CASE STUDY 9-1 Was Robert Eaton a Good Performance Management Leader? R obert Eaton was CEO and chairman of Chrys- ler from 1993 to 1998, replacing Lee Iacocca, who retired after serving in this capacity since 1978. Eaton then served as cochairman of the newly merged DaimlerChrysler organization from 1998 to 2000. In fact, Eaton was responsible for the sale of Chrysler Corporation to Daimler-Benz, thereby creating DaimlerChrysler. With 362,100 employees, DaimlerChrysler had achieved revenues of €136.4 billion in 2003. DaimlerChrysler's passenger car brands included Maybach, Mercedes-Benz, Chrysler, Jeep, Dodge, and Smart. Commercial vehicle brands included Mercedes-Benz, Freightliner, Sterling, Western Star, and Setra. From the beginning of his tenure as CEO, Eaton communicated with the people under him. He immediately shared his plans for the future with his top four executives, and upon the advice of his colleague, Bob Lutz, decided to look around the company before making any hasty decisions concern- ing the state of affairs at Chrysler. Eaton and Lutz ascertained that Chrysler was employing the right staff and that they did not need to hire new people; they just had to lead them in a different manner, in a more participative style. Eaton listened to everyone in the organization, including executives, suppliers, and assembly-line workers, to determine how to help the company succeed. Eaton also encouraged the employees at Chrysler to talk with one another. The atmosphere of collaboration and open-door communication between Eaton and Lutz (the two men sat across the hall from one another and never closed their doors) permeated the entire organization. Eaton and Lutz's walk-around management style indicated to employees that they were committed to and engaged in the organization. Furthermore, Eaton and Lutz held meetings with their executive team on a regular basis to exchange ideas and information from all areas of the organization. Eaton even reorganized the manner in which Chrysler designed cars, based on a study, previously 294 disregarded by Iacocca, that indicated that Chrys- ler needed to be more flexible and its executives needed to be in constant communication with the product design team. One employee was quoted as saying, Bob Eaton does not shoot the messenger when he hears something he doesn't like or understand. He knows that not every idea is right. But Bob is off-the-wall himself. . . He'll say something, and we'll tell him that it's a crazy idea. . . . He may not change his mind in the end, but he'll spend the time explaining to you what is behind his thought processes. Do you know what kind of confidence that inspires? This type of open communication at the top proved extremely successful, as summed up by one designer: "It's a system that recognizes talent early and rewards it, and that creates a sense of enthusiasm for your work, and a sense of mission." Another program that Eaton describes as empow- ering employees at Chrysler includes requiring all employees, including executives, to participate in the process of building a new vehicle. Eaton explains that this shows all of the employees in the plant that executives are concerned about the proper functioning of new cars, and it gives executives the opportunity to understand and solve problems at the factory level. Eaton states, “When we're done with our discussions, these guys know where we want to go and how we want to get there, and they go back and put the action plans together to do that. This goes for every single thing we do." He concludes, Clearly at a company there has to be a shared vision, but we try to teach people to be a leader in their own area, to know where the company wants to go, to know how that affects their area, to benchmark the best in the world and then set goals and programs to go after it. We also encourage