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Ford Motor Co.'s board dropped the other shoe July 26 in a long-rumored management reshuffle. After beefing up the clout of Chief Executive Jacques A. Nasser's top lieutenants in early July, Ford directors are giving the CEO more "help" from above. Led by Chairman William C. Ford, they created an "Office of the Chairman and CEO" to involve Bill Ford more actively in making key strategic decisions with Nasser.
The earlier action gave added authority to a handful of top executives. Most notable was bringing back to Stateside Nick Scheele, a respected executive who'd been heading Ford of Europe, as group vice-president over the company's North American operations. The move came amid complaints from critics that Nasser, overloaded from dealing with the Firestone tire recall and the slowing U.S. auto business, needed to delegate more of his responsibilities.
Ford insiders say the latest move reflects the chairman's concern that he was being left out of the loop on corporate decision-making. The new power-sharing structure, which replaces a looser, ad-hoc arrangement that had been in place since 1999, calls for meetings between the CEO and chairman at least twice monthly, and gives Bill Ford control over calling meetings and setting the agenda.
TOO LATE. The pair will jointly review key proposals and strategies, and the chairman, Ford, will be able to quiz managers and make suggestions earlier in the decision-making process. Before, in some cases, "by the time it got to Bill, [the decision] was probably 99% done," says company spokesman James Vella. "This strengthens the working relationship between Bill and Jac. It takes away the mystery" of how their unusual power-sharing agreement works.
One sign of how urgently Ford's board wanted to make changes: It made the decision during a special session by teleconference, rather than waiting until the next regular directors' meeting in September. At their July meeting two weeks ago, the board asked Nasser and Ford to discuss ways to improve the power-sharing structure and report back in the special session.
The company says the board wanted to move quickly because of all the competitive and economic challenges facing the carmaker. "This new office...allows us to react even more quickly to address the key issues facing the business," Nasser said in a statement issued by the company.
PROBLEMS. Ford's management shuffle comes as the company struggles with a host of troubles. As auto sales slowed and its rivals ratcheted up the competition, Ford's market share has slid 1.7 points, to 23.1% of U.S. light-vehicle sales so far in 2001. A second recall of Firestone tires is costing Ford $2.1 billion after taxes. That expense, combined with slowing sales and rising rebates, helped slash first-half profits by 91% to $307 million from $3.4 billion a year earlier.
While the second half won't be nearly as bad, there are few signs yet that the economy is on the mend. Meanwhile, the ongoing tire-safety crisis continues to take a steep toll on the company's image, sales of its Explorer SUVs, and the attention of top management to other issues. Ford's quality ratings have suffered lately, and it has had to recall several new models more than once. Insiders also say that employee morale was eroded by strict management evaluation practices that Nasser initiated -- and has recently rescinded.
HAPPY SHAREHOLDERS. Critics say Nasser also stretched himself too thin with dozens of new initiatives and acquisitions in the past two years. Bringing Scheele in to help fix the core North American unit was a popular move with analysts and investors. Sharing more responsibilities with Chairman Ford is also likely to be viewed positively by company shareholders and employees. The stock showed little reaction on the news, with shares falling $0.41 apiece to $25.09 on July 26.
It's clear that Ford has a ways to go to get back on track, but at least the board is giving management the structure, direction, and help it badly needs. By Katie Kerwin in Detroit