How Mercedes-Benz USA’s CEO is Leveraging its HQ Move

Photo from the North American International Auto Show

Mercedes-Benz USA CEO Dietmar Exler has a lot on his plate these days, what with trying to protect and build on the German brand’s new lead in U.S. luxury-car sales over arch-rival BMW, as well as Lexus and others.

Add this: Exler also is overseeing the move of Mercedes’ American operations from its traditional headquarters in New Jersey to Sandy Springs, Ga., in metro Atlanta. The company is constructing and will open its $93-million, 200,000-square-foot new building in 2018, after announcing in January, 2015, that it would be leaving Montvale, N.J.

Mercedes-Benz already has transferred about 200 people from New Jersey and hired about 300 new people in Georgia, putting them in temporary quarters—and trying to integrate them into a new culture.

“You’d better have your act together regarding the culture you want to create, or the 300 new people will create it for you,” Exler told Chief Executive.

“You’d better have your act together regarding the culture you want to create, or the 300 new people will create it for you.”

Many CEOs each year preside over the move of a corporate headquarters or the construction of a new building. Here are some pointers from Exler about what it takes to build and sustain a culture while doing so.

1. Leverage the occasion. Mercedes-Benz had been wanting to go paperless at its U.S. headquarters for years. “We kind of pushed for a paperless office five or six years ago, but it didn’t quite work,” Exler recalled. But when the company arrived at its temporary lodgings in Atlanta last year, Exler took advantage of the opportunity to try the paperless strategy again.

“We didn’t have storage here, so we had to go paperless,” he said. “And it worked because the 300 new people didn’t know anything different.”

2. Make sure you communicate. Understanding that the change in geographic location and refining of a hybrid culture could be fraught with opportunities for mistakes and miscommunication, Exler was determined to use the transition to create “a much more communications-focused culture than ever before.”

For example, each month various top executives film a five- to eight-minute video with their views about sales trends and other operational topics and host it on the internal company portal.

And Exler instituted a new 360-degree evaluation process for all Mercedes-Benz USA managers. “We need honestly critical questions to push ourselves forward,” he said. That process includes reviews of the chief by everyone in the company, not just his peers in the C-suite and direct reports. All employees were asked to rate Exler in various ways on a 1-to-5 scale and also given the opportunity for free-form feedback.

“I got 40 pages of that,” he said. “Ninety-five percent of it was specific points, not just words to fill out the form. No one had to fill that box. People really took time to make suggestions.” The majority of comments were directed at the company per se, “but as CEO I stand for the company.” Mercedes also initiated some management actions in response to the feedback and “made some commitments,” he said.

3. Avoid a sophomore slump. Exler said that the second year of integrating Mercedes-Benz into its new headquarters setting in Atlanta was more difficult than the first year, and CEOs need to be wary of encountering a sophomore slump in the process.

“In the first year, everyone understands the situation and people actually pitch in more and cover,” he said. “But in the second year, it’s getting tougher. The intention has to move on and you’ve got to be more careful.”