Nissan: The Ghosn Era

International Human Resource Management Group 3 05. October 2011

Agenda

1. Failure of Nissans first turnaround attempt 2. Carlos Ghosns success 3. Is the success replicable? 4. International HRM principles

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Nissan

Failure of Nissans first turnaround attempt

Nissans situation in 1999:
1244 trillion loss in operating profit decline in market share: from 18% in 1989 to barely 13% ten years later highly covered with debt

WHY?
external circumstances:
times of recession credit crunch resulted in Nissan being short of cash

internal factors:
management unable to restructure the company to adapt to the new situation no long-term vision: no clear and understandable future objectives were set lack of communication resulted in highly unmotivated employees missing cooperation between the departments failed to develop new cars and to invest in R & D misallocation of resources, high need for cost reduction management did not face the internal problems, but only focused on the need-for-money problem

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Nissan

Carlos Ghosns Success

Carlos Ghosn succeeded in dealing with change management and company transformation in multicultural environments HOW?
Building cross-functional teams: teams of 10 employees to come up with proposals on how to improve on cost, quality and lead and delivery time

Developing the Nissan Revival plan: precise plan targeting the profitability of Nissan with clear, understandable objectives; deadlines were set when to achieve the goals
Strong communication: transmitted the change at all levels, created commitment among the employees by involving them in the planning process and by directly addressing them Visibility: Ghosn shows strong leadership and determination; clear and visible goals he is committed to achieve with the help of the employees; motivates people by leading by example

Carlos Ghosn was not scared to face the real problems He looked for the origins of the problem, rather than blaming the environment He set new priorities and defined a new action-plan His way of working was much more structured, organized and methodical
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Is the success replicable?

Carlos Ghosn brought Nissan back on the right track by:
showing commitment and motivation setting clear and achievable goals communicating across all business units

Replicable?

Carlos Ghosns successor should do the following:

follow the principles of Ghosns management style keep on setting long-term objectives show commitment and motivation to lead by example should not try to replicate the person Carlos Ghosn communicate across the business and involve the employees in strategic decisions

Replicable, if the successor is able to motivate and involve the employees, and also shows strong leadership and commitment at the same time
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International HRM principles

The development of multicultural skills: developing a sense for other cultures by e.g. learning the language

Strategy Alignment: clear strategic goals, understandable for everyone to become part of it

Communication processes: across the company and different departments, addressing everybody on all levels

Breaking internal traditions: to show courage to actually make some changes and do something in a different way; e.g. building of CFTs

Development of employees: give employees opportunities to develop in order to gain their commitment and to motivate them

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ANY QUESTIONS?

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Nissan