May 03, 2009

Mergers and Acquistions: More "Managing the Marriage"

"The single most important thing was to dismantle the organizational structure of Fiat. We tore it apart in 60 days, removing a large number of leaders who had been there a long time and who represented an operating style that lay outside any proper understanding of market dynamics."

Sergio Marchionne
CEO Fiat Group

"The Italians have been shocked by how bloated Chrysler's management still is--there are nearly ten times as many people in external communications as there are at Fiat."

The Economist
April 25, 2009

"If this thing (Fiat acquisition of Chrysler) comes off they're (Chrysler management) really in for a shock."

Anonymous Senior Fiat Executive

You are Fiat's CEO. How do you balance the immediate need to change while at the same time maintaining a minimum level of Chrysler employee morale?

Or do you even need to care?


  1. Everyone wants change but no one wants their "ox" "gored".

    Were it me, I wouldn't give a fly's wing what others thought about the changes I made but you watch. As soon as union benefits are affected, when suppliers start to lay off workers, that's when Obama and congress will rush in with new retroactive rules they demand be followed.

    Radical change is necessary and by definition that means a lot of people will not like what happens. There simply is no other way so let's get over it and on with it.

  2. There is no inherently good reason to save Chrysler except for jobs and as the anonymous Fiat executive makes clear, that's not likely going to happen. In fact, exactly the opposite.

    And why Chrysler as opposed to say Circuit City or any other large company employing thousands?

  3. The point of this post isn't about Chrysler, Fiat or what the government does, it's about whether management needs to care about employee morale.

    It would be nice if they did but in this economy, it likely isn't necessary given the number of people out of work who will be happy to work for most any company no matter how insensitive their management might be.

    Remember when Reagan fired the air traffic controllers? One could argue that he should have worried about their morale because he would need at least some of them to rebuild the system. But if he did, it wasn't apparent. In the end, new workers took their places and life went on.

    So too will it at Chrysler regardless of what Fiat does.

  4. i think you'd have to be a fool to say or think that you can ignore employee morale. BUT this has to done in the context of the individual situation.

    my heart goes out to any and every person who is negatively impacted by the dramatic changes in the auto industry but is anyone really surprised? can any company (chrysler or otherwise) expect to be sustainable for the long term when it puts out non-compelling products and has a non-competitive cost structure largely due to onerous labor contracts and other ridiculous legacy costs?