Case Study: Organizational Change at General Motors

Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

This lesson examines the recent organizational change at General Motors. We will look at the government's role, what changes were implemented, and how these affect the way GM does business. Changes in production and management are examples.

About General Motors

General Motors (GM) is a company that we all know. It's big, American, and historic. Founded in the early 1900s by William Durant in Flint, Michigan, we've come to know GM as the company that makes Chevrolet, GMC, Buick, and Cadillac vehicles. Even though it is one of the top companies in the world, GM has had its recent challenges.

In 2008, GM's profitability took a nosedive with the recession. In 2009, the company declared bankruptcy. The U.S. government then took over 60% control of GM, and taxpayers began bailing the company out of bankruptcy. The government got involved because if GM failed, the economic repercussions would be failure for many suppliers, distributors, employees, and communities. This was too much of a strain for a struggling U.S. economy.

By 2010, we said goodbye to the old GM, and it was time for the company to undergo an organizational change. General Motors Corporation became General Motors Company, and a new corporation was born. By 2014, the government's bailout of GM was complete.

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  • 0:04 About General Motors
  • 1:10 Organizational Change at GM
  • 2:01 Production & Employee…
  • 3:01 Branding & Management Style
  • 4:16 Community Interaction
  • 4:41 Lesson Summary
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Organizational Change at GM

Leadership at GM was resistant to change. With government intervention, GM was forced to undergo significant changes to survive. Eventually, the federal government wanted someone from the outside to come into the company and restructure it. Ed Whitacre, a leader in the telecommunications industry, was tasked with the job. These organizational changes were dramatic for a company that had never really needed to manage its assets efficiently.

Organizational change at any company can be tasking because it involves the transformation of a working philosophy. For GM, this was something that had been ingrained in its culture for many years. This type of change can involve changes in production, employee relations, branding, management style, and community interaction. For GM, it involved changes in all of these areas. Let's look at these changes.

Production & Employee Relations

With new leadership setting the priorities for GM, simplifying production and cutting costs were at the top of the list. GM reduced the number of models it made, which reduced its workforce. By cutting Saturn, Pontiac, Saab, and Hummer, the company focused on the simplification and advancement of its brand without spreading itself too thin. The company also tightened the job descriptions of managers, finding ways to increase accountability and responsibility. If something wasn't produced correctly, changes were made quickly.

GM had problems with morale during this pivotal time in its transformation. Whitacre set the tone for the company by beginning to involve employees in more decision making. He communicated directly with employees and expected other leaders in the company to do the same. Employees were asked to buy in to the new management style. In exchange, the company would establish more work/life balance options. The goal was to empower employees, which typically translates into increased creativity, efficiency, and productivity.

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