Fiat company overview and operations

Organizational Performance and Culture at Fiat

Some observers suggest that the recent resurgence of Fiat fortunes in recent years may be attributable to cultural changes within the organization, but it is also reasonable to suggest that a number of other factors have affected the company's ability to compete in an increasingly globalized marketplace as well. To determine how organizational cultural changes have affected Fiat in recent years, this paper provides a review of the relevant literature concerning Fiat, including an evaluation of how the company and culture changed and why and the part the Fiat's executive leadership team played in these efforts.

Founded in July 1899, Fiat Group Automobiles, S.p.A. (hereinafter alternatively "the company") was established and the company opened its first factory with 150 employees shortly thereafter at the fin de siecle in Turin, Italy (History of Fiat 2012). Today, the company has more than 130,000 employees and manufactures more than 2,000,000 vehicles a year (Fiat Annual Report 2011). The company was renowned throughout the 20th century for its innovative designs and fuel-efficiency, and Fiat has remained focused on promoting a brand that reflects the company's vision to provide consumers with the latest safety and performance features as well as distinctive design. According to the company's promotional literature concerning its brand, "[the brand] has changed over time, evolving in design, keeping abreast of the evolution of the auto industry and the very concept of automobiles: from the search for functionality to the addition of an emotional appeal" (History of Fiat 2012, p. 1). The company now operates on a global basis and has successfully leveraged its brand recognition in a number of countries, most especially Brazil (Fiat Annual Report 2011).

Evaluation

Although all organizations are unique in some fashion, they share a common feature in having a culture that defines "how things are done around here" as well as other important values. According to Badrtalei and Bates (2007), "To work with the culture of an organization is to work with all facets of a company that have any bearing on why people behave the way they do on the job from day-to-day. It is the traditions, shared beliefs, and expectations about how individuals behave and accomplish tasks in organizations" (p. 304). Because Fiat has grown its business by expanding its operations into other countries through strategic partnerships, acquisitions and mergers, the company's corporate culture must be sufficiently flexible to accommodate significant cross-cultural differences and operating styles. In this regard, Fiat's corporate culture has not always proven up to the task. For instance, Badrtalei and Bates (2007) cite Fiat's organizational culture as being responsible for a failed partnership with another Italian automaker, Lancia: "After 34 years of ownership, Fiat Auto's partnership with Lancia has to be judged a failure" (p. 304).

In other cases, though, the company has successfully responded to changes in its operating environment by making the structural changes that were needed to achieve a competitive advantage while remaining true to its original business model of focusing on innovation and design. In this regard, the senior vice president of human resources for the Fiat Group in Italy, Enrico Auteri, reports that, "In 1990, management at the Fiat Group -- Italy's largest private employer -- responded to today's business challenges by reevaluating our structure. After taking a hard look at ourselves, we embarked on a long journey of organizational development focused on delegation of authority, management training and an improved focus on customers. In short, we decided that to remain competitive we must do what we do both better and at a lower cost" (p. 107). To its credit, the company expended an enormous amount of resources and time in reviewing its existing structure to identify opportunities for improvement and the elimination of waste, including an unacceptably high ratio of managers to workers (Auteri 1994). According to Auteri, "The ratio of managers to specialists was extremely high. This situation was due in part to the former practice of rewarding employees by moving them to a higher level in the hierarchy, regardless of organizational requirements" (1994, p. 108), a human resource policy that has since been discontinued. Of particular interest were Auteri's observations concerning how Fiat's organizational culture, like all large organizations, requires time to change. In this regard, Auteri emphasizes that, "We've learned that corporate change doesn't happen quickly, either. Even under an unstable economic market, it takes time to forge change" (1994, p. 108).

Like other major organizations, the corporate culture at Fiat begins at the top with the company's chief executive officer, Sergio Marchionne, and his executive leadership team, but the culture at Fiat is in reality sustained by everyone in the organization, including the owner and his family. For instance, according to Hooper, "One of the more striking aspects of Italy's economy today is how many of the larger corporations are still family-based and, to a greater or lesser extent, family run. Fiat is one example" (p. 66). Several key themes are discernible in the company's organizational culture, including several that have characterized its operations throughout its lengthy history such as a focus on innovation and distinctive design elements. Fiat's leadership, though, has also relied on the longstanding corporate values that have helped it overcome some difficult periods in its operating history to emerge as a viable automobile manufacturer in the 21st century with a view towards long-term sustainable growth for the future. For instance, in the company's most recent annual report, Fiat's chairman, John Elkann, emphasized, "The management team, beginning with CEO Sergio Marchionne, is working diligently to leverage opportunities for further growth. With the contribution of everyone at Fiat at the support of my family, we will continue in pursuit of the principal objective: to create a company that is a leader in the global automobile sector, oriented toward innovation, secure in its values and dedicated to sustainable long-term development" (p. 3).