Car-Industry Insiders Ready to Retake Steering Wheel

Detroit car makers were rescued last decade by a group of outsiders with scant auto industry experience. Now the insiders are retaking the wheel.

Later this year, Ford Motor Co. Chief Executive Alan Mulally will pass the keys to Mark Fields, a 25-year veteran of the U.S. auto maker and its affiliates. General Motors Co. this year named Mary Barra, who started at the company as a college intern, to replace private-equity executive Daniel Akerson.

Within a few years, Fiat Chrysler Automobiles NV CEO Sergio Marchionne, the Italian-Canadian accountant and lawyer who took over Fiat in 2004, is expected to step down and name a replacement most likely from within its existing ranks.

The departure of the outsiders in many ways reflects the auto industry's return to health. Directors in the last decade threw out their old playbooks—and in many cases were themselves tossed out—as executives failed to anticipate severe downturns. Bosses tied to the old ways were too plodding and trapped by earlier decisions to break the mold as the landscape changed.

"When things are going well, insiders are a natural place to look. When you are in trouble and needing a turnaround, you go to the outside," said Sydney Finkelstein, a management professor at Dartmouth College's Tuck School of Business.

Mr. Finkelstein cautions there is no evidence that outsiders do better, only that they are preferred when directors conclude big changes are necessary.

Outsiders with little ties to the industry orthodoxy, such as former AT&T Inc. Chairman Edward Whitacre, and later Carlyle Group's Akerson and Boeing Co.'s Mulally, were recruited to bring fresh perspective and their records of success. Mr. Marchionne had successfully run a Swiss conglomerate in metals, packaging and chemicals before joining Fiat.

Often, management experts say, it is the speed of decision making that becomes critical during a crisis.

"The insider knows every reason why [they need] to move slowly, but it is really important in many instances to move quickly," said Joseph Bower, a Harvard Business School management professor and expert on succession planning. "Companies really do have to reinvent their relationships to the markets and there is a terrible tendency for insiders to take too much time."

Today, Ford, GM and Fiat Chrysler are profitable, having undergone major restructuring efforts to cut costs and, they hope, the old ways that brought them to their knees, such as keeping factories running to optimize production while being forced to heavily discount the excess output.

So why go back? Mr. Bower says directors look inward once the crisis has passed and choose insiders who have navigated the transition for greater responsibilities. "It turns out that insiders have the great virtue that they know how the place works. They know where real talent is and isn't, they know how the communication works and how to get things done," he said.

At Ford, Mr. Fields brings expertise in the auto maker's global businesses. He has run operations in Asia, Europe and South America. Later, he tackled restructuring at its big North American car-making unit, and has been operating chief for more than a year. Mr. Mulally said in an interview last week that he has full faith in Mr. Fields to continue to execute the company's business plan.

"I think most companies in the auto industry and their boards today know that what's really important isn't whether management is 'insider' or 'outsider,' but whether management is effective," said John Hoffecker, co-president of the Americas at AlixPartners LLP, which managed GM's restructuring during its bankruptcy. "Given the market and competition today, long gone are the days when anything else really matters."

At GM, Ms. Barra is a veteran at a time when questions about whether the auto giant has changed enough since its prebankruptcy days. Now dealing with a troubled recall of small cars linked to 13 deaths, she is arguing the "old GM" that stumbled into bankruptcy has been replaced, even though most of its leaders are longtime GM employees.

With Ms. Barra taking charge in January, only Dan Ammann, a former Morgan Stanley investment banker who joined GM in 2010, later became CFO, remains with the company as its president. Gone are Steve Girsky, a former Morgan Stanley auto analyst and deal maker, who left after being passed over for the top job, and Chris Liddell, who joined from Microsoft Corp., and whose brash, high-tech style clashed with its executive team.

A changeover at Fiat Chrysler is a few years off, but Mr. Marchionne has signaled he expects an executive at the auto maker will replace him. Soon after taking over Chrysler, Mr. Marchionne assembled an executive council of 20 managers who oversee aspects of the company's operations.

Harald Wester, who runs Alfa Romeo and Maserati sports car businesses, and Alfredo Altavilla, chief of its Europe, Middle East and Africa operations, are among the contenders, said people close to the company.

"The thing I'm most proud of, in addition to the cars we make, is the quality of leadership I was able to put together," Mr. Marchionne said in January at the Detroit auto show. "I'm hopeful that with time they'll mature into superb leaders and that one of them will eventually take my place."

But guessing when the hand off might take place is the "biggest waste of time," Mr. Marchionne said. "Buy a lottery ticket, you'll have more fun," he added.