Chrysler and GM will emerge from bankruptcy with completely new looks. The logic is that the new Chrysler and the new GM will be in a much better position to compete companies like Toyota. As GM vice chairman Bob Lutz put it, “We will be smaller, leaner and we’re going to be a powerhouse.” Unfortunately, that doesn’t have a chance of happening because Chrysler and GM have not dealt with the one issue that got them into this position in the first place–their management style–the way they treat their employees who do the work that the company gets paid for. Both Chrysler and GM have a long history of top-down management that uses fear as a motivator–the people at the top are treated like royalty and the people at the bottom are treated like third class citizens–it’s part of the DNA of these companies and Ford’s too, for that matter. Until these companies address this fundamental issue, they are doomed to eventually be run out of business.
An employee focused management style has been the competitive edge of the Japanese automakers all along. They’ve even tried to point this out to the executives running the American auto companies, but nobody listened. In an August 11, 1980 issue of Fortune magazine, an executive vice president of Honda was quoted as saying, “…capital investment alone will not make the difference. In any country the quality of the products and the productivity of the workers depend on management. When Detroit changes its management system [the way it treats its employees], we will see more formidable American Competitors.” Since then, the Detroit automakers have dramatically changed how the build cars, but they have not addressed the one issue that allowed the Japanese automakers to take over the American auto industry–their management style–the way they treat their employees who do the work that the company gets paid for.