COM60811 - Final Paper - Leadership at Ford Motor Company

Running head: LEADERSHIP AT FORD MOTOR COMPANY 1

LEADERSHIP STRATEGIES

AND STYLES AT THE

FORD MOTOR COMPANY

Katie L. Organ

COMS60811

Purdue University

Author Note

Author is a graduate student at the Brian Lamb School of Communication, Purdue University.

Correspondence concerning this article should be addressed to the department chair.

LEADERSHIP AT FORD MOTOR COMPANY 2

The situation

“With twelve investors and one thousand shares, the Ford Motor Company had spent

almost all of its’ $28,000 cash investment by the time it sold the first Ford Model A on July 23,

1903. But by October 1, 1903, Ford Motor Company had turned a profit of $37,000” (Ford

corporate history, 2016). Challenge and struggles are nothing new for the Ford Motor Company,

but when the US economy took a down-turn in late 2007, Ford was already positioned to work its

way through the challenge. Led by William Ford, Jr. and Alan Mulally, the Ford Motor Company

was able to avoid taking a massive loan from the US Government, now referred to as a ‘bail out’.

This paper will explore the strategic leadership communication style of Alan Mulally and the

executive leadership team at Ford, and the successes and pitfalls of leading a major corporation

through a difficult financial situation.

The beginning of the end

In 2007, the writing was on the wall with the housing industry bubble beginning to show

signs of instability. Hot on the heels of that bubble were the automakers, Ford, General Motors,

and Chrysler, all wondering how their fate would fare as the American auto market began to feel

the squeeze. “When President Obama took office, America’s automobile industry was on the brink

of collapse. The financial crisis had nearly frozen access to credit for vehicle loans and sales had

plunged by 40 percent. Faced with that sober reality, the Obama Administration moved quickly to

protect the broader economy by stabilizing the industry” (www.treasury.gov, 2016). In late 2008,

Congress authorize $700 billion for the Troubled Asset Relief Program, or TARP. General Motors

and Chrysler took part in the TARP program, borrowing $51.0 billion and $11.2 million

respectively from the US Government (www.treasury.gov, 2016).

However, the Ford Motor Company did not participate in the TARP program as Ford was

already supported financially with a massive borrowing effort that took place in November of


2006. “In a packed ballroom at a New York hotel, Ford’s chief executive, Alan R. Mulally, said he

would mortgage all the company’s assets for billions of dollars in loans to finance an overhaul of

the troubled automaker. Although the economy was healthy then, Mr. Mulally said the money

would give Ford ‘a cushion to protect for a recession or other unexpected event’. At the time, the

request was considered an act of desperation. But the $23.6 billion in loans it received turned out

to be Ford’s salvation” (Vlasic, The New York Times, 2009).

A new era

While GM and Chrysler were working through the public relations backlash over taxpayer

money being used to float private businesses, the Ford Motor Company was moving forward with

a new CEO, Alan Mulally. The company had been traditionally spearheaded by a member of the

Ford family, but the family recognized the need for a change in thinking. “Bill Ford didn't just

hand over the reins of the company to Alan Mulally, who he recruited from Boeing (BA, Fortune

500) after several competing auto industry executives turned down the CEO spot. As Executive

Chairman, Ford is at work every day, collaborating with Mulally on the direction of the company.

‘I talk to Alan many times a day, every day. The way we like to work, our styles are very similar,

we don't have formal meetings, we bounce back and forth between each other’s offices. We don't

like to have any kind of scheduled meetings. We communicate on every big decision, and a lot of

little ones too’ " (Quote from Ford Jr., Hammond, Fortune, 2011).

“’It was a defining moment for us,’ Mr. Mulally said in an interview. ‘But they never

would have been willing to lend us the money if we weren’t on a different path.’ Mr. Mulally had

been on the job as Ford’s chief executive less than 90 days when he asked for the loans. But as he

told the bankers, he was prepared to make tough decisions, including selling off brands, shedding

jobs and focusing Ford’s efforts on small cars rather than trucks and sport utility vehicles” (Vlasic,

The New York Times, 2009).


Leading with style

“Researchers have identified a number of leadership communication styles in the past half-

century. These varying styles can be pared down to two primary models of communication: one

model compares authoritarian, democratic, and laissez-faire styles of leadership communication; a

second model contrasts task and interpersonal leadership communication.” (Hackman & Johnson,

2013, p. 39). Ford Jr. and Mulally both exhibited characteristics of a more democratic style of

leadership. “Democratic leaders engage in supportive communication that facilitates interaction

between leaders and followers. The leader adopting the democratic communication style

encourages follower involvement and participation in the determination of goals and procedures”

(Hackman & Johnson, 2013, p. 40). Additionally, Mulally demonstrated a transformational style of

leadership through not only his communication style but his actions associated with presenting the

company’s case for borrowing money.

In the research conducted regarding transformational leadership Van Wart observes that

“effective leaders not only ensure that things get done and that employees are appropriately

empowered in the present but also take the organization into the future (2013, p 558).” Mulally’s

actions when first coming on board at Ford ultimately lead the company to a full economic

recovery in a shorter amount of time than was previously expected by investors. “Unlike the

transactional leader who indicates how current needs of followers can be fulfilled, the

transformational leader sharply arouses or alters the strength of needs that may have lain

dormant…It is leadership that is transformational that can bring about the big differences and big

changes in groups, organization, and societies” (Bass, 2007, as quoted in Hackman & Johnson,

2013, p.102).


The application of style

“To build the case [for borrowing money] to the other stake-holding members of his

family, Ford needed to go back to the basics of good business communication from the executive

level: Lay out your plan, be as forthcoming with information as possible, answer questions and

seek feedback” (Cassano, Smart Business, 2011). Ford Jr. and Mulally did just that. They knew

that their current approach to research and development was not going to be enough to sustain the

company through their economic hardships, so they went to work to set about a change at the Ford

Motor Company. They employed transformational styles of leadership to overhaul how the

company operated, as well as how the employees felt about the company and behavior within the

corporate culture. In the Hackman and Johnson text, a transactional leader is described as “most

concerned with the satisfaction of physiological, safety, and belonging needs” (2013, p.101). In the

reverse, a transformational leader “also attempts to satisfy the basic needs of follower, but they go

beyond mere exchange by engaging the total person in an attempt to satisfy the higher-level needs

of self-esteem and self-actualization” (2013, p. 101).

At the beginning of the overhaul of the business, the leadership team presented their

strategy for borrowing money from banks and investors. They exhibited both influential and

natural authenticity in regards to their plans for transforming the business through continued

investment in research and development activities, as well as natural authenticity in regards to

improving the commodities (vehicles) that would be offered in the marketplace as a result of the

capital investment. Leaders who exhibit traits of influential authenticity are “perceive as authentic

that which exerts influence on other entities, calling human beings to a higher goal and providing a

foretaste of a better way; not inconsequential or without meaning” (Molleda & Roberts, 2014, p.

159). Leaders who exhibit traits of natural authenticity are “perceive as authentic that which exists

in its natural state in or of the earth, remaining untouched by human hands; not artificial or


synthetic” (Molleda & Roberts, 2014, p. 159). Their authentic leadership styles coupled with a

transformational agenda allowed them to raise $5.9 million (Fox News, 2009).

In their case study exploring the concepts of global yet local, or ‘glocal’, strategic

communications in relation to the PR campaign for Colombian coffee, authors Molleda and

Roberts noted that “Gilmore and Pine (2007) introduce five genres of perceived authenticity

corresponding to these five economic offerings: commodities (natural authenticity), goods

(original authenticity), services (exceptional authenticity), experiences (referential authenticity),

and transformations (influential authenticity)” (2014, p. 159). Ford Jr. and Mulally were

attempting to lead a global manufacturing company, whose roots in the community of Detroit are

deeply embedded, through massive internal and external changes in order to avoid failure on a

global scale. “Glocal” strategic communication and leadership was present throughout all their

efforts. Mulally and his team presented their leadership concepts with different aspects of Gilmore

and Pine’s authenticities.

After the necessary capital was raised, however, the work was only just beginning. Mulally

and his team needed to think broadly about how they were going to lead the company through the

change that so desperately needed to occur in order for Ford to be profitable again in the not too

distant future. Mulally’s transformational leadership style, coupled with his communication skills,

allowed him to focus his next efforts on the internal culture at Ford.

Leading internally

“The other critical component in building your business for the future is a motivated work

force. You motivate employees by giving them avenues to pursue their ideas and removing

roadblocks. But you also need to encourage the behaviors you want to see. Ultimately, your

internal culture needs to work in tandem with your outside resources. When a motivated work

force can draw upon extensive financial and intellectual support, your company can have the tools


to weather just about any circumstance that comes your way. There will still be adversity, but

you’ll be prepared for it” (Quote from Ford Jr., Cassano, Smart Business, 2011). The importance

of being authentic to the roots of the Ford company were strategically critical to the success of the

changes needed to be made. Mulally understood that he could not simply implement a new way to

doing business without taking in the ‘glocal’ factors. It was critically important that Mulally and

the leadership team be authentic in their communication with the teams. Addressing difficult issues

of change with teams who’s locally based roots run deep in Detroit and with teams who worked in

the global manufacturing centers around the world could not have been conducted in the same

manner. “’There are different ways to deliver the same message and we learned that we had to be

flexible,’ said Mike Parris, manager for mass communications. ‘It didn’t make sense to feed

straight stories, and we couldn’t get into tons of approvals so we would share themes and then trust

them [local management teams] to do the job right.’ To keeps ideas flowing, members of the

communications team benchmarked their operations with other companies and held off-site

meetings with a facilitator to brainstorm ways of getting the messages out” (Marton, 1999, p. 11).

Ford Jr. and Mulally’s democratic style of leadership was a major contributing factor to the

success of the internal communication change campaign. Democratic leadership ‘involves

followers in setting goals, engages in two-way, open communication, and solicit input regarding

determination of policy and procedures” (Hackman & Johnson, 2013, p. 41). The management

teams across Ford understood what the direction of the campaign was, and not only did they feel

empowered to manage the campaign in their own sites but were actually empowered to do so by

Mulally and his team. The ‘glocal’ leadership approach to managing the communication provided

regular feedback in the form of surveys. “Employees’ support for Ford 2000 [campaign] was

gauged through surveys initially conducted every six weeks and then quarterly. The surveys also


helped determine employee response to the barrage of information they were receiving” (Marton,

1999, p.10).

As a true transformational leader, Mulally applied the basic philosophies of his leadership

style across all facets of the organization time and time again. “To succeed, he [Mulally] said,

programs such as “Go Further” must begin by making sure every constituency in the company is

fully apprised of the common platform and expectations about it; then break it down to help

individual employees understand what it means for them in their roles; then obtain commitments

from employees and begin measuring behaviors that will indicate the internal branding effort is

taking hold; and, finally, seriously recognize and reward the desired behaviors” (Buss, 2016).

“Focus on communication quality as well as quantity. Communication behaviors that are

positively correlated with emergent leadership include: setting goals, giving directions, managing

tension and conflict, and summarizing. Not only is quality communication essential to becoming a

leader, but effective leadership communication helps the group as a whole. Groups are most likely

to make good decisions when their most influential members facilitate discussion by asking

questions, challenging poor assumptions, clarifying ideas, and keeping the group on track”

(Hackman & Johnson, 2013, p. 205).

Leadership through public relations and branding

Ford Jr. and Mulally understood that their democratic leadership of the company through

the economic downturn by cultivating investor relations and internal communication alone would

not be enough to ensure the survival of the Ford Motor Company. They knew that a significant

level of effort and investment would be required with the American and international publics, who

ultimately buy Ford’s vehicles. Investing in branding and public relations could have been

perceived as superfluous to the needs of the business, but Ford Jr. and Mulally understood the

benefits.


In their study addressing the return on investment of public relations, authors Lee and Yoon

examined the application of international public relations leadership methodologies at a more

macro-level. “The most important contribution of this study is to show empirical evidence of the

bottom-line impact of country-level international public relations based on macro-level analysis.

To practitioners in public diplomacy and international public relations, the findings of this study

are supportive of the value of public relations at the country level. As in the company setting,

international public relations budgets at the country level are often easy targets for reduction,

especially in times of economic downturn due to the difficulty of showing tangible outcomes from

international public relations investment. This study clearly presents convincing empirical

evidence as to the value of international public relations, specifically in the form of economic

returns back to the country” (2009, p.19). Mulally in particular understood that Ford needed to lead

its way back to the American public’s brand conscious prior to the improvement of the overall

economic picture, in order to be well positioned to make back the lost market share once the

recovery began.

As a transformational leader, Mulally understood how critical it would be for Ford’s

continued growth and success to spend money on marketing and advertising. He hired Jim Farley

as marketing officer. Mulally laid out his plan and vision for Ford, but ultimately empowered

Farley to make decisions he felt would be best for the brand. “"He pulled out a document and there

were, like, 200 individual models on it. But he said to me, 'You see this blue oval? We are going to

focus on Ford, and take Ford and integrate it globally,’ Mr. Farley said of his meeting with Mr.

Mulally. ‘As a competitor, I was always scared that Ford was going to do that.’ But the bigger

concern was a cultural one. Mr. Farley, a self-described "freak," was worried he wouldn't fit in at

Ford. ‘By 'freak,' I mean that I like bottom-up ideas, creative thinking at the client, not the agency.

I expect our team to come up with new ideas and I expect that to flow up from the bottom. I was


worried the culture would reject me like a bad organ,’ Mr. Farley said. ‘Alan just said, 'Jim, we'll

stand back to back. Like Wyatt Earp.’ Instead of wondering whether he would fit in with the

culture of Ford, Mr. Farley changed the culture” (Thomaselli, 2010). Through a democratic and

transformational leadership style, Mulally was able to secure the recruitment of Farley for the

marketing team. Mulally’s efforts results in $4.7 billion in profit year-ending 2010, the company’s

largest profit since 1998 (Thomaselli, 2010).

Conclusions

Mulally and his team worked tirelessly to deploy their communication campaign across the

‘glocal’ organization. There were missteps along the way, but ultimately the leadership style of

Mulally and the reinforcement of Mulally’s leadership style by Bill Ford Jr., allowed Ford to

emerge from one of the worst financial situations in the company’s long history. “Leaders are not

the only factor influencing organizational success, follower happiness, and constituent satisfaction;

however, leaders are generally significant factors and, sometimes, the most important factor (e.g.,

Fernandez 2005; Hennessey 1998; Kaiser, Hogan, and Craig 2008; Trottier, Van Wart, and Wang

2008). For example, in a study using 30,000 respondents, Dull (2010) demonstrated the strong

relationship between trusted leadership and satisfaction, perceived performance, and a sense of

freedom in expressing opinions. The literature also points out, however, that leadership is often

romanticized or exaggerated in many circumstances, even when leaders are perceived to play

relatively strong roles” (Van Wart, 2013, p. 555).

Through the application of the principles of the democratic style of leadership Mulally

listened to his team, employees, and investors, which led him to not only maintain a healthy level

of investment of company funds and resources in research and development efforts, but also to

drive change in the internal culture at Ford from one of segregation and mismanagement to that of

collaboration and partnership. Furthermore, Mulally continually demonstrated authenticity


throughout the transformation of the internal culture, investor relations, and external branding

efforts. He spoke candidly, openly, and honestly to the team at Ford about the company’s financial

situation. He presented his ideas to move the company forward both clearly and with relevance to

the overall strategic plan. Employees and investors understood that tough times were ahead, but

that on the other side of those tough times there would be prosperity. The team rallied around

Mulally’s plans and now Ford is back as the number two auto manufacturer in the United States.

Leadership and leadership styles may not ultimately be responsible for an organization’s success,

as it takes many individuals working hard towards a goal in order to achieve it. However, without

consistency of leadership and leadership styling, an organization may find itself lost among the

multiple avenues that can be taken towards success.


References

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Company Media Center. Retrieved from

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Buss, D. (2012, June 14). ‘Go Further’ Brand Message Is Aimed at Ford’s Employees, Too. In

Forbes. Retrieved from http://www.forbes.com/sites/dalebuss/2012/06/14/go-further-brand-

message-is-aimed-at-fords-employees-too/#3d3a448333d6

Cassano, E. (2011, March 1). How Bill Ford Jr. led Ford Motor Co. through the recession.

In Smart Business. Retrieved from http://www.sbnonline.com/article/bill-ford-jr-on-the-

future-of-his-brand-the-business/

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http://www.foxnews.com/story/2009/06/23/ford-gets-5-billion-government-loan.html

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Documents

COM60811 - Final Paper - Leadership at Ford Motor Company