After General Motors (GM) announced a recall for faulty ignition switches earlier this year, the company was criticized for it communications efforts, as CEO Mary Barra displayed minimal empathy for the thirteen customers who lost their lives in GM cars.
If the first stage to recovery is recognizing that you have a problem, then it would appear that Barra is trying to regain her footing in the midst of this major corporate crisis. Actions the CEO has taken since those early missteps have included the following:
- The company has brought back some of their old PR veterans as well as a crisis expert who is helping them navigate through this period.
- Barra now shows great empathy for the victims, repeatedly noting the company’s failures and sadness over the tragedy.
- GM has formed a compensation fund for victims killed or injured because of the faulty ignition switches.
- Barra formed a “Speak Up for Safety” internal communications campaign to encourage whistleblowers to step forward when warranted.
- The company commissioned an “independent” investigation (note that such studies can always be criticized when the subject of the investigation is funding it) which concluded that there was no cover up, though it cited extreme incompetence that resulted in inaction without a recall for a whole decade – until it was way too late.
- The company named a new vehicle safety chief for the first time.
- Three new recalls were announced, now affecting a total of 3 million vehicles totaling a cost of $300 million for this quarter alone.
As the next stages of recovery get underway for GM though, a very mixed picture of crisis management is emerging.
On the one hand, when she announced the results of the internal investigation, CEO Barra took the rare step of firing 15 employees and executives held responsible for this disaster (see: GM chief says no cover-up in delayed recall). Large organizations have a hard time taking such definitive steps to hold their people accountable in the face of such crises. They often let culpable company leaders retire quietly, fade into the corporate woodwork, or sometimes even promote them after the crisis has passed.
On the other end of the spectrum, a ghastly glitch resulted in the families of the dead customers receiving the recall notice in the mail (see: GM again forced to apologize after PR flub). This is a management error, reflective of the type of mismanagement that got them in this mess in the first place, that shows this is a company with a long recovery ahead of them and a culture that must change so that business operations catch-up with the contrite words of the CEO.
One of the next things on the crisis agenda for GM will be to face the music before skeptical congressional investigators in the wake of a record $35 million penalty imposed by the National Highway Transportation Safety Administration (NHSTA). It is never good for a CEO to be taken for a trip to the congressional woodshed, especially in an election year.
As it continues to recover from this crisis, there are some additional steps that GM and CEO Mary Barr should employ:
Meet with the Victims’ Families
This is the ultimate act of humility that will enable GM to reinforce an image of a company that is committed to resolution and not just payouts.
Reorganize Company Management
Hiring a new safety chief is great, but the breakdown at GM came from inaction and management creep. The company needs an ombudsman who will review the chains of command to prevent a repeat of a recall delayed by a whole decade.
Establish Expert Advisory Panel
Create an advisory panel for two years that will blow the whistle on GM management if they do not hold true to their commitments.
Launch Safety Hotline
Establish a mechanism for customers to raise their concerns early and often, including a direct call line through OnStar, the onboard safety and communications system exclusive to GM vehicles.
GM faces a long and arduous road to recovery. Considering that lives were lost due to the ineptitude of mid-level corporate managers at GM, the company deserves all the skepticism they are about to receive from Congress, NHTSA, and the general public. Many questions linger, including what truly happened in the management systems that had such devastating consequences.
Yet, if CEO Barra continues to demonstrate a willingness to adapt and change as the crisis unfolds, she will demonstrate that corporate cultures can be changed and lives can be saved as a result. These are signs of crisis recovery that can ultimately benefit customers as well as the bottom line.