Mary Barra’s response to Valukas probe: First steps toward GM’s rehabilitation?

GM CEO Mary Barra has shown a number of faces during the auto giant’s recall crisis. It has been Barra’s job to serve as chief spokesperson about the recalls of some 11 million cars, recalls that took as long as 11 years to enact, a delay that caused 13 deaths the organization has acknowledged (and possibly hundreds of others they haven’t).
Barra—who only to the helm this year—has faced new revelations on a regular basis, including disclosure of an internal presentation cautioning employees to avoid using incendiary words in emails that might surface during legal discovery. (This Legal department move was particularly ill-advised. It was likely to be disclosed, but worse, it supports a culture of deflection rather than responsibility. I wrote about this a couple weeks ago.)
But Barra’s statements have vacillated between genuine concern and cold corporate euphemisms. When she asserted that GM would emerge stronger from the experience, comedian John Oliver, on his “Last Week Tonight” program on HBO, congratulated her for defying gender stereotype by issuing as statement “every bit as shitty as one from a male CEO.”
Today, though, Barra may have taken the most important right steps to begin the rehabilitation of GM’s tarnished image. In the wake of the revelations of GM burying the truth about the defects while they continued to result in injuries and death, Barra hired Anton Valukas to lead an internal investigation. Valukas, chairman of Jenner & Block LLP, was the investigator hired by the U.S. Justice Department to look into the collapse of Lehman Brothers.
Three months later, Valukas has issued a scathing report citing “incompetence and neglect” which GM plans to release today. In advance of the release, though, Barra has fired 15 employees and disciplined another five. According to Money, “Some were dismissed due to misconduct or incompetence, while others simply did not do enough to fix the problem.”
About the report, Barra said, “It represents a fundamental failure to meet the basic needs of these customers. We simply didn’t do our jobs. We failed these customers.” She announced the creation of a program to compensate victims.
While the report found no conspiracy or cover-up, an no deliberate trade-off between safety and cost, it did find “a pattern of management deficiencies and misjudgments—often based on incomplete data—that were passed off at the time as business as usual.”
Barra’s response to the report is a critical first step in rebuilding the public’s trust (defined as confidence that GM will do the right thing):
- Dismissing 15 employees sends a message to the public that this kind of mismanagement and bad judgment won’t be tolerated. More important, it sends a signal to employees about what kinds of behaviors won’t be tolerated. Punishing bad behavior and rewarding desired behavior is a core step in changing a culture.
- Disclosing the full report signals a shift toward greater transparency.
- Establishing the victims fund—assuming the amount is adequate—says the company is taking responsibility. While something other than cash would be nice, it’s what a business has, other than words.
None of this will change public perception much by itself, but if Barra can continue the culture pivot based on the direction established here, she could be on the path to mend GM’s sullied image. Now it’s a matter of ensuring every future action is consistent with those values. It takes years to change a culture, and Barra’s actions today could be the first steps on that journey or just another turnabout before reverting to past behaviors. Only time will tell.
Not that GM’s image appears to matter all that much, at least as far as profit is concerned, given that GM posted its best month of U.S. auto sales since before the Lehman Brothers collapse plunged the country into a recession. Sales exceeded analysts’ estimates for pickups and sport-utility vehicles, suggesting that, while people might not be happy with GM, enough are still willing to buy their cars to keep the recall crisis from affecting earnings.
06/05/14 | 0 Comments | Mary Barra’s response to Valukas probe: First steps toward GM’s rehabilitation?