In 1908, Mr. William Durant established General Motors in an effort to build

I. Introduction

In 1908, Mr. William Durant established General Motors in an effort to build a prestigious car manufacturing plan (The Case). The original idea was to be a co-competitor and market share holder with Ford, which at the time had taken over the American automotive industry. The business slid into heavy debts and was saved by bankers. Alfred Sloan joined the organization in 1923 and further led GM into one of its most profitable periods in history from 1923 to 1946 (The Case). In the 23 years of service to GM, Sloan brought about a cultural change in the organization, introduced a new management style, and redefined leadership in the entire automotive sector. The introduction of five different brands of cars under the GM flagship to serve five different types of consumers and segments was a brilliant move that created loyalty to the GM brand and redefined customer relations in the 20th century (The Case). However, with the development of the automotive industry and new market entrants, Sloan’s style of leadership began to lose its impact once GM started to lose domination of the industry. The major challenge with the management style was that it had led to internal fiefdoms, enormous inefficiencies and a competitive, dysfunctional culture between divisions and with the Worker’s Unions. At this time, GM had almost grown totally rigid to global changes and the need to change the organization. The problem has persisted in the organization as GM refuses to accept its market position and the need to reconsider its corporate culture.

II. Describe the type of change the organization was experiencing under the CEO

Sloan’s used an effective classical management style. The main changes he proposed were largely organizational culture, a shift from the casualness that had marked his predecessor’s era (The Case). He insisted on every employee doing their part and remaining professional, even frowning upon the use of first names in the workplace. Sloan wanted a way to capture a larger market share and overtake Ford to claim the title of the largest motor company in the world. Therefore, he set out an elaborate plan to produce practical cars for all income groups, and segment these in a way that one income group desired to move upper in the car production line with time. As a result, Sloan managed to create planned obsolescence where cars were designed to have a limited useful period, forcing customers to return to the market to buy after a given period. He would come up with an idea to change how Americans consumed cars, enabling a system resembling a ladder that customers would climb as they chased the bigger brands such as the Cadillac.

GM was also experiencing a change in the organizational culture. The rigid style that had marked the organization’s interactions with different stakeholders was coming to an end. There was an urgent need to listen to employee issues, address customer concerns, and combine these issues to meet the shareholders’ goals. Coupled by a rapidly changing external environment, GM was required to adapt to a changing external market. New market entrants from Asia and Europe were threatening its market position, leading up to a need to change strategies and to manage the internal changes in the organization. The reorganization attempt, coupled with the need to respond to the external threats forced GM to see a different picture of the automotive industry (The Case). Ultimately, the company was now focused on changing, a concept it had ignored for a while based on its domestic success in the US motor vehicle market and industry. As more people became car owners, GM also set itself up to change its managerial and marketing strategies so as to appeal to the new and upcoming markets.

IV. Strategic Approach Management Could Use to Implement Necessary Changes

The strategic approach that GM has continued to apply over the years to steer the company from poor performance to better results has been a change of its leadership and marketing approaches. However, this has not always worked. As a result, the most effective strategic approach for a company to effect permanent changes is changing its organizational culture. By changing its organizational culture, GM will be able to support all efforts aimed at enhancing its bottom line in the automotive industry. Currently, the company’s cultural features have contributed to poor performance. Reforms in its corporate culture will ensure that all internal stakeholders are aware of what is required and work towards achieving it. The company has undergone several leadership regimes, all with different managerial skills and techniques. However, the corporate culture at GM has remained largely unchanged, with a culture that wreaks arrogance and the notion of market dominance in the automotive industry. This culture has led to mediocre performance, since the reign of superstar CEOs like Alfred Sloan who steered the company to great heights (The Case). However, these glory days are long gone, yet the corporate culture at GM still harbors a notion of dominance. There is a need for a complete cultural overhaul to institute changes that will allow stakeholders in the organization to rethink their role and where they wish to take the company.

GM’s new culture must focus on new traditions, unwritten rules, and values among the employees, the management, the leadership, shareholders, and other important stakeholders. The proposed change in corporate culture will focus on employees: their behavior in response to market changes and their role in contributing to success, and a new culture that promotes human resource agility. The first proposed strategic change will enable employees to rethink their position and to work towards meeting the expected goals and objectives. Agility in the company’s human resource will support the efforts meant to improve the business performance and to further support the first proposal. With the internal issues relating to finance and the external threats from global industry giants like Ford and Toyota, employees will play a vital role in ensuring that they propel the company forward (The Case). For instance, agile workforces facilitate an increase in a company’s ability to quickly innovate for a stronger competitive edge and advantage. To save GM from collapse, therefore, an organizational-wide change in thinking is necessary. Particularly, the employees must understand the role they are required to play and be ready to meet these requirements. Strategically, the company should support these efforts by using an agile workforce through human resource support.

III. A Transactional Leader’s Approach

The most effective strategic approach for a company to effect permanent changes is changing its organizational culture. To save GM from collapse, therefore, an organizational-wide change in thinking is necessary. Particularly, the employees must understand the role they are required to play and be ready to meet these requirements. By changing its organizational culture, GM will be able to support all efforts aimed at enhancing its bottom line in the automotive industry (The Case). GM’s new culture must focus on new traditions, unwritten rules, and values among the employees, the management, the leadership, shareholders, and other important stakeholders. With the change in its organizational culture, the company will be able to handle changes better implement new strategies with ease, and face fewer instances of resistance in the implementation of relevant changes in response to both internal and external demands.

In the transactional leaders’ approach, there is a focus on managers to offer employees something they need/want in exchange for the changes they require. Because employees are not naturally self-motivated, there is a need for structure, monitoring, and instruction so as to comply with policies and changes. Transactional leadership, therefore, is a managerial-oriented leadership focusing on the roles f group performance, supervision, and organization. Leaders keen on using this strategy focus on particular tasks through the use of punishments and rewards to motivate followers. In their core, transactional leaders prefer structure and order over other elements in an organization. They are more likely to be successful in tasks and rules that require adherence to rules and regulation in the meeting of objectives.

Transactional leadership is more interest in results and conforms to the established structure of an organization. In this system, a leader uses the system of penalties and rewards based on the organizational structure. They have positions of responsibility and formal authority within the organization. For example, Alfred Sloan preferred transactional leadership in his role as CEO of GM. He was able to successfully drive the organization to greater heights through ensuring that people stuck to the rules and regulations, completed their tasks on time, and adhered to the structure that defined their interactions. Sloan was responsible for the maintenance of routine through the management of individual performance and a facilitation of group performance. Such managers prefer to set criteria for performance of employees as per the previously defined requirements. To measure employee performance and adherence to structure, transactional leaders use performance reviews as a popular tool for determination of current position. The reward versus penalty system is supposed to keep every employee in check, making it easier for transactional leaders to implement changes. This way, transactional leaders are able to maintain the status quo of a company, such as what Gm did with Alfred Sloan’s managerial style.

To implement the strategic approach for GM through change of organizational structure, a transactional leader will first begin by defining the expectations for every employee, against a series of consequence for non-compliance. Because employees are naturally against any changes that may affect their role and ability to remain in their current positions, structure definition and the threat of penalties would be a motivating factor enough to bring about changes. The structure is important to the transactional leader in introducing change to the organization because it offers a background for rules, regulations, monitoring, supervising, and control. Therefore, by appealing to the self-interest of employees to keep their positions and to advance their careers, a transactional leader would begin by providing promotions to individuals in line with the new changes. Best performers would be awarded bonuses, considered for promotions, and involved more in the decision making processes at their level. Contingent rewards can be linked to the goal of effecting change in the organization. For GM, the afore-stated strategy would involve clarifying expectations, providing necessary resources and support, setting mutually agreeable goals, and offering different types of rewards for the successful implementation of desired changes and performance. A transactional leader would set SMART goals for all GM employees in order to be specific, to be able to measure outcome, attain objectives, have realistic demands, ad work within a set deadline. In all these, employees will be motivated by a reward and punishment approach to ensure maximum compliance.

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