(For purposes of disclosure, I’ve interviewed Wagoner twice, most recently in December 2005.)
We’ve all seen this kind of “gotcha” game before. Standard & Poor’s, obviously hoping to start a stampede, announced that it was putting GM’s debt on credit watch with negative implications. The regulators in Washington want more investigations of how GM has kept its books. And Paul Ingrassia, writing on the editorial page of The Wall Street Journal last week, made a rehashed case for why Wagoner should go by “this summer, at the latest” and suggesting two of his friends as possible successors. His friends? This is a complete violation of basic journalistic ethics. It’s a wonder the Journal actually printed the article.
Here are four reasons why Wagoner is the right person for the most difficult and important job in Corporate America.
1. Putting in anyone else, from inside GM or from outside, even board member Jerry York or new CFO Fritz Henderson, would result in at least a year of transition management. This particular CEO job is spectacularly complex-the person who sits in this chair has to manage product development, U.S. governmental policies and regulations, international strategies, health care and pension issues, environmental concerns and communications with employees, dealers and suppliers. Any interruption in CEO leadership now would mean that GM goes sideways on many tough issues. And there is no time to go sideways.
2. Wagoner is making the decisions that need to be made. We can argue that it’s happening too late, which is probably because the company left Gary Cowger in charge of North America until last year. A president of North America can’t make the sweeping moves that only a CEO can make. Cowger was, and is, good man, but he didn’t have the power that Wagoner has. Only someone with the legitimacy that Wagoner possesses can make structural changes, not just cosmetic tweaks.
3. Wagoner has a chance to manage the company through an historic transition in its relations with the United Auto Workers, which must give ground in terms of hourly compensation, health care and pensions. He’s taken a pay cut personally and also laid off white collar employees. These are hugely important symbolic moves because they show that management is sharing the pain. If the board were to put anyone else in the CEO’s position at this sensitive juncture, relations with the UAW could blow up. That would send the company into a death spiral.
4. Wagoner does not project the image of a defeated leader. This is highly subjective, but it’s almost as if CEOs who realize they are failing at their jobs give off a different bodily scent. The visitor to Wagoner’s office gets none of that. At 53, Wagoner is the right age to have three decades of experience under his belt–yet at the same time have the stamina and the will to see this job through, for another decade if necessary. He is focused, energetic and determined to win. That’s critical at this moment. If the CEO of GM had even the slightest whiff of doubt, he and the company would be dead meat. They would have no chance.
In view of these realities, the media, financial analysts, and political leaders and regulators in Washington ought to be playing a different game, not the gotcha game. The new game would go like this: It’s critically important to the U.S. economy that GM survives. What will it take to help Wagoner make that happen? He doesn’t want a Chrysler-style bailout, but how can we create a policy and economic climate that would help Rick Wagoner save this icon of American economic power? That should be the question of the hour.
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Response to: If Not Rick Wagoner, Then Who?
Your four points have merit but it is easy to take a more negative approach.