Carlos Ghosn as CEO of Nissan and Renault: Can He Rework the 'Nissan Magic'?
Carlos Ghosn: The 'Nissan Magic' Cont...
Listening to the employees and facilitating their participation in the decision-making process, was key aspect of Carlos Ghosn's leadership. By avoiding impersonal meetings through mails, he stressed the need for face-to-face communication. He believed that the people close to the company could come out with better solutions than an outsider like him. In contrast, the Japanese were polite, reticent and never spoke about the plans to their boss. Carlos Ghosn had to repeatedly explain to the employees that he needed their viewpoints and would not mind if they speak out. This, according to him was the greatest hurdle. While in France at Renault, he emphasized on teamwork, in Japan he believed it was not required and instead individuality was given more prominence. Price Water house Coopers in a report on change management listed Carlos Ghosn's key human resource management techniques calling them very simple and straightforward
|
By maintaining transparency from the stage of planning to action, he aimed at the best possible out comes while also lifting
the morale of the employees who were particularly distressed after the crisis at the company. He invited suggestions from
every influential individual from suppliers, Nissan’s ex-employees, dealers etc. He explained, "As you know credibility has
two legs, performance, and transparency. Performance, we had none to show at the time, so we were determined to be
highly transparent."9 He called the NRP, an 'organization's collective effort' involving thousands of employees at every
managerial level. To show his commitment to the plan, he declared that he would resign along with other top executives if the
plan fails in bringing in the benefits. Carlos Ghosn wanted immediate results by fixing short-term targets. While he called the
passive style of management-by-consensus a killer, an active and constructional version could
work miracles, according to him. He believed that an 85%consensus was enough and 100%was not always essential.
|
|
The first phase of NRP focused on cutting the costs and improving profits. The first major step Carlos Ghosn undertook was divestments from subsidiaries to reduce the debt. Suppliers accounted for major part of costs of production and the age-old Keiretsu system and the obligations that came with it were adding to heavy costs11 . Deviating from the system, Carlos Ghosn opened the purchasing offer to all the suppliers encouraging new suppliers who were ready to supply at low prices. As part of the revival plan, suppliers were forced to offer discounts to the tune of 20-30%and the number of suppliers was brought down to 600 from 1145 while the purchasing costs were reduced by 20%. During a meeting with the dealers of Nissan, Carlos Ghosn announced, "I don't want any excuses. I want to know what you are going to do to make things better."12 Cost cutting at each stage began to be regarded as the need of the hour as the employees were encouraged to reduce expenses through all possible ways. The cross functional teams were given one month time to identify areas to cut costs and increase the profits through bottom-line growth.
Next >>9]Ibid.
10]Larimar, Tim "Japan, Nissan and Ghosn revolution", www.gsb.columbia.edu
11]The Keiretsu system, in which the companies maintained partnership with each of its suppliers, holding shares in those companies, transferring managers characterized the big family of companies and its suppliers were both shared relationships
12]Larimar, Tim "Japan, Nissan and Ghosn revolution", op.cit.
