TURIN, Italy (July 20, 2011) — Sergio Marchionne, who personally holds almost all authority at Fiat S.p.A. and Chrysler Group L.L.C. through an astonishing 50 direct reports, is preparing a new management structure that would delegate some authority to regional managers.
He spent the past weekend working in Turin on the final touches of the plan that would operate Chrysler and Fiat as a more unified company, sources said.
The sources in Turin and Auburn Hills, Mich., who decline to be named because the work is confidential and still in progress, said Mr. Marchionne is planning to:
- Create four regions—Europe, North America, Latin America and Asia-Pacific—each with a regional boss.
- Require brand bosses, who are powerful in the current organization, to work closely with the new regional bosses.
- Establish a new layer of management, tentatively dubbed the steering committee, that would help run Fiat and Chrysler.
The committee could take some operating pressure off Mr. Marchionne. But 50 executives, split about evenly between Chrysler and Fiat, would still report directly to him. The new structure would create many dual reports: Regional executives in, for instance, purchasing would report to their boss on the steering committee and to Mr. Marchionne.
Rescuing Chrysler did require a special breed of executive. Mr. Marchionne often works 18-hour days, catching catnaps on the plane as he flies constantly between Turin and Detroit. The pace is punishing, but his outsized efforts are widely credited for rebuilding Chrysler after the 2009 crisis.
Now, the new structure would help move Chrysler beyond the frenetic post-bankruptcy period.
The sense of urgency played to Mr. Marchionne's strengths: charismatic leadership and 24/7 work. But a more traditional organization would help overworked Chrysler executives catch their breath and adopt a saner work rhythm. Some executives have barely been able to sneak in a total week of vacation in the past two years.
A more traditional structure also could lay the groundwork to develop a succession plan at Fiat and Chrysler. Mr. Marchionne, 59, overshadows everyone else at the two car companies now. The combined firms will eventually need tested leaders capable of succeeding him.
Mr. Marchionne plans to announce a unified structure “pretty quickly,” he told reporters in Zurich last week after a speech at the Swiss-American Chamber of Commerce.
He is expected to announce on July 26 the 25 executives who will steer Fiat and Chrysler during a Fiat board meeting in Belo Horizonte, Brazil, to approve the company's quarterly results.
Fiat's second-quarter results will incorporate Chrysler's results for the first time, but for a shorter period: from May 24 to June 30.
Actually, Fiat and Chrysler already operate under one team. The problem is the team consists of one man: Mr. Marchionne.
North America, for instance, has no regional president. Instead, about 25 executives in sales, manufacturing, finance and other areas report directly to Mr. Marchionne.
The one-man “Sergio Show,” while unwieldy, has worked well so far. Chrysler has posted a long list of achievements. For instance, for the 2011 model year, company engineers updated 16 models in about 18 months, an impressive task.
Chrysler also improved its marketing. The “Imported from Detroit” campaign for the Chrysler brand has been widely praised. A TV commercial starring rapper Eminem made the Chrysler 200 a hot car.
In one characteristic bit of micromanagement, Mr. Marchionne viewed and analyzed the Eminem commercial hundreds of times before it appeared during the Super Bowl telecast in February.
During the past 40 days, the workaholic CEO has been selecting the 25 executives who will run the two auto makers. Characteristically, he is keeping his own counsel. He is talking with candidates about joining the steering committee.
Below Mr. Marchionne, Fiat and Chrysler now are largely run by brand bosses. The new plan would create four regions with a boss for each. Brand CEOs are tentatively scheduled to report to the regional bosses and not to Mr. Marchionne.
He would lead the 25-person steering committee; the four regional bosses would sit on the panel with heads of functions such as engineering, purchasing and sales.
The sources expect Mr. Marchionne to choose roughly an equal number of Chrysler and Fiat executives to sit on the steering committee. Executives of Fiat Group subsidiaries also may sit on the committee.
Executives who do not get a seat on the steering committee will continue to lead their functions in the Fiat and Chrysler organizations.
A formal merger of Fiat and Chrysler seems unlikely until late 2012 at the earliest. Mr. Marchionne has hinted that the unified organization could be incorporated in the U.S.
In the meantime, running Fiat and Chrysler in a more unified manner is expected to reduce costs and help achieve a target of more than 100 billion euros ($142 billion) in combined revenue by 2014. Combined revenue in 2010 was $92.6 billion.
This report appeared in Automotive News, a Detroit-based sister publication of Tire Business.