Anyone who has read the Dilbert comic strip knows how inefficient corporate America can be. Even the simple act of getting reimbursed for expenses can be a frustrating process, and the challenges are even greater for suppliers and other vendors.
General Motors wants to streamline its back-office operations and is launching a new Global Business Services group to handle various duties that might currently be assigned to a number of different operations, everything from hiring new personnel to handle expense reports to contracting and paying vendors.
The new group not only should reduce complexity and improve service quality, says Dan Amman, GM’s chief financial officer, but reduce related costs by as much as 30% over the next four years.
“Every dollar of efficiency unlocked through Global Business Services is a dollar we can put back into our vehicles for our customers or is a dollar we can take to the bottom line,” contends Ammann.
The new Global Business Services group will headed by 53-year-old Diana Tremblay, currently the head of North American Manufacturing. The 36-year GM veteran will step into her new role on July 1.
Initially, the Global Business Services operation will pull together employees from GM’s Finance, Human Resources, Facilities, Real Estate and Indirect Purchasing units. The idea is to take over “dozens of common processes” that currently may be duplicated repeatedly around the GM global empire.
“We’re skinnying this down,” explains GM spokesperson Katie McBride. “As part of one integrated team…that will eliminate expenses and complexity.”
GM has been struggling with a bloated bureaucracy for decades and it was one of the factors blamed for its ultimate slide into bankruptcy in 2009, a collapse it survived only with the help of a $50 billion federal bailout.
Since then, the maker, spurred by Chairman and CEO Dan Akerson, has been looking for ways to streamline the bureaucracy and flatten out the org chart in a bid to make things operate smoother, more efficiently – and less expensively.
Despite such goals, insiders and well-connected observers complain that GM still has a long way to go in pairing down what some liken to a “layer of clay,” an ineffective middle management structure that can add costs and delay critical operations – including the development and introduction of new vehicles.
Despite such concerns, GM has made a number of recent gains, including a slight uptick in its U.S. market share. The maker’s debt is now one step short of investment grade and it recently returned to the S&P 500 stock index, a position GM had held from 1925 until its bankruptcy.
GM’s stock has risen sharply in recent months and industry analysts expect a further increase due to the return to the S&P 500.
IME GM has 3-4 levels of management they don’t need. Every 8-10 years they delete about 2 levels and it grows back over the next decade.
It sounds unlikely that a 30% savings can be achieved simply by ‘reorganizing’ functions. More likely the work is being outsourced to India (or similar low-wage country), similar to what Ford has done with FBSC.