Marchionne Risking Burnout With New Organization?

Fiat and Chrysler CEO Sergio Marchionne has too many people reporting to him under the auto makers’ pending management integration, says a noted business professor and former car company chief.

Fiat unveils today a “group executive council” (GEC) that integrates the operations of newly-acquired Chrysler, effective Sept. 1. Marchionne is CEO atop a global flow chart consisting of four columns – one each for regions, brands, “industrial process leader” and “support process leaders.”

Lines on the chart link Marchionne’s name with those of 21 executives – four fewer than the number who now report to him at Chrysler alone, but still too many, says Gerald Meyers, adjunct professor at the University of Michigan’s Ross School of Business and former chairman and CEO of American Motors.

Eight to 10 direct reports is the gold standard, Meyers tells Ward’s. “Even that is a lot. Unless you’re a genius or (the plan) is temporary.”

The genius label has been attached to Marchionne. Senior executives within the Chrysler organization repeatedly have cited his capacity to analyze and retain enormous amounts of information.

Meanwhile, there are no signs the structure unveiled today is temporary. “We have now reached the right moment to step on the accelerator of the Fiat-Chrysler integration,” Marchionne says in a statement.

In addition to his duties as GEC CEO, Marchionne, an Italian national who grew up in Canada, will have responsibility for North America as chief operating officer. From the Fiat organization, Cledorvino Belini and Gianni Coda are tapped to lead Latin America and the Europe/Africa/Middle East regions, respectively.

Mike Manley will be COO of Fiat’s Asia region, while former Fiat insider Pietro Gorlier moves from the Chrysler organization to handle parts and service under the MOPAR banner.

Sergio Marchionne, group executive council CEO and COO, North America

Eugenio Razelli is named COO of Fiat’s components operations, which primarily consists of Magneti Marelli, while Riccardo Tarantini becomes COO of the company’s casting and machine-tool operations, known as Teksid and Comau, respectively.

Manley is one of three executives to wear two hats, a hallmark of previous Marchionne flow charts. Fiat’s Asia chief also will have global responsibility for the Jeep brand.

Other brand chiefs with multiple responsibilities are Harald Wester and Olivier Francois. Wester will lead Alfa Romeo, Abarth and Maserati while retaining his post as chief technical officer.

Francois, who has won acclaim as boss of the Chrysler organization’s marketing strategy, keeps his finger in the marketing pie as chief creative officer. But he surrenders responsibility for the Chrysler and Lancia brands in exchange for the Fiat marque.

Saad Chehab will oversee Chrysler and Lancia, while Reid Bigland keeps his job as Dodge chief and Lorenzo Sistino leads Fiat Professional, the auto maker’s work-truck brand.

The Ram brand is not represented on the flow chart, because it is not a global brand and there are no plans to make it so, Ward’s is told.

Lorenzo Ramaciotti will be in charge of global design while three Chrysler executives add significantly to their workloads. Doug Betts, Bob Lee and Mark Chernoby now have global responsibility for quality, powertrain and product development, respectively.

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Meyers suggests Marchionne has chosen to stay close to Fiat’s day-to-day operations because he is unsure of the talent within his organization. But the CEO’s statements suggest otherwise.

“These appointments are the result of an extensive process of evaluation of the technical and leadership skills of the individuals who have been appointed to the GEC,” Marchionne says. “But equally important is the fact that they reflect the multi-cultural, geographically diverse nature of our businesses.

“We recognize in these leaders the future of Fiat-Chrysler as an efficient, multinational competitor in a global automotive marketplace. It is a privilege for me to have the opportunity to lead this group of people and see them grow, to watch them as they transform challenge into success and into faith in themselves and what they can achieve.”

Still, the size of the organization appears daunting. “He still has too many people reporting to him,” Meyers says, adding General Electric – widely regarded as the benchmark for organization structure – does not ascribe to a ratio of more than 6:1 for CEOs.

One-time industry darling Carlos Ghosn tried first to lead the global operations of the Renault-Nissan alliance while also shepherding Nissan North America, but he gave up the latter job after 23 months.

Marchionne has led Chrysler and Fiat since mid-2009. If he maintains this pace, “he’s going to find himself burned out,” Meyers says.

Ironically, thanks to a strict diet, the 59-year-old Marchionne looks fitter than when he assumed leadership of Chrysler.

He also has been lauded for his democratic approach to management. Chrysler insiders admit he is demanding, but he also is quick to take counsel.

This, too, poses risk, according to Meyers. “A business is not a democracy,” he says.

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