding value, as long as I’m meeting the needs of the board, I’m happy to do that. But if somebody wants to change that, or there’s a better way of going about it, I’m open to that, too. I’m more of trying to be a support and help as opposed to holding a position. I’ve done that.
Q: But it sounds like you don’t have any immediate plans to (retire)?
A: Oh, no. I’m in this boat and I’m rolling with everybody in it. And we’re going to make the changes and we’re going to make it a great company.

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