DETROIT – On the surface,Group LLC’s organizational chart smacks of desperation, a bare-bones reflection of the tumultuous times that greeted the auto maker, post-bankruptcy, in 2009.
Each of the four brand chiefs wears two hats. Big ones. Which saves salaries, for starters.
But asstruggles to rewrite the most contentious chapter in its storied history, two key stakeholders say the strategy is gaining traction.
“Upstream, downstream, side-stream, no matter what, we’re all looking out for each other,” says Fred Diaz, president and CEO of Chrysler’s Ram brand who also is top U.S. sales executive for the entire company.
And this unifying effect is magnified throughout the organization.
“The teams below us see us doing that, so they follow our lead,” Diaz tells Ward’s. “It’s an amazing creation that is driving the culture of our organization. That’s the depth of his brilliance.”
Diaz is referring to the plan’s author, CEO Sergio Marchionne. But he admits the brilliance of his boss’s plan was not readily apparent.
“I went, ‘Holy crap!’ Each one of these jobs is big enough for one person to handle and keep that person busy 24-7,” he says.
Matrix-style organizational charts can be found in business textbooks, says Tony Faria, a professor and marketing department chairman at Marchionne’s alma mater, the University of Windsor, in Windsor, ON, Canada.
The goal of such management structures is “something that all top executives in all companies would like to have,” he adds. “They’d like to have their department heads looking out for the whole organization, not just their departments.”
But the strategy is not foolproof, says Faria, who also is co-director of his school’s office of automotive and vehicle research. “How it works is dependent on the people.”
Joining Diaz in the matrix are Mike Manley, Jeep president and CEO and lead executive for international markets; Olivier Francois, Chrysler president and CEO and the auto maker’s top marketer; Ralph Gilles, Dodge president and CEO and design chief; and Pietro Gorlier, MOPAR president and CEO whose responsibilities also cover customer care.
Early indications suggest everyone is on the same page. The system has “trained us to be friends and get along,” Gilles says.
The Dodge boss’ disappointment with previous regimes is all too apparent during an appearance at the recent Automotive News World Congress.
Chrysler insiders tell Ward’s they languished under what they considered oppressive overseas control when the auto maker was under the Germany-based umbrella of the now-defunct DaimlerChrysler AG. And they were shocked by the bunker mentality of the company’s most recent owners, Cerberus Capital Management LP.
“There is a lot of caution and wisdom that comes from peculiar leadership,” Gilles says before realizing his remarks might be viewed as impolitic.
“Sorry, he adds. “I’m still in therapy.”
But Marchionne’s matrix organization is have a healing effect by generating positive tension, Gilles says. And the CEO himself, with his celebrated unassuming manner, is leading by example.
Marchionne, who also headsGroup Automobiles SpA, has abandoned the upper-floor office occupied by his predecessor in favor of a desk adjacent to Chrysler’s engineering operations.
“The 15th floor is almost a museum,” Gilles says, adding his boss also sets a frantic pace.
“Sergio invented the eighth day.”
Gerald Meyers, who led American Motors Corp. as CEO and now is a consultant and business professor at the University of Michigan, admits Marchionne is the main cog in the Chrysler wheel. But, he adds, what goes around comes around.
“I think it only works with a guy like Marchionne,” Meyers tells Ward’s. He also calls the strategy “temporary.”
When Chrysler turns the profitability corner, Meyers expects the “experiment” to end.
The auto maker is gearing up for an initial public offering on the heels of 2010’s 16.5% sales jump over prior-year, according to Ward’s data.
“I’ve seen it before,” Meyers says of assigning multiple portfolios to individual executives. “has done it.”
In 2009,Motor Co. tapped marketing boss Jim Farley to oversee the auto maker’s operations in Canada, Mexico and South America. But in August of last year, he was named group vice president-global marketing and responsibilities for those regions were reassigned.
Chrysler’s structure, Meyers adds, could provide more clarity.
“Dealers are confused,” he says. “You ask them who’s responsible for what and they won’t be able to tell you. And that’s not good.”
Alfred Flores, vice chairman of the auto maker’s national dealer council, begs to differ.
“Chrysler has high-profile brand CEOs who have frequent contact with dealers and through our National Dealer Council meetings,” says Flores, who also is principal of Spring Chrysler Jeep Dodge in Spring, TX. “We know (Diaz) is the leader, as well the voice to the dealers.”
Historically, matrix-style organizations are used to “build executive talent,” Meyers notes, adding the strategy is not usually employed to “pull an organization together.”
However, that has been the outcome at Chrysler. “It makes you responsible to look out for each other,” Diaz says. “Or else you build chimneys and silos.
“One thing you don’t see in our organization is backstabbing, infighting and hidden agendas,” he adds.
While Diaz admits Chrysler’s near-death experience is a motivating force, Marchionne’s matrix is the straw that stirs the drink.
“You can’t go out on a island and just worry about your brand and nobody else, because your other responsibility filters across all the brands,” he says.
“If I got my sales organization and I said, ‘Help us with Ram and only Ram,’ you know what? Olivier Francois, who builds my marketing, he could say, ‘Well, I’ll fix him. Let’s see how good his next commercial looks.’”
– with Byron Pope