In the freebie-fueled marketing industry, the policy will save GM's ad agencies and media suppliers money they would normally spend wining and dining the auto marketer. If GM executives attend a business lunch or supplier function, they must pay their own way.
"It's going to impact the client's life," said Dick O'Connor, chairman of Campbell-Ewald, Warren, Mich., Chevrolet's agency. "It will be a different world.
"Will [GM employees] go to as many things as they did in the past? I rather doubt it."
GM staff is waiting to learn which expenses the carmaker will repay. If not reimbursed, many will probably be reluctant to pay out of their own pockets, said a top executive at another GM shop.
"It's going to hurt the golf courses if GM doesn't reimburse for that," the agency executive said. "How can you justify that the only way to do business is playing golf?"
IN THE MIDDLE
The new policy will hit midlevel GM workers harder than top brass, because the higher-ups can afford to personally pick up $100 golfing green fees or $100-per-plate charity dinners.
The agency executive and a magazine executive who asked not to be named both predicted local golf courses, caterers and charities will be hurt by GM's policy. The magazine executive said Detroit-area restaurants are already suffering as a result of the new policy, adopted last month.
The magazine executive said his title will have a hospitality tent at the upcoming U.S. Open tournament in metro Detroit. Some GM executives have declined an invitation to stop by, while others will be there but are picking up their own tabs.
FEWER MAGAZINE EVENTS
The whirlwind of magazine-sponsored parties in Detroit for auto executives and their agencies could die down, the executive said: "Media reps may actually go home at night."
Although GM's policy doesn't prohibit its agencies from attending media-sponsored functions, shops probably won't attend events without the client, the agency executive said.
GM previously had a longstanding policy allowing employees to accept invitations to lunch, golf or parties from suppliers. The shift came about in reaction to problems with GM's Opel operations, the agency executive said.
GM officials denied the policy was triggered by last year's kickback scandal at its Adam Opel European subsidiary.
"It's not related to any one event," said John Mueller, director of corporate media relations. "It continues the improvement of our existing policies."
Last July, a trio of top executives at Adam Opel resigned in the midst of a kickback and fraud scandal. Opel confirmed that 14 of its employees skimmed at least $1.9 million from a $700 million-plus plant construction project in eastern Germany, according to Automotive News, a sister publication to Ad Age.
German prosecutors said the scandal involved more than $7.9 million.