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Faulty ignition switch which caused airbags not to deploy during a crash forced America’s giant car manufacture General Motors to recall 1.6 million vehicles worldwide. While this is a recent fiasco, GM is no stranger to similar bad news; it is just that at General Motors bad news travels slowly,

 

Tomas Mega from Las Vegas, NV

In June, General Motors (GM) CEO Mary Barra announced that fifteen employees of the giant corporation had been forced out over the faulty ignition switch which caused airbags not to deploy during a crash. By GM’s own count, thirteen deaths occurred as a result of the faulty ignition, which shut the power off in a moving vehicle, rendering the airbags inoperable. An analysis of deaths caused by failure of the air bags to deploy was conducted by Friedman Research, on behalf of the Center for Auto Safety. It puts the death count at over 300, but GM contends the data is flawed, and refuses to acknowledge that number. As a result of the fault, GM has recalled 1.6 million vehicles worldwide. Another 1.5 million vehicles have been recalled for problems unrelated to the ignition switch fault. The company says the repairs will cost them $300 million.

In 2005, according to documents supplied recently to Congress, GM failed to make a repair of the switch that would have cost just 57 cents. Industry experts say labor cost for the repair would also be low, as the repair is simple and quick. It took GM over a decade to recall vehicles with bad switches. Ms. Barra, the first female CEO of a major global automaker and a thirty year veteran of GM, along with other senior GM executives, say that for more than a decade they knew nothing about the faulty switches. Despite all their combined experience, top university degrees, and years spent walking the corridors of GM’s Detroit headquarters, they knew nothing.

Bad news sure does travel slowly at General Motors.

They are not the first corporation to suffer from the paralysis of bad news. Morton Thiokol, the designer of the O-Rings on the space shuttle Challenger, which exploded shortly after liftoff in 1986, apparently knew there were problems with the O-Rings. Some engineers at Thiokol had opposed the launch of Challenger on that icy morning. But the launch went ahead, and the O-Rings failed with catastrophic results.

Some corporations handle bad news well and with a high level of common sense in the face of tremendous crisis. The 1982 Tylenol murders in Chicago are a case in point. Seven people died after taking Tylenol tablets laced with potassium cyanide. Johnson & Johnson, the manufacturer of Tylenol, acted quickly and decisively. Among the actions they took was a nationwide recall of Tylenol, with an estimated loss to the company of $100 million dollars. Their action to address the emergency has become a model of how management should handle a major corporate crisis.

So what happened at GM? In a video to employees, Ms. Barra says, “Something went wrong with our process, and terrible things happened.” Former Unites States Attorney Anton Valukas, hired by GM to investigate the matter, released a 300 page report. In it, he discusses the cultural problems at GM which led to the company doing nothing for ten years. The report cites a “resistance to raising issues.” There were suggestions that some supervisors stated that employees should “never put the company at risk.”

The report also highlights the phenomenon of the “GM salute,” and the “GM nod.” The “salute” was a crossing of the arms and pointing outward towards others, indicating that the responsibility belonged to someone else. Ms. Barra described the “GM nod” as an act where everyone nods in agreement to a plan of action, but then leaves the room with no intention to follow through. Other failures mentioned were employees working in ‘silos’ with no intention of sharing information with others. The report goes on to say that, “breakdowns in communication between and within groups were a critical part of failures described in this report.”

For anyone who has ever worked in a large organization, none of this should come as a surprise. Corporate silos, where managers hunker down and battle for power, prestige, promotions, larger budgets and influence are nothing new. There is a reluctance to share bad news with the other silos because it may reflect negatively on you, your division, your employees, your budget and ultimately your career. What is surprising is that it took GM ten years to act and the application of ‘common sense,’ which Johnson & Johnson successfully exercised, appears absent during that time.

Perhaps graduate business schools should offer a course in common sense. It is a priceless commodity for any leader. As a young manager decades ago, a boss of mine who also became an admired mentor, gave me a piece of paper and told me to tack it on the bulletin board in my office. I still have it. The paper has several quotes on it, including: “You must be determined to apply massive common sense to complex problems” and “A wise Chieftain never rejects the Hun bearing bad news. He rejects the Hun who fails to deliver bad news.”

The quotes are from the 1985 New York Times Bestseller “Leadership Secrets of Attila the Hun.” The initial four pages of the book lists praises from noted readers/reviewers. Intriguingly, this quote appears on page four: “I have read it a dozen times, and every re-reading has given me more insights.” It was written by Mr. Paul H. Zalecki, a former vice president and associate general counsel at GM.

Ms. Barra has promised the new GM will not repeat its mistakes regarding the ignition switch failures. Let’s hope other organizations learn GM’s lesson. When bad news travels slowly in a corporation, it’s because the corporate culture allows it and its leaders condone it, with amateurish and sometimes tragic regard for the consequences.

Cover Photo: General Motors CEO Mary Barra

Photo: Thedetriotbureau

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