GM’s Parma Plant Received $60 million in new investment

As many of you read in our first book about Bob Lintz and the transformational change he led at GM’s Parma Stamping Plant in the ’80s and ’90s near Cleveland, Ohio, I thought you’d be interested in some recent news about Parma, in which GM will be invested $60 million dollars as part of the plant’s most recent modernization.

This is truly a lasting legacy that Bob left, as the plant continues to improve and be one of the world’s very best stamping plants years AFTER Bob retired.  For you Good To Great and Built to Last fans, Parma is a compelling example of a Level 5 Leader who built a Flywheel that continues to demonstrate significant bottom-line results for both GM and its employees who work at Parma.

Karen and I be continuing our profile of Bob and discussing what he has learned as a result of his inspiring leadership efforts in our forthcoming sequel, Becoming a Trustworthy Leader:  Psychology and Practice, due out later this by Routledge Press.

Why is trust important?

We take trust for granted, thinking it is some nice soft thing that makes our lives happy.  As managers, we want to know why trust makes such a difference that we should actually spend time building it and actually care about it.

Well, here are some examples from the leaders we profile in our book…

  • Trust between a General Motors plant manager and his local union turned around a $250 million plant that had horrible costs, quality, and productivity 20 years ago.  It is now a thriving $1 billion/year operation, and thousands of jobs have been preserved.
  • Trust between a cardiothoracic medical doctor and his critical care team reduced mortality by nearly 50%, sepsis by 50%, and acute renal failure by 37.5%, while improving operational efficiency by reducing ICU and hospital length of stays.
  • Trust in her employees helped Mary Ellen Sheets take a $350 investment and turn it into the $200 million company, Two Men and a Truck

So, while trust is a nice thing that makes people happy and makes a work environment much easier to manage, it also saves jobs, saves lives, and makes money.


Downsizing the Company Without Downsizing Morale


Our coauthor and good friend Professor Gretchen Spreitzer of the University of Michigan’s Ross School of Business was recently interviewed about our article, elaborating on our key findings, and you can listen to the interview here.

Our article on how to improve organizational flexibility, innovation, and internal communication to improve trust during downsizing was just published by MIT Sloan Management Review.  Here is an excerpt:

After more than two decades of research into corporate downsizing, there remains a fundamental question: “How can managers and employees rethink their organizations even as they confront the need to downsize?” More specifically, how can organizations support learning, innovation and creativity while at the same time finding effective ways to improve costs, quality and productivity? Some might argue that these goals are at odds with one another — that you can’t build a better and a leaner organization. We disagree. In our 1998 Sloan Management Review article, “Preserving Employee Morale During Downsizing,” we maintained that strong organizations need to develop resilience so they could take advantage of new opportunities that arise during periods of economic retrenchment.

In the last decade, we have continued to follow the organizations we profiled in our original article and have started studying additional organizations that have undergone significant change, including downsizing. We have conducted scores of additional interviews with top executives, surveyed hundreds of employees and collected performance data. We have also coached managers whose organizations have initiated downsizings as part of their global outsourcing efforts. Through these efforts we have identified three additional success factors that are important to successful downsizing: (1) Organizations must become more flexible; (2) they must become more innovative and creative; and (3) they must improve their communications with stakeholders who are increasingly skeptical of downsizing efforts. The emphasis on flexibility, innovation and communications will require even greater levels of trust and empowerment.

You can go here to register and download a copy of the full article.  Much more information about the research findings and strategies for downsizing effectively can be found in our book, Trust is Everything.


Are You Too Busy to Do What’s Important?

This from a recent Wall Street Journal article by Carol Hymowitz:

Far more than their predecessors, top executives face many demands from many different people. “Where CEOs a decade ago may have had five choices, they have 100 — and because they’re under more scrutiny, they’re more pressured to be visible and make themselves available,” says Richard Wellins, senior vice president of global marketing at DDI, a Pittsburgh-based consultant.

To start with, executives are at the helm of much larger companies than existed even a short time ago. They spend considerable time globetrotting to visit employees and customers dispersed around the world. They are expected to stay in close touch with a growing list of constituents — from directors and big investors to government regulatory officials and potential business partners. They’re also in demand to serve as directors of other companies and other organizations, to appear on television, to give speeches at universities, to headline conferences, and to participate in nonprofit and civic groups.

While the scope of CEOs’ activities may be greater than ever, I’m not convinced that their schedules need to as packed as they are according to this article.  The internet can free up people as much as tie them down, and the extent to which one has more time to do the important work that needs to be done is up to the individual.  Nobody is forcing CEOs to become rock stars or televangelists.  The ability to say “no” becomes more essential as one moves up the food chain, and I’m finally learning how to say it in my 40s.

Here’s what I said on the forum about this article:

There is no substitute for face-to-face communication, which I learned once again when teaching executives from Coca-Cola Icecek, the Turkish bottling group with operations now throughout Turkey, the Middle East and many of the former Soviet Republics.

Nonetheless, the more trust a CEO has engendered with the firm’s key stakeholders, be they employees, customers, suppliers, or the communities in which they operate, the less there is a need for constant physical presence. In our newly-published book, we document how leaders have been abe to go from meeting with all of their key stakeholders face-to-face to developing technological substitutes (e.g., Bob Lintz at GM using videos in the 1980s and videoconferencing now), and using surrogates as the charismatic founder institutionalizes her values and principles throughout the company (e.g., Mary Ellen Sheets of Two Men and a Truck, International).

Trust is initially built from direct interactions between people, but over time, the leader can enhance the trust developed through informal close connections using formal, less direct mechanisms. The leader’s reliability, openness, competence and compassion (ROCC of Trust) becomes the firm’s, and is more durable, compelling, and less dependent on any one encounter.

One executive quote in the article by Ms. Hymowitz supports this point very well:

The single most crucial element for surviving such a schedule, she believes, is to have a competent team to which you can delegate important jobs. “At my level, you can’t get caught in the weeds,” she says, “you have to move back to a more strategic position.”