After 28 years as a loyal company man, Mark Fields was asked to resign from his post as president and CEO of Ford Motor Company on Friday. He’s retiring at age 56 and has been replaced by former Steelcase CEO Jim Hackett, a board member since 2013 who has been heading the Ford Smart Mobility subsidiary for about a year. Fields’s brief three years behind the wheel alongside executive chairman Bill Ford Jr. was a period of record profitability and positive cash flow. But it wasn’t enough.
Ford’s shares fell almost 40 percent in value since Fields replaced Alan Mulally in 2014, and the discontent with the company’s stock performance appeared to reach new heights at its annual meeting earlier this month. It was then, Reuters reports, that 35 percent of shareholders voted to end the dual-class voting structure that gives the Ford family two-fifths of a vote. The vote didn’t pass, but the message was sent.
On Monday, both Hackett and Bill Ford sought to play down the role that the company’s lagging shares played in the management shakeup; however, words like “culture” and “hierarchy” came up more than once. It’s clear that Ford wants decisions to be made faster and that he wants the company to get a boost that perhaps only fresh blood can bring.
Mulally, another outsider, was also mentioned more than once. He came to Ford from Boeing in 2006 to turn the automaker around when it was facing a $17 billion loss. Bill Ford told reporters Monday he had promised himself he wouldn’t compare Hackett to Mulally, calling them different leaders for different times. Nevertheless, Ford said, Mulally “really captured the hearts and minds of our employees and made them feel that not only could we win, but we were going to win and they were going to have fun on the journey. And I think that’s something very much that you’ll see with Jim.”
Whether or not Ford’s 202,000 employees are having enough fun was certainly not the only driving factor in the decision to replace Fields with Hackett. Ford praised Hackett as a “proven, transformational leader” and a “visionary thinker” who can tackle rapidly evolving technologies such as 3D printing, artificial intelligence, and deep learning. Hackett’s elevation also, somewhat ironically, doubles down on a message Fields had repeated: that Ford is transitioning to become an automotive and mobility company. Hackett said Ford Smart Mobility had just 12 employees when he arrived and will soon have 600.
While Fields may have harped on the mobility message, it seemed to be lost on investors and, at times, confusing to the public. Asked about Ford’s lackluster stock price as of late, Hackett said Monday that share value will follow the company’s performance. “That’s a confidence indicator that comes after we do the things we tell you we’re going to do,” he said. “It’s a consequence. It’s not a leading indicator—it’s after we get things happening.”
Obviously it’s too soon to say what Hackett’s promotion will do to Ford’s longer-term share value. For what it’s worth, Hackett took Steelcase public in 1998 with an initial share offering of $28. Its shares subsequently went down 56 percent from that IPO price but were rebounding in Hackett’s final five years before his retirement in 2014. Under Mulally, Ford shares dropped to $1.39 in the dark days of November 2008 but had climbed to more than $16 a share by the time he retired at age 68. Ford shares closed Monday at $11.10, up about 2 percent.
Beyond share price, Mulally was credited with giving the automaker a jolt from outside its ranks and unifying the automaker behind his One Ford plan. “It worked really well,” Hackett said Monday of the plan. “In fact we’re going to use parts of it in the way we monitor success.” But he said the strategy going forward will also need go beyond it to address the complex challenges facing the company, which he likened to a Rubik’s Cube.
Asked whether he believes a cultural change is needed at Ford, Hackett said, “I would say it’s an emphasis, you know, being more emphatic about parts of the culture that need to come out.” He said bureaucracy and hierarchies at big corporations such as Ford can become burdensome to fast decision making. People should also have fun, he said. “We want people to come to work thinking they can have a great day here,” he said.
Ford agreed. “One of the things that’s frustrated me over the years has been our obsession with hierarchy within our culture,” Ford said. “And if we’re really going to get the best out of our employees, and really get through teamwork, then we’re going to have to bend that notion of hierarchy within the company. And that is very much a cultural thing.”
In its bid to streamline the decision-making process, the company has restructured some of its operations, with three new positions that will report to Hackett. Jim Farley has been named executive vice president and president for global markets. Farley will oversee the automaker’s global business units well as Lincoln Motor Company and global marketing and sales. He is also in charge of the company’s strategy for electric and autonomous vehicles. He was most recently head of Europe, the Middle East, and Africa for Ford.
Joe Hinrichs has been named executive vice president and president for global operations. He’ll oversee Ford’s global product development, supply chain, labor affairs, safety engineering, and environmental issues. Hinrichs had been Ford’s executive vice president of the Americas. Marcy Klevorn has been named executive vice president of mobility, overseeing the Ford Smart Mobility subsidiary. The three appointments are effective June 1.
Mark Truby has been named the company’s vice president of communications, reporting to Bill Ford. He replaces Ray Day, who plans to retire next year and will give consulting services until then. Truby was previously head of Ford’s communications teams in the Asia-Pacific and Europe, Middle East, and Africa regions.
Before joining Ford Smart Mobility in March 2016, Hackett was an interim athletic director at his alma mater, the University of Michigan, where, to much fanfare, he lured Jim Harbaugh back to his roots to coach the football team. Hackett played on the Michigan football team as a center in the 1970s. He had been at Steelcase for 30 years before retiring.
The jobs with Steelcase and Ford are not quite as different as size would suggest, Hackett said Monday. “The biggest challenge I had there and we will have here is to have everybody see the future, and that they can see their opportunity in that,” he said. “And secondly, that it’s our right to win there. That we don’t have to cede that to anybody. Tesla, anybody. It’s our right to win there. So I love that challenge, because I know how to do that.”
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