Report on Alfred Sloan’s “My Years with General Motors”
It is hard to forget the events that unfolded in 2009 regarding the General Motor Corporation. On June 1st 2009, GM filed for chapter 11 bankruptcy and on July 10th 2009 the company was purchased by another entity. After reading Alfred P. Sloan’s My Years with General Motors, it is hard to imagine what happened between the years Sloan was president of the company until 1956 and what the company was in 2009. Sloan was one of the to work out system organization in a large corporation. He developed GM into an extremely successful corporation and left it in a healthy economic position.
Sloan begins with ...view middle of the document...
e. axel or transmission). Two of the companies that began purchasing the bearings were General Motors and Ford. Soon, Mr. Durant (president GM) offered to buy out the Hyatt Company. In the spring of 1916, General Motors followed through with purchasing the company at a price of $13.5 million. Sloan stated one of the three reasons he chose to sell the company was because he understood that the bearings they produced had a potentially short product life cycle. After the purchase, Sloan was given the position of president and chief operating officer of United Motors. He soon became a member of the Executive Committee of General Motors.
It was this position where he started making decisions for GM and began making observations of Mr. Durant’s management styles. Sloan admired Durant’s “automotive genius, imagination, integrity, and loyalty” but also noticed his flaws. He believed Durant was “too casual in his ways for an administrator, and often overloaded himself“ (25). Sloan gave examples of how Durant would delegate power to Sloan in areas of the business that Sloan did not specialize in (i.e. accounting and real estate). Sloan believed that Mr. Durant began a company that had amazing potential as an enterprise, but also understood that there would be problems that would arise due to the lack of organized management.
General Motors once again began experiencing financial difficulties in 1919 during the post war inflation. The company was placing a large emphasis on expanding at this point in time and labor costs were rising. At this point Sloan was appointed head of Committee of Appropriation Request Rules. The committee’s main objective was to place a higher responsibility on authorizing expenditures. In 1920 the automobile market takes a turn for the worse, causing all major car companies to cut prices. GM, having difficulties paying employee payrolls and invoices, borrowed $83 million and shut down most of the divisions, excluding Buick and Cadillac. When Sloan realized the potential crisis, he developed a new organization plan and presented it to Durant. Although Mr. Durant accepted the plan, he did not act on it. In November of 1920, Durant resigned from the company.
After Durant’s resignation, the company began to struggle with internal management accompanied by trouble in the external automobile market. At this point in time Pierre du Pont was appointed president of General Motors. GM was had recently been an extremely decentralized. Sloan believed the company needed more flexibility and act more cautiously. Sloan proposed to balance out the decentralization to some degree. One of the key points of interest regarding Sloan’s view on decentralization is that “It increases the morale of the operations” (50). He stated that it makes each operation feel as if it has its own responsibilities and gives the operation a sense of belonging to the company.
Sloan described two principles of the organization from which he based his study on...