EDS after Perot: views differ on whether GM can run the ship

It began as General Motors' 21st-century dream: a high-tech, global auto power, linked electronically by a powerful computer network capable of minute management of far-flung operations. That's why GM paid $2.5 billion for Dallas-based Electronic Data Systems two years ago. Now, having bought out EDS founder H.Ross Perot, GM faces a critical problem: It has to convince EDS's computer talents that there's reason to stick around after Mr. Perot leaves.

To many EDS employees, Perot was at the very least a philosophical leader who set the tone for the entire company. With him gone, they are concerned lest they be swallowed up, deemphasized, or stifled by overbearing management as GM goes through its current contraction.

Several EDS employees say discontent is widespread in the organization in the wake of the GM buyout of Perot.

``With Ross Perot gone, it's very hard to say whether I'll stay or not,'' a EDS systems engineer said in a phone interview. ``I don't want to become a General Motors employee.''

Another EDS veteran with more than a decade of experience acknowledges that ``EDS has been more than Ross Perot for a long time.'' But he also says: ``Certainly everything that has happened leaves a bad taste in my mouth - and in a lot of people's. [Perot's ouster] takes on the appearance of a personal vendetta.''

GM chairman Roger B. Smith has been hailed as a visionary for trying to turn GM into a space-age company. But the attempt isn't a success yet. To make it so, Mr. Smith cannot afford to lose too many EDS workers.

``At EDS they don't have machine tools or assembly lines - it's the experience and intelligence of their people that make up the assets of the company,'' says John Hammond, an auto industry analyst at Data Resources Inc., a Lexington, Mass., research firm.

Since the switch in ownership, EDS has grown from 15,000 employees to more than 40,000. Thousands of those brought on board EDS were GM information systems veterans forced to transfer to EDS. Some 70 percent of EDS revenues (which have more than tripled) come from GM accounts.

The influx of GM employees has brought about a culture clash as GM and EDS employees were meshed. The crucial question now in the minds of EDS employees is ``what will happen to the old way of doing things when GM places EDS, along with Hughes Aircraft Company and Delco, in a new GM division.

``Unless there is a continuing, long-term, top [GM] management commitment to continue to promote innovation and creativity and provide for conceptual space, it's going to be very different for them [EDS managers], and many at the top may leave,'' says Raphael Amit, an associate professor of management at Northwestern University's Kellogg School of management.

Though EDS employees have worked closely with GM, there still has been a crucial distance maintained since becoming part of GM in 1984. It is the difference between being a vendor to GM divisions and actually becoming a division.

Employees are worried that they might lose a working environment in which they have the ``mental elbowroom'' to be creative.

Those EDS workers interviewed for this article say they and many of their colleagues are weighing whether to keep their jobs or go elsewhere. Potential reasons for quitting range from philosophical to practical.

``If they were to do continue doing the things he [Perot] suggested, then I might [stay],'' says the systems engineer. ``But it's hard to imagine that GM would follow Perot's suggestions enough to make me stay. I'm afraid that things will go back the way they were - very big, very slow. The way EDS does things is: `Let's not talk about it - let's get it done.' GM's way of doing it is: `Let's form a committee to study it - and then a committee to govern the committee and six or seven years down the road we'll have done something about it.'''

Whether or not that assessment is fair, it still may be a widespread view in the fast-paced, entrepreneurial environment of EDS. It is a corporate attitude Perot has worked hard to foster from the company's founding in 1962, until two weeks ago. In a few words, the philosophy was ``to be very professional, very go-get-'em, very aggressive, very matter of fact, very honest,'' an EDS employee says.

But Brian Jeffrey, a computer industry analyst with the International Technology Group, takes an different view of the volatile management situation.

``EDS is an organization that has outgrown the original Perot entrepreneurial style,'' Mr. Jeffrey says. ``EDS is already well embedded in GM. ... The bottom line is that in order to have a commitment from EDS, GM doesn't need Ross Perot. And in order to continue to function as an industry success story, EDS doesn't need Perot, either.''

Critics of GM's management generally concede that Smith has, even before Perot's public criticism, made progress toward reshaping the industrial behemoth.

``People outside don't see the magnitude of change,'' says David Cole, professor at the University of Michigan's Office for the Study of Automotive Transportation. ``GM is making the shift to a longer-term view. I think EDS and GM are going to be better off without Perot.''

Such an optimistic attitude has a good potential to be correct - despite the fact that GM is besieged by imports even as it struggles to regain its footing.

EDS employees themselves believe that there is a way GM could turn the messy Perot ouster to its advantage. But it would require a decision on the part of GM to continue revamping its organization and doing away with top-heavy management. Much of that has to do with moving decision making to lower levels.

``I have seen steady, slow movement [by GM management] in the right direction,'' says the EDS systems engineer. ``I would stay with EDS. But my fear is that with Perot gone, the change at GM isn't going to continue to happen.''

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