During Ford Motor Co.’s most recent earnings call , CFO Bob Shanks said the company had found its “North Star.”
That might be because, over the past few months, CEO Jim Hackett has re-calibrated the automaker’s moral compass.
Not quite nine months into his tenure leading the nation’s No. 2 automaker, a man who so often looks to the future has made his biggest impact bycleaning up sordid corners of Ford’s past.
In abruptly dismissing senior executive Raj Nair over “inappropriate behavior,” Hackett continued a trend first displayed earlier this year with his forceful condemnation of years of sexual harassment, abuse and discrimination uncovered at Ford’s Chicago Assembly Plant: that standards of human decency must be followed, whether you’re on the assembly line or in the C-suite.
Executives are no longer immune from the basic tenet of doing the right thing, no matter how bad the optics of reshuffling the leadership deck twice in less than a year may look to a Wall Street already skeptical of Ford’s decision-making.
The move reverberated beyond the auto industry with a general sense that Hackett made a difficult, but necessary call. In the hours after the news broke, insiders say Hackett received no fewer than a dozen emails and notes of support from his nonautomotive CEO friends, as well as one Ford joint venture partner.
That’s not to say there’s a happy feeling right now in Dearborn. The decision to cut ties with a Ford lifer who was generally liked by his peers and who had no prior history of misconduct was not taken lightly.
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But a three-week investigation revealed that Nair’s actions did not live up to Hackett’s standard. A source with knowledge of the situation said Nair’s indiscretion did not involve any financial malfeasance, but rather centered around a small number of “personal conduct” incidents.
It would be wrong to speculate on the nature of Nair’s behavior, but when taken in context with Hackett’s Chicago comments, it makes clear that Ford’s CEO will not tolerate improper actions of any kind, whether sexual, physical, emotional or otherwise.
And don’t think last week’s bombshell will stun the rest of Ford’s executive team to inaction.
Jim Farley, president of global markets, met with the Ford brand’s top 100 dealers last week in California, and those present at the meeting describe it as one of Farley’s most impassioned presentations ever.
In addition to describing plans for numerous new and updated products planned for the coming years, Farley was honest and forthcoming about the Nair decision, which happened the day before the California gathering. He also made a point of saying the company has already moved on and is excited about the prospects of giving greater responsibility to people such as Kumar Galhotra and Joy Falotico.
Ford has plenty of challenges ahead. Investors still question Hackett’s business plan and there’s growing unease that much of its product portfolio feels dated.
Hackett was hired to be a change agent and must still prove he can succeed where Mark Fields failed in laying out a clear path to a future of electrified powertrains and mobility services.
But he’s made it clear that, along the way, Ford won’t sacrifice its standards to get there.