siness Leadership

ACCELERATING
CHANGE AT GM
Critical By Robert J. Grossman

HR hands steer

I
n April 2011, when a headhunter suggested that Cynthia
the automaker Brinkley throw her hat in the ring for the top HR job at
GM, Brinkley politely declined. She had been at AT&T
at a time when for 23 years in increasingly senior roles. After rotating
from president of AT&T Missouri into an HR assignment as
direction and senior vice president of talent development and chief diver-
sity officer at AT&T's Dallas headquarters a little more than
speed are vital. two years earlier, she was inclined to stay put.
Reporting to William Blase, AT&T's senior executive
vice president of HR, she had moved quickly and effectively,
helping AT&T earn kudos for its learning and development
and diversity initiatives. "I was not interested at first," Brin-
kley says.
But as she mulled over the prospect, she became intrigued.
"I came up to Detroit and spoke with CEO Dan Akerson,"
she recalls. "I was impressed with the commitment, the lead-
ership team and the new direction of the company. They had
just come out of bankruptcy, and it was interesting to me to

The author, a contributing editor o/HR Magazine, is a lawyer and a pro-

fessor ofmanagement studies at Marist College in Poughkeepsie, N. Y.

58 HR Magazine • June 2012

Cynthia Brinkley, GM's
vice president of
global human resources.

June 2012 • H R Magazine 59

 iness Leadership

consider the challenges of being involved with a company going 6,000 to 3,600, and brands were cut to four: Chevrolet, Cadil-
through such a major transformation." lac, Buick and GMAC.
GM's leaders also liked what they saw. From a field of more Then-CEO Fritz Henderson announced that "business as
than 200 people, Akerson named Brinkley GM's vice president, usual is over at GM." He spoke about creating a winning cul-
global human resources. She began on July 1, 2011. ture if GM were to slice costs to levels comparable to more-
Brinkley, 52, was walking into a tinderbox. Bankruptcy, like agile competitors while designing, building and selling "the
a diet, had enabled GM to shed the debilitating excess baggage best vehicles in the world." Layers of management would be
dragging it down. With the new start, the question of whether removed, speeding up decision-making. U.S. executives would
the company could keep the weight off and quickly work its way be downsized by 35 percent.
into a viable, long-term competitor in the global auto sweep-
stakes was still unanswered. Critics worried that the company HR Takes a Hit
wasn't moving fast enough, wasn't cutting deep enough or Kathleen Barclay, global vice president for HR at the time, was
would revert to bad habits. among the first executives to hit the road. She had been GM's
HR professionals had been expected to play a significant top HR executive for a decade beginning in 1998 and had built
role as change agents in crafting a new culture and attracting the global HR team. Barclay began her career at GM in HR in
and developing talent, but they had been operating in low gear. 1978 and rose through the ranks. As the senior HR leader, she
And, there were inevitable questions about Brinkley's selec- was the consummate HR professional: A true strategic business
tion. Why would GM choose an outsider with no automotive partner and a respected player in the C-suite, she served on key
experience—and less than three years of HR experience—to strategic committees and reported to CEO Rick Wagoner from
head its complex global HR operations in what undeniably was June 2000 until Wagoner stepped aside in 2009.
the most risky time in its history? Under Barclay's leadership, HR had been integral in imple-
To understand the thinking, and why Brinkley may or may menting and determining the human capital policies that many
not prove to be GM's Ms. Goodwrench, requires a look in the now believe contributed mightily to GM's woes during the
rearview mirror at GM's precarious journey during the past Wagoner era, resulting in losses of $85 billion. "There were
decade and the roles that HR professionals have played. about 20 people at the very top level overseeing a lot of bad deci-
sions, and she was one," says Rob Kleinbaum, managing direc-
Bailout and Bankruptcy tor of auto industry consulting firm Rak & Co. in Saline, Mich.
In the fall of 2008, by most measures GM was a near total "If you believed that the culture contributed to the problems,
wreck, destined for liquidation or hostile takeover. There were which most people did, she had to go." Kleinbaum worked for
too many employees, too much money tied up in benefits and GM either as an employee or a consultant from 1983 until 2008.
legacy costs, too many brands, too many plants. The insularity Barclay and her team were viewed as part of the problem,
of the management team in choosing insiders with automobile agrees Noel Tichy, a management professor at the University of
credentials and the bureaucracy that hobbled and delayed deci- Michigan with expertise in the auto industry.
sion-making had all contributed to the disaster. "Katy and the CEO went down together. They were not
After the company failed to get private equity investors such tough enough in taking on and breaking the bureaucracy. On
as Bain Capital to bet on its ability to engineer a turnaround, her watch, Barclay should have been able to do what was finally
the Obama administration and U.S. taxpayers came to the res- accomplished through bankruptcy," Tichy says.
cue with $50.7 billion. But efforts to Barclay was not on the market long.
stay afloat without relief from the In January 2010, she joined Kroger
courts proved futile, and on June 1, Co., the supermarket giant in Cincin-
General Motors
2009, GM slipped into Chapter 11 nati, as senior vice president of human
bankruptcy. resources. She declined an interview for
Ownership: Publicly held (NYSE: GM),
Forty days later, on July 10, this article.
Top executives: Dan Akerson, chief
with the federal government own- In response to criticism, Henderson
executive officer; Cynthia Brinkley, vice
ing 60.8 percent of the company, president, global human resources. publicly lauded Barclay. Yet soon after
GM emerged from bankruptcy in replacing her, Henderson unexpect-
Employees: 205,000.
fighting form. Much of the bloat edly resigned. Edward Whitacre, a GM
and costly commitments had been 2011 revenue: Si 50.3 billion. board member, stepped up next, lasting
eliminated. U.S. employment had Locations: 158 facilities on six conti- until Sept. 1, 2010, when current CEO
been reduced from 91,000 to about nents and 21,000 dealers worldwide. Dan Akerson took the wheel. Akerson
64,000, U.S. dealers were cut from Connections: http://careers.gm.com. is reflective of board members' recogni-

60 HR Magazine • June 2012

tion that outside blood was required to revitalize GM's stulti-
fied culture.

New Direction for HR

It might have seemed logical for Henderson to look within HR
for a successor. Barclay had been grooming executives for such
eventuality with global job rotations. But perceptions of the Human Resources Policy Institute at Boston University. "It
HR team and HR in general at the executive and board levels was a pretty risky proposition, a tough industry, and it wasn't
were not positive. Instead, in July 2009, he turned to insider like the future was certain."
Mary Barra. A fast-tracking executive with an engineering Finally, in early June 2011, Brinkley, accepting the risks,
background. Barra was a GM lifer—dating back to 1980 when signed on. She reports to Akerson, joining Barra on the
she was a General Motors Institute (Kettering University) 19-member Executive Operations Committee.
co-op student at the Pontiac Motor Division. Barra had no HR Brinkley knew she had to play catch-up to get HR into the
experience. fast lane, but before she could begin in earnest, she had to do
"They brought her in because they saw that HR was a really due diligence. As an outsider, she needed a crash course. She
big problem, an enabler of the poor culture, and that there read trade journals, news articles and history-focused accounts,
was nobody a layer below in the culture including the controversial book by Bob
who could fix things," Kleinbaum says. Online Resources Lutz, former GM vice chairman. Car
"So they reached out to a manufactur- Guys vs. Bean Counters: The Battle for the
ing executive who was trusted within the For iinl<s to more intormationabout GM, see Soul of American Business (Portfolio/Pen-
company. It would have been impossible the online version ot this article at www. guin, 2011). And, leveraging superb com-
to get a good outsider, given the condition shrm.orci/hrmaaa2ine/0612Grossman. munication skills, Brinkley went on the
of the company." road, "trying to learn about the product
Barra understood the frustrations that line executives had life cycle and product development cycle" she says.
experienced with HR—the bureaucracy, the roadblocks. She "What kinds of people do we need? What kind of organiza-
seemed like a change agent. She would learn the HR side tion do we need?" she asks. The reaching out continues as Brin-
quickly and take steps to make HR responsive to GM's busi- kley conducts "diagonal slices" every other week or so, meeting
ness needs. with employees in groups ranging from 10 people to hundreds to
But HR had been hobbled in the bankruptcy and the time ñnd out what's on their minds.
leading up to it. For example, GM University, the company's
prime training operation, had been shuttered and is yet to re- Hybrid Leadership Strategy
open. Barra laid the groundwork for new HR metrics and a Brinkley received a warm reception from her HR colleagues.
new appraisal system, and contracted out recruitment func- "It is refreshing to get a fresh perspective from a new sector,"
tions previously handled inside. She oversaw further cutbacks, says Tobin J. Williams, director of human resources, corporate
restored some salary cuts and immersed herself in HR with a staffs, who began his GM career in 1983. "She has the opportu-
no-nonsense approach. But her days in HR were numbered. nity to transform how HR work is done inside our company. It's
On Nov. 17, 2010, with Akerson ensconced as CEO, GM all about making sure we have a company that's not managing
pulled off the largest public offering in history, with the govern- to the middle but to the top." Now, the philosophy has to be to
ment's share dropping to about one-third. Soon after, Akerson settle for nothing less than excellence.
decided that Barra could serve GM better in another role. "It The HR organization includes a shared services "factory"
was the worst application of talent I've ever seen," he told Auto- that handles data and information flow. HR business partners
motive News in October. In January 2011, he moved Barra up, serve with corporate staff, product lines and regions. Centers
naming her senior vice president of global product development. of expertise cover compensation and benefits, organizational
She became the first woman to hold that position at a major U.S. capabilities and diversity. HR's global head count is 2,700;
automaker. 22 percent work in the United States.
Brinkley's strength is as a proven executive who understands
Brinkley Drives In business and the role that HR must play in supporting the enter-
The search for Barra's replacement dragged on six months prise. "My mission is to make the business better," she says. She
under the guidance of Chicago search firm DHR International. gives no quarter to those who question her HR pedigree. "I've
"A lot of seasoned HR people who are real pros would have never been anybody other than who I am, " she says. With under-
passed on this search," reflects Fred Foulkes, director of the graduate degrees in journalism and political science, "I have a

June 2012 • HR Magazine 61

 siness Leadership

natural knack for HR but haven't been in the discipline through- be speeding down the road so fast that we miss the exit. People
out my career. I have a learning curve in HR, but while I'm learn- are not accustomed to moving too fast. Quick decision-making
ing, I have tremendous expertise on the HR team. So for me, catches people by surprise."
a 'hybrid model' works best. I rely on my team to provide the Early on, Brinkley sought advice about HR operations. She
expertise, then I make the decisions." brought in consultants from The Hackett Group. "We've taken
"Because of her inclusive leadership, her lack of HR experi- a deep dive to learn how HR compares to other companies as
ence is not really an issue," says Janice Uhlig, executive director to who is best in class," she says. "How effective are we at what
of global compensation and benefits, who reports to Brinkley. we do? How are other companies structured? How are they
"We have very seasoned HR professionals here. Her leadership staffed?"
team is made up mostly of HR people who grew up here in HR. Meanwhile, the news is encouraging: On Feb. 16, with
She lets people run their business but sets priorities. " Uhlig beganthe government stul owning 26 percent of GM, the company
her career at GM's Canadian headquarters in finance. She has reported record profits of $7.6 billion for 2011, up from $4.7 bil-
been with the company in various capacities for more than 15 lion in 2010. On May 3, GM announced that it earned $1 billion
years. in thefirstquarter, a 69 percent decline from the year-ago period,
when it benefited from one-time gains from asset sales. Earn-
Decisive Manager ings in North America improved 30 percent during the quarter,
Brinkley meets with her leadership team weekly and individu- but continued struggles in Europe dragged down overall results.
ally as needed. "She makes decisions quickly," Williams says. Globally, GM still employs 205,000. In the United States, there
"If you have her trust, you put out your proposal and she goes are 26,000 salaried and 47,500 hourly union employees.
with it; you don't need to have multi-iterations to convince her. Brinkley's impact, influenced by the Hackett report, is
She is open to feedback and perspective, but at the end of the beginning to be seen. She's overhauling a four-day training
day comfortable in moving forward." program to pound home new attitudes and values GM aspires
Some HR professionals are still adjusting to her speed and to. The program, "Leading in Today's GM," will be a prereq-
urgency. "In our desire to change," Williams says, "we could uisite for all managers. Through webcasts and presentations,
she's helped communicate a new appraisal
system with five rating tiers now being used
for salaried employees. Employee engagement
Talent Management: Top Priority surveys, last done five years ago, will now be
In December 2 0 1 1 , GM's HR head convincing qualified people to come
conducted annually. So far, she is keeping her
top reports but is beginning to shuffle them
Cynthia Brinkley reassigned Tobin to GM for lower wages and benefits is
around.
Williams to his current role as HR proving difficult. Challenges abound in

director. Outsider Michael Arena, from
Bank of America, replaced Williams as
director of organizational capability in
January. The move is indicative of the
urgent priority Brinkley places on talent
management and its funding. Arena is
charged with building an infrastructure
and making it work.
Kristin Dziczek, director of the Labor
and Industry Group of the Center for
Automotive Research in Ann Arbor,
Mich., explains some issues Arena
faces:
• With the implementation of a two-
tiered wage structure for hourly workers.
filling salaried positions as well.
• Salaried workers have been pushed
out through retirements, leaving gaps in
expertise.
• Younger workers cost less but need
training.
• Older workers need retraining and
cross-training as technology changes
and productivity demands increase.
• Morale issues pop up when a recruit
who is a good fit commands higher pay
than insiders get.
• Top talent needs to be developed
and retained in an increasingly
competitive environment.
Addressing the Culture
Brinkley is determined to make HR and the
entire GM workforce more business-oriented,
seeing winning in the marketplace as the only
acceptable outcome. Generating more and sus-
tained car sales worldwide requires being more
innovative, being more cost-effective and earn-
ing more market share than the competition.
The message is clear: "If we do this, everyone
does well; if we don't, everyone suffers."
In the new GM, leaders stay mindful of les-
sons from competitive Asian cultures. "There
is a heightened appreciation for cost," Wil-
liams says. "People speak in terms of margins.
Their culture is based on negotiation. We see a
price here, we accept it. They see a price, they
negotiate, trying to get it down as low as pos-
sible. GM, and that includes HR, needs to have
that emerging nation mentality." >

62 HR Magazine • June 2012

 J_eadÊCSliip_

Changing the compensation

mix has also accelerated change.
Now, raises and bonuses are tied
to business results. As of Octo-
ber, all salaried workers will
move from traditional deñned
benefit plans with guaranteed
payouts to 401(k)-type plans with
contributions based on salaries
and bonuses.
Still, "Unless you have a
magic wand, changing culture is
easier said than done," Brinkley
observes.
"The caution is not to fall in
the same traps," says Bruce Bel-
zowski, assistant research scien-
tist at the University of Michigan
Transportation Research Insti-
tute. GM has taken on culture
change before. There have been
"project-of-the-month interven-
tions, but each time people don't change. They sit back and wait The jury is out about whether Brinkley's lack of HR expe-
it out. This time may be different." rience will hamper her. "There's a science about talent and
Historically, HR has been viewed as less of a strategic part- succession, to name just two areas," Foulkes says. "If these dis-
ner and as more transactional, Williams says. Now, "We have ciplines are not in the toolkit, it will be a disadvantage."
to bring value to the business by being agile and nimble, by Yet, there arc many examples where non-HR executives
executing or implementing systems that help reduce structural move into top HR slots, either as career moves or as part of
costs and increase margins." a job rotation. "It's not rocket science. It's not like designing
Brinkley says, "HR people need to be able to connect their complicated engines for new-age vehicles," Kleinbaum says.
work to the business. If it doesn't drive the business, then why Given GM's precarious position, this situation is differ-
are you doing it? You need to know what margins mean, what ent, Tichy says. "People with limited experience may land
we're talking about when we speak about ROI [return on invest- top HR jobs, but they've not been the head of HR driving
ment] and EBIT [earnings before interest and taxes]." She plans transformation in a large company. HR is central to GM's
training in HR and throughout GM to teach business basics. ability to achieve its mission. It needs to revamp the organi-
zation for the global world of tomorrow. And I can't think
Observers Weigh In of someone coming in with her background—and I know
Experts caution that Brinkley's long-term ability to change the the HR fraternity well—that played a significant transforma-
culture and attract and maintain top talent will depend on how tional role.
fast she moves to bring in her own team. "The directors that "This should not be on-the-job learning," he concludes.
report to her are part of the problem," Kleinbaum says. "Unless Tichy, who helped transform HR at GE while working for
she sweeps out that level, she will be continuously frustrated. It the legendary Jack Welch, insists that a transformational HR
sounds harsh, but other companies like IBM and GE that did leader needs "guts, acumen, leadership ability and support
turnarounds did that." from the top." Though it's too early to judge, Brinkley seems to
Why? Leaving the incumbents in their jobs, reassigning possess these qualities—and more. Tichy, however, hedges his
them or offering them a drawn-out exit strategy increases odds bets: It "looks like a long shot," he says. "But she just may over-
against GM, Kleinbaum contends. "Moving people out in dribs come her lack of background, buüd a new HR team and become
and drabs, it's not clear they haven't made things worse. People the transformational leader that GM desperately needs."
are frightened for their jobs, unwilling to speak out. You need Can she provide the octane that GM needs to run smoothly?
a culture where you can have debate and dissent and where Time will tell. DB
things can be fixed."

64 HR Magazine • June 2012

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