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Managers see leaving Ford as a better idea

Headhunters draw interest from automaker's dispirited officials' ranks as company fortunes fall.

Jeffrey Mccracken and Joann S. Lublin / Wall Street Journal

At a glance
Ford Motor Co. has seen an exodus of senior managers and directors.
In early August, Ford hired a new recruiting firm to help assist it in replacing departed managers and retain current ones.
Several key managers have left Ford in the past year.
Ford has paid a bonus to managers only twice in the past five years. Before that, it paid bonuses eight years in a row.

As Ford Motor Co. struggles to turn around its North American operations, management recruiters say they are hearing from an increasing number of senior managers and executives who are looking to leave the company -- if not the industry.

The inquiries are coming not just from top executives, but also senior managers in charge of key departments or previously targeted for advancement within Ford, say recruiters and ex-Ford officials who keep in contact with former colleagues.

Within the last year, Ford has lost several top executives who were either in charge of Ford's most profitable operations or at business units the company pointed to as examples of Ford's ability to execute a turnaround. Ford also lost executives whom Chairman and CEO Bill Ford Jr. singled out as key leaders.

Earlier this month, Ford hired a new executive recruiting firm, Korn/Ferry International, to help it cope with turnover in its dispirited management ranks. Korn/Ferry took over from Heidrick & Struggles International Inc., which declined to rebid on the Ford contract, according to a Ford spokeswoman.

A Korn/Ferry spokesman declined to comment.

Ford's recruiting move reflects concern both inside and outside the struggling automaker about senior employees leaving the company to join the competitors. Heidrick & Struggles decided against rebidding on the Ford contract because Ford wanted a promise that it wouldn't do searches for any other automakers, according to a person familiar with the matter.

A Heidrick & Struggles official declined to comment.

Bill Ford, who stepped into the post in 2001 after the ousting of former CEO Jacques Nasser, has tried unsuccessfully to woo executives from other companies to take senior roles at Ford.

Meanwhile, Ford has lost senior managers in key areas such as finance and product development as its business has soured and prospects have dimmed for management bonuses.

"I am really concerned. I must have talked to about nine people at senior levels at Ford within the past year or so. I've encouraged them to stay, to talk with Bill about their concerns, but the vast majority want to get out. There is a brain drain for sure," said John Slosar, chairman and CEO of Triniti Executive Search firm, which does work for the auto industry, manufacturing, retail and other industries.

Slosar, who left Ford as an executive director of auto components in 1994 after 34 years there, says his firm hears from "three times as many Ford people as GM people."

Ford -- which has about 300 senior officer and about 2,000 in director-level positions -- disputes it is losing an inordinate number of managers and senior-level people. Spokeswoman Marcy Evans says the automaker uses 20 other industrial companies as benchmarks and determined that "we think historically we have a low quit rate," among salaried workers. She said in the last four years that rate has been half that of the companies it uses as benchmarks.

Ford declined to make Joe Laymon, Ford's head of human resources, available for this article.

Internally at Ford, there is some concern. A senior manager said the company has "discussed on and off again whether we need retention bonuses because so many good people are leaving." He cited the finance and treasury departments as areas of high turnover, saying it was because "their skills are portable and they have no confidence in a turnaround."

More cuts coming

Attrition may fit in with the automaker's goal of shrinking its salaried work force of 35,000. Ford is studying cuts of 10 percent to 30 percent of its salaried costs as part of an accelerated structuring that will likely be unveiled in September, say Ford officials.

"I get a call a week from someone at Ford at a high level wanting to get out of the automotive world," said Peter D. Crist, chairman and CEO of Crist Associates, a small search firm in Hinsdale, Ill. The volume of such Ford calls "has tripled in the last 18 months." And "it's exponentially larger than it was two or three years ago."

Some Ford executives have moved to auto parts makers. But others don't care what industry they join. Crist says they call him and say, "I need to get out of Detroit" because they are "running from something and not to something."

The problem: Companies in other industries aren't keen to hire automotive-industry veterans who lack a broad range of work experience. One such manufacturer recently interviewed -- and rejected -- a senior Ford executive recommended by Crist.

"They liked the guy a lot," the recruiter said. But the prospect hadn't worked anywhere else but Ford.

The reasons for the departures vary, say recruiters and ex-Ford managers. Many cite lack of bonuses for salaried workers and the importance of variable compensation.

Bonuses are scarce

Ford officials say top managers can get 40 percent to 100 percent of their salary in bonuses -- if the automaker does well, like it did throughout the 1990s. Ford didn't pay out a bonus in 2006 for the year prior.

With the automaker on track to lose $4 billion in North America, Ford officials don't expect a bonus this year either. Ford has paid out a salaried bonus just twice in the last five years, after paying out a bonus the previous eight straight years.

"Clearly at the senior levels in Ford a large part of your compensation is in bonuses and options. Well, your options are worthless, so you look closely at that bonus and whether there is one," said John Coletti, who left Ford in 2005 at age 55 as director of special vehicle teams after 33 years with the automaker.

Slosar said it goes beyond compensation: Ford promoted a number of younger workers and created a "false expectation" that managers with 20 years' experience should become senior officers.

Some of the executives who have left Ford recently include those who were involved in promoting some high-profile initiatives.

Among the recent departures is former Ford Credit Chief Financial Officer Dave Cosper, who left March 1 to take a job as CFO at Sonic Automotive Inc. Ford Credit has long been more profitable than Ford's automotive operations, and Cosper was one of the executives chosen to speak in January to investors and the media to discuss Ford's initial "way forward" restructuring plan.

Ford has since acknowledged the way forward didn't go far enough and will next month unveil an accelerated version. Cosper did not return a telephone message seeking comment.

Another departed executive is Antonio Maciel, former president of Ford South America, which the automaker this summer touted for returning to profitability and doubling market share a few years after Ford nearly closed the unit. Maciel departed May 3 to take a top job at a Brazilian paper manufacturer. Maciel could not be reached for comment.

In October, Ford's head of product development, Phil Martens, left the company after 18 years. Martens, who recently was named senior vice president of supplier ArvinMeritor Inc., was singled out by Ford in a Sept. 21 public speech to employees and put in charge of an "innovation" effort at Ford. Martens declined to comment on his departure.

The key element of that innovation speech, which the company later touted with national TV ads, was a push to increase Ford hybrid production to 250,000 vehicles by 2010.

Accompanying Ford for the announcement was Mary Ann Wright, head of Ford's hybrid technology program. She left Ford on Oct. 28 after 17 years and later took a job with bankrupt auto supplier Collins & Aikman.

Earlier this summer, Ford backed away from the hybrid goal -- saying it would focus instead on building more ethanol vehicles. Wright did not return a phone call seeking comment.
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