Monday, August 03, 2009

Advice for New GM Chairman

The new GM Board of Directors meets today for the first time. Here are three pieces of advice for new GM Board Chairman, Edward Whitacre, Jr.

First, Whitacre needs to have a frank discussion with the Board, as well as senior management at GM, about the role of the Board relative to management. The Board needs to exercise good governance and control, but it can't be meddling in numerous operational decisions at GM. Whitacre needs to lead an open conversation about how they will delineate the boundaries between management versus Board responsibilities.

Second, Whitacre must discuss Board process with his team of directors. How will he run the Board meetings? What is expected of each director? What role(s) will each director play? What information will be made available to the directors, and at what time? How will Whitacre encourage candid dialogue and the expression of dissenting views?

Third, Whitacre must establish a process for evaluating CEO Fritz Henderson over the coming months. What criteria will be used to evaluate Henderson? Whitacre should establish those criteria clearly, as well as marking out clear milestones for Henderson to strive to achieve. He should also establish the timing of the CEO review process. In other words, how often will the Board formally review Henderson's performance? Given the situation at GM, an annual review seems inadequate. Establishing quarterly milestones and reviews seems more appropriate given the depth of the crisis.


行云流水 said...

Is the first advice universal to all companies which have a Board and management committee?

Keith B Murray said...

Mike...Great points on what the CEO needs to know and do--I couldn't have put it better!

There are a few marketing matters, too, he needs to figure out as well--how is it that he gets advice from two terrific bloggers at the same time...hope he can digest it all at once! KBM

Michael Roberto said...

The first piece of advice is universal, but it's especially important in the case because there are so many new directors all at once (an unusually high amount of turnover for a board)... plus a new CEO at the same time.