The following thorough post is a combination of two priorguest posts to Switch & Shiftplus additional updates after Mary Barra’s second appearance before a House subcommittee.
The GM ignition switch recall tragedy led to at least 13 deaths and was the result of 11 years of failure on many levels. It’s a live case study on a sad culture crisis we all can andmust learn fromsince culture is the most powerful force in organizations. Rarely do we have a chance to pull back the covers and see a culture with some serious dysfunction from an organization that still accomplishes amazing work on a global scale in spite of it all.
Mary Barra’s initial appearance before House & Senate subcommittees
The first session kicked off with a strong proclamation that the Committee would be asking GM what they are doing to “not just fix a car but to fix a culture.” Unfortunately, only about five minutes of over four hours of testimony across the two days specifically zeroed in on the subject of culture. Most of the discussion was about process and people which are only the surface of this issue and the GM culture.
There is no doubt in my mind GM possesses all the processes you could ever imagine to prevent this type of issue. I personally experienced the relentless power of GM to drive quality when I was a VP of Quality at a major supplier of safety-critical products and GM was our largest customer. A quality defect or potential recall could unleash work nearly around the clock for weeks on end with a “no excuses” mind-set. I don’t believe for a second that this issue is about improving processes. It is all about leadership and culture.
Mary Barra came across as highly competent and, to a great extent, culturally astute in her very limited discussion about cultureduring the testimony. She made the following statements:
- “We in the past had more of a cost culture and we are moving to more of a customer culture that focuses on safety and quality.” (So true about what’s needed at GM)
- “We recognize culture change doesn’t happen in a year or two but we are well on that journey and we are dedicated to it and very clearly want to have the safest vehicles on the road.” (She better build momentum fast even though it’s a long journey)
- “We’ve also rolled out new values (including) the customer is our compass, relationship matter, and individual excellence.” (Wow, a CEO even mentioning values in a crisis)
- “Most importantly it’s leadership at the top. It’s the leadership of how we behave, of how we demonstrate when we make decisions.” (Love the personal accountability)
She assumed personal accountability for the situation and the culture change effort. She repeatedly made reference to the “new General Motors,” which was an extremely gutsy move with all the baggage from the past.
Let’s look at some other points about Mary Barra and her beliefs:
- The GM description of“Our Company”now starts with: “At the new General Motors, we are passionate about designing, building, and selling the world’s best vehicles. This vision unites us as a team each and every day and is the hallmark of our customer-driven culture.” Building clarity around a shared purpose and vision is absolutely critical and it appears like she is off to a good start.
- She referenced values being revised but I could not find them on their website or in the16 page Code of Conductthey released earlier this year. The Code of Conduct included some good content but it ended with a typical corporate warning about disciplinary action, termination of employment, etc. It did open with a great letter from Mary Barra where she highlighted her belief that “culture can become a competitive advantage” and she also wrote: “One message should jump off the pages: We cannot cut corners in the pursuit of growth and profit. To do so would sully our reputation and undermine everything we are trying to accomplish as a team.” How prophetic her words ended up being.
- There is an interesting videoon the GM Careers site of her being interviewed before she took the CEO job. She talked about the focus on culture change coming out of the bankruptcy, reducing policies, slashing bureaucracy and said: “if we win the hearts and minds of employees, we’re going to have better business success.” She talked extensively about involving employees so the key will be making sure they are involved in the right areas and in the right way.
It obviously was not the first time the subject of culture change has been publicized at GM. A thorough article highlighted some specific points that are quite relevant to the latest culture crisis. It also led me to conclude that Mary Barra likely has a very clear understanding of what it will take to transform the GM culture. Experience makes a tremendous difference with culture change efforts because we learn from success and failure. This article summarizedwork related to the culture Fritz Henderson was drivingafter they emerged from the bankruptcy:
- “Henderson distilled his vision of the new GM’s culture to four precepts: risk-taking, accountability, speed and, at the heart of it all, customer and product focus.” It’s interesting how different this vision is from the “new GM.”
- There was a 12-member culture transformation team that met regularly and the HR representative was, you guessed it, Mary Barra.
- They brought in culture expert Jon Katzenbach from Booz & Company to help advise them. He is one of the absolute top thought leaders in this space. She knows what they implemented from his advice and what they did not. She also knows the results and likely how to change things this time around. She speaks with confidence about workplace culture and this is extremely rare in business today, especially from a CEO that knows how massive this change effort must be. She must understand the culture fundamentals.
What GM must do to begin transforming the culture
I initially outlined a series of improvements GM would need to make over the next 12-24 months for the transformation to take hold:
- This specific safety issue should be used as a cornerstone for improvement on many different fronts. She is writing her own story on this one and I can’t wait to see how things unfold. It’s a tragic problem but it’s a clear issue where behavior was specifically in conflict with the purpose and values she has communicated.
- Mary Barra should implement a “keystone habit” related to the communication of certain types of serious safety issues directly to her and it will set the tone for the behavior they need (refer to the bookThe Power of Habit and Paul O’Neill’s focus on safety and a related keystone habit as a foundation for a turnaround at Alcoa).
- GM will need to provide totalclarity with their purpose, values, expected behaviors and why the new culture will drive the performance (results) they need. Mary Barra must focus the effort on a few very specific behaviors if there will ever be the chance of building momentum.
- She will need to teach her organization in regular communication activities about the strategies, goals, and measures that support safety and the related behavior that must exist. Employees will learn from this one specific area about how the broader “new GM” will operate.
- She will need to reach deep in her organization to confirm there is meaningful behavior change. Feedback and prioritization should be used to refine improvement plans so employees feel a part of the effort. There should be specific approaches with long service employees to confirm meaningful change is taking place and new employees to confirm there is total clarity around expected behaviors and reinforcement from day one.
- Reward and recognition systems should be refined to specifically emphasize the behaviors GM must shift or build. It will be important to encourage practicing the new behaviors and connecting that practice to formal and informal reward and recognition systems. Feedback from others should be used to confirm the new behaviors are being exhibited at all levels.
- All employees should be involved in coaching training in some form so they know how to interact with each other effectively to support the behavior and results they need. This is not top-down coaching but “collegial coaching” that moves in all directions (up, down and across the organization).
- Leadership development and succession development programs should be overhauled to focus on expected behaviors and 360 degree feedback to confirm expected behaviors are being exhibited.
- Their stated effort to build transparency and remove bureaucracy should specifically emphasizedriving out fearand people “acting on what they know” (the hallmark of an effective culture). Countless systems and processes are inhibiting this behavior now so there MUST be a focus on behavior that cuts through whatever systems, reviews, meetings and other habits are leading to this fear.
- Leaders that do not support the behaviors of the “new GM” should be visibly removed. I hope specific engineers are not scapegoats for this effort but the action is focused on leaders that reinforce or exhibit toxic behavior.
I initially predicted Mary Barra would lead the greatest culture transformation of all time. I expected her to build on her positive initial response and cover at least some of the recommendations I outlined since they are based on many culture fundamentals I thought she understood. I watched all major communications from GM expecting to see more detail on their plans but the follow-up appeared to be completely focused on structure and process changes without clear effort to engage her organization in deeper, more meaningful change. Two months passed before the independent investigation was completed and a thorough report was released.
The Volukas Report = A Sad Culture Story
The Volukas Report read like a novel with many characters, potential villains, a Wisconsin State Patrol report that surfaced the specific problem, an Indiana University study that identified the issue, countless committees, and legal case after legal case. Unfortunately, the hero never emerged in this story. Engineers even identified the problem when they reviewed a crashed vehicle in a junkyard and “dispatched an investigator to buy a fish scale from a local bait and tackle shop” to measure how easy it was to move the ignition switch out of the “run” position. It was shocking just how often this problem was specifically highlighted without resolution but it was “regarded as an issue of customer convenience rather than safety.”
The GM culture is the problem
After pouring through the325 page investigation reportand the transcript of Mary Barra’s response in a Town Hall Meeting with employees, it’s clear that both the investigator and GM are not adequately addressing the root cause of this issue – The GM Culture. I stand by that conclusion, as would the vast majority of workplace culture experts I know, even though the report included the following point: “whether ‘general’ culture issues are to blame is difficult to ascertain.” It is not “difficult to ascertain” at all.
This story screams “culture problem” like no other and it will not end with firings, countless policy and procedure changes, and a host of other top-down changes. Mary Barra started on the right path in the Town Hall meeting by showing respect for the victims and no excuses when sharing the report findings:
“To give you a sense of the thoroughness and forcefulness of the investigation, I want to paraphrase a few of the key conclusions:
- GM personnel’s inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.
- While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility.
- Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end.
- The ignition switch issue was touched by numerous parties at GM – engineers, investigators, lawyers – but nobody raised the problem to the highest levels of the company.
- Overall, the report concludes that from start to finish the Cobalt saga was riddled with failures, which led totragic results for many.”
After reading the report from the independent investigator, the only point I disagree with is the point about it not being raised to the highest levels of the company. Yes, it did not reach the top leadership team and the report confirmed Mary Barra did not know about the issue until December, 2013. Her response was clear when she did hear: “Get the right data; then do the right thing.” Unfortunately, many senior executives did know about the problem including a Vehicle Line Executive, a Chief Engineer, and three “senior managers” that were asked to “champion” the investigation.
Obvious culture issues in the Volukas Report
She stopped short of sharing some of the points from the report that provide a clear picture of some undesirable aspects of the GM culture.
- Reluctance to Raise Issues or Problems: “Some witnesses said that there was reluctance to raise issues or concerns in the GM culture.”
- The GM Salute: “One witness described the GM phenomenon of avoiding responsibility as the ‘GM Salute,’ a crossing of arms and pointing towards others, indicating that the responsibility belongs to someone else, not me.”
- The GM Nod: “Mary Barra described a phenomenon known as the ‘GM Nod’…when everyone nods agreement to a proposed plan of action, but then leaves the room with no intention to follow through, and the nod is an empty gesture.”
- A Proliferation of Committees: The issue passed through “an astonishing number of committees. We repeatedly heard from witnesses that flagged the issue, proposed a solution, and the solution died in committee or with some other ad hoc group exploring the issue. But determining the identity of any actual decision-maker was impenetrable. No single person owned any decision. Indeed it was often difficult to determine who sat on the committees or what was considered, as there are rarely minutes of meetings.
- Conflicting Messages from Top Management: two clear messages were consistently emphasized from the top: 1) “When safety is at issue, cost is irrelevant” and 2) “Cost is everything.” One engineer said that the emphasis on cost control at GM “permeates the fabric of the whole culture.”
- No sense of urgency: “One engineer wrote: this issue has been around since man first lumbered out of [the] sea and stood on two feet.” The processes seemed designed to only accelerate corrective action when safety or cost was a driving factor.
I found myself in total shock as Mary Barra took the “accountability bait” and explained the inappropriate behavior of a select number of employees.
Fifteen individuals, who we determined to have acted inappropriately, are no longer with the company. Some were removed because of what we consider misconduct or incompetence. Others have been relieved because they simply didn’t do enough: They didn’t take responsibility; didn’t act with any sense of urgency.
15 employees? Seriously? I just don’t get it after reading the report since it was very clear this is a serious culture problem. Countless people came and went without dealing with the issue in any different manner than those that came before them, further reinforcing why this is a culture problem. I am all for accountability and dealing with misconduct or incompetence. I get the need to show some accountability and tough action. I totally agree with the changes if these people consistently showed incompetent or toxic behavior that was clearly in conflict with important GM values that top leadership consistently supported. This “tone” of inappropriate behavior may have been evident with a few people in the report, not 15!
Mary Barra went on to recap some of the actions they have taken:
- “We named Jeff Boyer Vice President of Safety for the company, elevating and integrating our safety processes under a single leader. Jeff reports directly to Mark Reuss, and Jeff and I meet regularly.
- We added 35 safety investigators that will allow us to identify and address issues much more quickly. And we have already seen the positive results of their work.
- We instituted our Speak Up for Safety program encouraging employees to report potential safety issues quickly. And we are going to recognize them for doing so.
- We announced the creation of, and have implemented, a new Global Product Integrity organization that will enhance our overall safety and quality performance.
- Finally – and this is an incredibly important one – we restructured the safety decision-making process to raise it to the highest levels of the company. Senior management is now going to be at the center of these issues.”
She then talked about the Volukas Report and committed to implementing the recommendations “on an expedited timetable.”
Culture recommendations from the Volukas Report
I was still trying to get over the perplexing emphasis in the Town Hall Meeting on firing 15 people when I reached the recommendations in the investigator’s report “to ensure that a commitment to consumer safety is a prominent part of the Company’s culture and is embedded within the fabric of the organizations.” This was it. This was the part I have been waiting to see for months. The “culture” recommendations were covered in the second of nine areas. The first area was organizational structure recommendations that weren’t bad so I read on with anticipation. You judge for yourself from some of these “culture recommendation” highlights:
- “Implement regular communications with employees to raise awareness about safety and reinforce the tone at the top.”
- “We recommend GM promote the [Speak Up For Safety] program through visible communications, such as posters on employee bulletin boards. Bulletins or newsletters could include features recognizing employees who have raised safety issues.”
- “Visibly promote and rigorously enforce the non-retaliation policy.”
- “Regularly communicate to suppliers the importance of safety and GM’s expectation that suppliers will promptly and accurately identify any potential safety issues.”
- “Explicitly communicate to employees that they should not be reluctant to classify issues as safety issues or potential safety issues.”
- “Develop protocols for escalating potential safety issues to appropriate levels of management.”
- “Continue to review and strengthen the process for expeditious reporting by employees of potential or actual safety issues and non-compliance.”
These and the many recommended policy and procedure changes in the report are not near enough to address the subject of culture. They may look fine on the surface and be suitable to make it through the government investigations. They are not near enough to evolve the GM culture. Not even close.
It’s about culture and leadership
What important words were completely missing from the transcript of Mary Barra’s Town Hall Meeting? 1) Culture, and 2) Leadership. Yes, not one reference. There were likely plenty of PR and communication experts involved in helping to prepare the message but she missed an incredible opportunity for a clear and memorable turning point in GM’s culture journey.
It was a perfect time for leadership to take ownership for allowing this culture to persist and to begin building the trust and transparency needed to unite the workforce in support of their customers. Unfortunately, the headlines around the world are focused on the disciplinary actions, for example:GM Axes 15 over Botched Recall(CNN Money), GM Fires 15 in Wake of “Deeply Troubling” Recall Report (FOX News)
A mistaken prediction
It was completely clear at this point that Mary Barra would not lead the greatest culture transformation of all time as I predicted. I was wrong since culture and leadership inexplicably disappeared from the communication landscape.
Mary Barra showed genuine concern for the victims and it is commendable. I wanted to see that same genuine concern for her 200,000 employees and for her to talk about how the GM leadership let them down. A question she should have pondered was: how many of her employees would have made the same decisions as some of the 15 released if they were in the exact same situation? I don’t know the details behind the scene on these 15 former employees but her remarks showed no acknowledgment of the power of culture in shaping behavior and the role of top leadership in this saga.
Second appearance in front of a House subcommittee
I was still holding out hope that more details about the potential culture transformation would emerge. Mary Barra’s initialstatement included the following:
Finally, Mr. Chairman and Members of the Committee, I know some of you are wondering about my commitment to solve the deep underlying cultural problems uncovered in this report. The answer is I will not rest until these problems are resolved. As I told our employees, I am not afraid of the truth.
And I am not going to accept business as usual at GM. It’s time — in fact, it’s past time — to insist on total accountability and make sure that vital information is shared across all functions in our company… so we can unleash the full power of our 200,000 employees, our 21,000 dealers and our 23,000 suppliers
Mara Barra was questionedabout what she was specifically doing to change the culture and her response primarily focused on the “speak up for safety” program. I was glad to see this program because it did cover one of the recommendations I had previously highlighted. It was very clear from her explanation the focus was on process and structure without engagement, accelerate leadership development, or other improvements necessary to deal with the deeper cultural issues.
Representative Diana DeGette mentioned that her sources gave feedback the firing of the 15 “have only created more paranoia that people are going to lose their job.” That is absolutely no surprise to me and it shouldn’t be to anyone in GM. Demanding accountability of others without leaders looking in the mirror is a real problem. It’s a real shame. The emphasis on “total accountability” and confirming “vital information is shared” barely touches the surface of the deeply entrenched cultural dynamics that impacted this problem for over a decade.
Beat the accountability drum all you want. The culture will not change that way. The new systems may be enough to stop an obvious safety problem that involves as many people as this one did. Unfortunately, many borderline issues will still be sucked up by the current culture and no whistle-blower inspired system will fix it. The environment of over-sensitivity to safety will not emerge in a culture where people do not proactively “act on what they know” in so many other areas. If it’s not happening when lives are on the line, think about all the other areas where people do not proactively surface ideas, issues, etc. Those other areas may not directly impact safety but they are the key to transforming a culture steeped in command and control structure with limited employee engagement. GM needs a general “speak up” campaign and not just for safety. Leaders need a “listen” campaign and they might be surprised by the value of what they hear.
There was no indication whatsoever that Mary Barra or her team met with groups across GM to genuinely listen and work together to design meaningful improvements that would transform GM.
The bottom line – a missed opportunity for GM and us all
A huge opportunity is being missed by GM on this one and it doesn’t appear like a single person at the top of GM or Congress has reached out to anyone with deep experience in the culture field. Everyone is perplexed by how this could happen but welcome to the power of culture and the lack of leadership to cover many of the areas that would be necessary to shift behavior in any meaningful way.
As a Detroit-metro resident, I am rooting for GM and Mary Barra to successfully tackle this culture issue with clarity and speed. They clearly need the advice of some culture experts to zero in on meaningful change since we are still at the surface of this problem after 11 years, 13 deaths, a 325 page independent investigator report, and two appearances before House subcommittees. As Edgar Schein, arguably the #1 culture expert in the world, said: “Culture is not this surface phenomenon but it is our very core. We live in a culture, we display a culture, we’re always driven by our culture.”
Leaders across the world could have learned about meaningful change as part of this live case study. Unfortunately, it will now be used as a case study in bureaucratic, top-down change that will fall far short of impacting the GM nod, GM salute, and other widespread cultural dynamics that contributed to this tragedy.
What did you think of Mary Barra’s corrective actions? Is GM on the right track?
Editor’s Note: read Tim’s most popular CultureU post: 8 Culture Change Secrets Most Leaders Don’t Understand
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Tim Kuppler is the founder of CultureUniversity.com and Director of Culture and Organization Development for Human Synergistics, a 40+ year pioneer in the workplace culture field with the mission of Changing the World—One Organization at a Time®. He leads collaboration and partnering efforts with culture experts, consulting firms, industry organizations and other groups interested in making a meaningful difference in their organization, those they support, and, ultimately, society.
Human Synergistics is home of the Organizational Culture Inventory, the most widely used and thoroughly researched culture assessment in the world, the 90 Day Ultimate Culture and Performance Quick Start Program, and the Annual Ultimate Culture Conference, the premier organizational culture event.
He authored Build the Culture Advantage, Deliver Sustainable Performance with Clarity and Speed which was endorsed as the "go-to" resource for building a performance culture. He previously led major culture transformations as a senior executive with case studies featured as part of the 2012 best-selling book – Leading Culture Change in Global Organizations. He was also President of Denison Consulting, a culture assessment and consulting firm. He is an accomplished speaker and recognized as a Top 100 leadership conferences speaker on Inc.com.
His 20 years of culture and performance improvement experience includes the rare mix of executive leadership, coaching, and consulting knowledge necessary to help leaders quickly improve team effectiveness and results as they focus on their top performance priorities, challenges, and/or goals. He networks extensively in the workplace culture field in order to learn and apply the latest insights from many experts. Email him to learn more about options to help you understand and evolve your culture with a direct and sustainable impact on performance.
The case examines the problems faced by GM, the second largest automaker in the world. These problems have brought the company at the verge of bankruptcy. The major reasons for the crisis at GM were its inability to bring out new vehicles that suit the needs of the customers, poor business strategy, and high costs associated with employee healthcare and pension benefits. These problems, coupled with global financial crisis and recession in the economies of several developed and developing countries adversely impacted the revenues of GM, which fell by 11% in 2008 as compared to 2007. In order to solve its liquidity crisis, GM approached the US Government for financial aid.
The company was granted US$ 13.4 billion through a series of federal loans. In December 2008, GM got a loan of US$ 4 billion. The company was required to fulfill specific targets that included reduction in debt, renegotiation of employee contract terms with the unions etc, before a stipulated time as a part of the loan package. If GM failed to meet these targets by the predetermined time, it had to repay the loan amount with interest within 30 days. On February 17, 2009, while submitting the 'Restructuring Plan,' GM asked for additional financial aid from the US government to carry on its operations after March 2009. The case concludes with a note on the challenges GM is likely to face in the near future if it is not able to meet the targets specified. It also debates on whether the US Government should have offered any financial aid to GM at all and let the company file bankruptcy.
» Examine the flaws in GM's business strategy that led the company face major problems.
» Understand the reasons behind GM's financial crisis.
» Debate whether the US government was right in bailing out GM.
» Analyze the challenges faced by GM in the near future.
GM Corporation, Rick Wagoner, United Autoworkers Union, Pension Liabilities, Healthcare Costs, Global Financial Crisis, Financial Aid, Restructuring Plan, Delphi, US Bankruptcy Code, Market Share, Special Attrition Program, Reorganization, Auto Task Force, Financial Performance, Restructuring Targets, VEBA, Secured Term Loan Facility
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