GM drives HR to the next level: GM undergoes a transformation, and HR helps to steer the changes - Strategic HR - General Motors Corp.; human resources - Company Profile

HR Magazine, March, 2002 by Bill Leonard

Most people may be surprised to find out that the nearly century-old General Motors Corp. has become something of a leader in innovative HR practices. Over the past two years, the world's largest automobile manufacturer has completely reshaped the way HR operates within the company, and GM officials like to say that the corporate HR function is changing from a tactical to a strategic role. Indeed, one of the world's largest and most complex corporations understands that it cannot become a truly global corporation without strategic support from HR.

To this end, GM CEO Rick Wagoner appointed the head of HR, Kathleen S. Barclay to the company's overall strategy board. He also gave her the authority to reshape the HR department. Barclay accomplished this through a strategy she calls the 3Ts: technology, talent and transformation.

A Climate for Change

While many businesses flourished during the boom years of the 1990s, GM, like other U.S.-based automakers, struggled to maintain the status quo. During those years, GM's market share continued to shrink as a steady stream of consumers bought cars from its Japanese, German and Korean competitors.

When Wagoner took over as president and chief operating officer of GM in 1998, he knew the company had to change its approach to manufacturing and selling cars or it would continue a downward spiral and eventually lose its place as the world's pre-eminent automaker. Wagoner set into motion an effort to reorganize and rebuild GM from the inside out. One of Wagoner's primary objectives was to refocus and revamp the company's HR department.

"In my mind, HR is paramount to our reorganization effort. If we are to hire, train and keep the best workforce possible, then we must have the best and most up-to-date HR practices possible," Wagoner says. "While the change in HR is just one element of making GM a more globally focused and competitive company, it is a key element."

One of the first things Wagoner did as president was to organize a senior executive management committee, which he named the Automotive Strategies Board. The newly formed board includes the top-level executives at GM such as the chief financial officer, the chief information officer and the vice president of communications.

Wagoner, who had promoted Barclay to the position of vice president of global human resources for GM, named her to the strategies board. The move to place the head of HR on a top-level management team is something new within the organizational chart at GM. Essentially, Barclay now is considered the chief human resource officer at GM, and she reports directly to Wagoner.

Wagoner says it is crucial that GM's head of HR be a member of the top management team and says the board now actively seeks Barclay's input and opinions at its monthly meetings.

"Katy is a great asset to our organization, and I seek her counsel and perspective constantly," says Wagoner. "She has demonstrated a tremendous capacity to think and act strategically, which is essential to our HR function and what we want to achieve in making GM a globally competitive business."

Wagoner, who assumed the CEO position two years ago, is a relatively young chief executive at age 49. He has received some high marks from business analysts and the media for the changes at GM. Many have praised his fresh and energetic approach, which has helped GM maintain and actually show market share gains in a slumping economy and competitive global marketplace.

"Rick Wagoner is doing a wonderful job at GM, and he is taking the correct approach in involving and placing HR into a leadership role in the reorganization process," says David Ulrich, a management professor at the University of Michigan in Ann Arbor. "I believe he is doing all the right things to help turn GM around. I think they have turned a corner here and are positioning themselves well for the future."

Some observers, however, don't quite share Ulrich's optimistic outlook and say that GM faces some serious obstacles to becoming the globally cohesive company of Wagoner's s vision.

"GM has always been a very siloed corporation with all of its different divisions really operating like separate companies. There have been numerous reorganization efforts at GM, and most have not fared well, because of the turf battles and independent nature of GM's divisions," says Jay Conger, a management professor at the London School of Economics and a research associate with the Los Angeles-based Center for Effective Organizations at the University of Southern California.

Conger does admit, however, that GM appears to be taking a different approach. He says that focusing on HR and making it a key element in the reorganization effort is the right thing to do and is something that GM has never really attempted before. He also adds that reorganization on such a massive level and within an organization the size of GM will take several years to take root.

Ralph J. Szygenda, group vice president and chief information officer for GM, takes a similar cautious view. "HR has helped to keep us focused on what our ultimate goal is," he says. "Katy is really good at what she does and has been very persistent in keeping us focused and informed about the progress and changes that are happening throughout the company.