Strategic HR: GM Drives HR to the Next Level

GM undergoes a transformation, and HR helps to steer the changes.

By Bill Leonard Mar 1, 2002
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HR Magazine, March 2002 Most people may be surprised to find out that the nearly century-old General Motors Corp. has become something of a leader in innovative HR practices. Over the past two years, the world’s largest automobile manufacturer has completely reshaped the way HR operates within the company, and GM officials like to say that the corporate HR function is changing from a tactical to a strategic role. Indeed, one of the world’s largest and most complex corporations understands that it cannot become a truly global corporation without strategic support from HR.

To this end, GM CEO Rick Wagoner appointed the head of HR, Kathleen S. Barclay to the company’s overall strategy board. He also gave her the authority to reshape the HR department. Barclay accomplished this through a strategy she calls the 3Ts: technology, talent and transformation.

A Climate for Change

While many businesses flourished during the boom years of the 1990s, GM, like other U.S.-based automakers, struggled to maintain the status quo. During those years, GM’s market share continued to shrink as a steady stream of consumers bought cars from its Japanese, German and Korean competitors.

When Wagoner took over as president and chief operating officer of GM in 1998, he knew the company had to change its approach to manufacturing and selling cars or it would continue a downward spiral and eventually lose its place as the world’s pre-eminent automaker. Wagoner set into motion an effort to reorganize and rebuild GM from the inside out. One of Wagoner’s primary objectives was to refocus and revamp the company’s HR department.

“In my mind, HR is paramount to our reorganization effort. If we are to hire, train and keep the best workforce possible, then we must have the best and most up-to-date HR practices possible,” Wagoner says. “While the change in HR is just one element of making GM a more globally focused and competitive company, it is a key element.”

One of the first things Wagoner did as president was to organize a senior executive management committee, which he named the Automotive Strategies Board. The newly formed board includes the top-level executives at GM such as the chief financial officer, the chief information officer and the vice president of communications.

Wagoner, who had promoted Barclay to the position of vice president of global human resources for GM, named her to the strategies board. The move to place the head of HR on a top-level management team is something new within the organizational chart at GM. Essentially, Barclay now is considered the chief human resource officer at GM, and she reports directly to Wagoner.

Wagoner says it is crucial that GM’s head of HR be a member of the top management team and says the board now actively seeks Barclay’s input and opinions at its monthly meetings.

“Katy is a great asset to our organization, and I seek her counsel and perspective constantly,” says Wagoner. “She has demonstrated a tremendous capacity to think and act strategically, which is essential to our HR function and what we want to achieve in making GM a globally competitive business.”

Wagoner, who assumed the CEO position two years ago, is a relatively young chief executive at age 49. He has received some high marks from business analysts and the media for the changes at GM. Many have praised his fresh and energetic approach, which has helped GM maintain and actually show market share gains in a slumping economy and competitive global marketplace.

“Rick Wagoner is doing a wonderful job at GM, and he is taking the correct approach in involving and placing HR into a leadership role in the reorganization process,” says David Ulrich, a management professor at the University of Michigan in Ann Arbor. “I believe he is doing all the right things to help turn GM around. I think they have turned a corner here and are positioning themselves well for the future.”

Some observers, however, don’t quite share Ulrich’s optimistic outlook and say that GM faces some serious obstacles to becoming the globally cohesive company of Wagoner’s vision.

“GM has always been a very siloed corporation with all of its different divisions really operating like separate companies. There have been numerous reorganization efforts at GM, and most have not fared well, because of the turf battles and independent nature of GM’s divisions,” says Jay Conger, a management professor at the London School of Economics and a research associate with the Los Angeles-based Center for Effective Organizations at the University of Southern California.

Conger does admit, however, that GM appears to be taking a different approach. He says that focusing on HR and making it a key element in the reorganization effort is the right thing to do and is something that GM has never really attempted before. He also adds that reorganization on such a massive level and within an organization the size of GM will take several years to take root.

Ralph J. Szygenda, group vice president and chief information officer for GM, takes a similar cautious view. “HR has helped to keep us focused on what our ultimate goal is,” he says. “Katy is really good at what she does and has been very persistent in keeping us focused and informed about the progress and changes that are happening throughout the company.

“But HR is definitely still in a transformation and can’t declare victory yet,” he adds. “GM is a much better company than we were five years ago, but there is still a lot more room for improvement.”

One real challenge has been to get GM’s management team to completely buy into the strategic role for HR. Szygenda and Barclay say it was fairly easy to get the support of senior management because of the support of Wagoner and the creation of the Automotive Strategies Board.

Middle management, however, has been a different story, according to Szygenda, and has been more resistant to change. But, the effort is under way, and senior-level executives are well aware that it is “an evolution not a revolution” and therefore will take some time. The key to making the evolution work, both Barclay and Wagoner say, is to find the points of resistance and to try to make them understand the need for change. And if they continue to resist then personnel changes should be considered.

“We don’t want anyone to lose their jobs, so if there’s a problem then we will assess the individual’s situation and see if we can find a better fit for them within GM,” Barclay says.

HR Strategy: 3Ts

Nowhere was the “siloed syndrome” at GM more evident than within the corporate HR function. Five years ago, if you visited 50 different GM facilities, you would have seen HR administered in 50 different ways. Each GM plant had its own HR department, and these departments operated, for the most part, independently. To say GM’s HR function lacked cohesion would probably be an understatement, according to Barclay and other members of GM’s HR staff.

Wagoner handed Barclay the task of tearing down the walls and building a strong global network of HR professionals within GM. She says it was a daunting challenge, but one that she had been preparing for her whole career. Barclay began working for GM in 1978 but left in 1981 to pursue another opportunity. She returned to GM in 1985 and has remained ever since. Barclay believes her intimate knowledge and experience at all levels of the HR function within GM made her especially suited for the job of totally reshaping the way her department operated.

The first “T” in Barclay’s “3Ts,” or technology, is what GM focused on for the first part of this reorganization. This emphasis on technology has helped HR to develop and retain talent, which is the second “T.” The last part focuses on the transformation—or the third “T”—within GM. For the first time, the HR department has a consistent platform and set of goals with which to work. And many HR professionals within GM are seeing the effects of making their jobs more strategic and globally focused.

Technology

GM’s use of technology to completely revamp its HR processes has become a model that other organizations of all sizes are now following. GM has focused its efforts on creating an effective and totally accessible corporate intranet. The company placed most of its HR-related activities online and last year transformed its four-year-old intranet site into an HR portal.

“The portal is helping us to achieve our goals of developing a web-savvy workforce, of improving our ability to communicate and collaborate with one another,” Barclay says. “The employee service center does this by cutting out HR as the middleman and allowing employees to directly modify their HR-related information. It really is freeing up our time to do more substantive work and really get involved with the planning and strategic aspects of our business.” (For a case study on GM’s e-HR experience, see “Taking the E-HR Plunge” in the September 2001 issue of HR Magazine.)

Talent

In 1997, the company founded GM University, which is one of the largest corporate educational programs in the world. The university currently has 15 functional colleges charged with developing curricula tailored to the professional needs and challenges facing GM employees.

Most of the classes within GMU are lecture-based and in a traditional classroom format. But over the past couple of years, the focus has been to move most of the training courses online. In April of last year, GM launched the first training program offered completely on the corporate intranet. The course is called “HR Skills for Success,” and its launch demonstrates GM’s dedication to improving the opportunities of its 3,000-plus HR professionals.

The new online course is required training for HR professionals who work at GM. The course is divided into three phases with the first phase being mandatory for the HR staff. The other phases are provided to HR professionals who want to increase their management skills.

According to Donnee Ramelli, president of GMU, the key element to the initial phase of the course is a new root map system. The root map is essentially a brand-new organizational guide to show HR professionals how their job duties have changed and how work is now performed within GM.

“A lot of hard work went into developing these new root maps, and really they are providing the basis for everything we are trying to teach in this course,” Ramelli says. “It truly is a new and radically different way for HR to work within the company, and understanding the root maps is crucial to a clear comprehension of how to perform as an HR professional within GM.”

Transformation

As the changes in HR begin to take hold, HR professionals throughout GM say that the focus of their jobs definitely has changed over the past two years. Helen Elliott, GM’s manager for human resource development for Europe, says that for the first time the company now has standard training programs that are used in every country and each GM facility. Elliott, who is based in the United Kingdom, says prior to the change, GM’s training programs varied widely from plant to plant and from country to country.

“It was quite confusing and hard to keep track of. The new system is much easier to work within. While it might vary some because countries like Germany and France do have different types of labor and workplace laws, the new system means everyone is really on the same page,” she says. “And it has helped to improve the communications and interaction within the corporation and that’s a welcome change.”

Another difference Elliott sees is that communication with GM’s headquarters in Detroit has opened up and now flows both ways across the Atlantic.

“Before the transition began, Detroit would just tell us what they wanted us to do and there was no real discussion about it. Now they actively ask us for suggestions and seek our input. It definitely has been very empowering,” Elliott says.

Norbert Kuepper, director of HR at Opel, a German-based GM subsidiary, agrees with Elliott. Both Kuepper and Waldemar Kleinert, an HR representative for Opel, say the recent changes have been nothing short of miraculous.

“For years, Opel has been treated really as a separate company from GM,” Kuepper says. “But the communications channels have opened up recently, and it’s definitely changed our attitude, and we now feel more a part of a global team.”

“Both Norbert and I have been here for many years, and this really is the most exciting and positive change we have ever seen in the company,” Kleinert says. “We are participating in meetings and are asked for our perspective on some very important issues and projects. Now, we are just two old HR guys from Germany with the opportunity to work on a strategic level that we’ve never experienced before.

“It’s a new way to think and work, and it’s something we’ve both enjoyed being part of.”

Bill Leonard is senior writer for HR Magazine.

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