Brain Drain Threatens Auto Industry

Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – Most companies typically replace 50% of their top leaders every five years as part of the regular course of firings, resignations and retirements, but the auto industry is threatened by a replacement rate that could be far more severe, says a senior partner at the largest automotive executive search firm.

Retirements, alone, are expected to cull 20% to 30% of auto maker senior executive ranks within the next five years and 40% to 50% of executives within the next decade, says Brad Marion, senior partner-Global Automotive Practice, Korn/Ferry International.

“That, plus the unique industry challenges that exist today suggest that a 50% leadership turnover rate in five years may be low,” Marion says at the Management Briefing Seminars here.

And, because auto makers are doing their best not to replace individuals who are retiring, the remaining management jobs are bigger and carry more responsibility.

This is leading to a potential brain-drain situation, where younger executives will be over-promoted into jobs they do not have the knowledge or experience to handle – setting them up for failure.

“The leadership style that enables success for a supervisor or manager is dramatically different than that which enables success as a senior executive,” Marion says. “The social and participative skills become much more important, and the task orientation becomes much less.”

Perhaps even more disturbing is that some of the industry’s most enthusiastic advocates also are leaving.

“Historically, the automotive industry, unlike many others, prompted devotion, passion, adrenaline and excitement,” he says. “As I speak with people across the industry every day, every week, I hear less of this conviction than ever before.

“More people are saying, ‘As much as I love the car business, it’s not as much fun as it used to be, and given what lies ahead for the industry, I think it’s time I consider a career change.’”

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