With GM's Massive Recall, Is Corporate Culture to Blame? Did the mistake lie not with a faulty part but rather with how the entire company dealt with problems?
By Brian Fielkow •
Opinions expressed by Entrepreneur contributors are their own.
I've been carefully watching General Motors navigate its way through its current recall of 2.6 million cars due to defective ignition switches. How could a company take a decade to implement a recall, one linked to several deaths? Why was a cost-benefit decision made to give greater weight to saving 57 cents per switch than to protecting the safety of customers and the public?
The answer lies in the company's culture.
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Prior to its 2009 bankruptcy and bailout, GM was bleeding cash and producing substandard vehicles. Managers knew that the company's existence and their jobs were at stake. GM's internal problems created a culture that could justify saving a few cents on a critical repair. The company's CEO, Mary Barra, admitted that in her recent congressional testimony.
Barra contrasted the old GM, whose culture weighed costs against improved safety, with the new GM that has a customer-centric culture.
Business leaders need to learn from GM's mistakes. The reality is that no one is immune from adversity in business, but the best protection always has been fostering a vibrant culture that detects and attacks problems early on.
Your company's culture is your secret ingredient. It separates you from your competition and makes your products and services unique and valued by customers. This culture is assessed internally by your employees and externally by customers. A healthy culture is likely to produce favorable results and is essential to a robust bottom line.
So when it comes to fostering a healthy corporate culture replete with core company values, here are a few lessons to glean from GM's recall debacle:
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1. Don't let a business cycle define the company. Many businesses go through cycles and cost issues become critical in a downturn. Nonetheless, never let cost concerns compromise core values, especially not the safety of customers.
2. Always maintain long-term vision. During a time of crisis, a siege mentality can develop. When the whole organization is threatened, short-term thinking can arise and lead to unfortunate results. The role of the leader is to maintain a long-term view. I'm willing to bet that someone thought he or she was helping solve GM's crisis by not upgrading the ignition switches and thus avoiding a recall in the mid-2000s.
2. Foster honest communication. Employees are often afraid to give bad news. It's essential to create a culture that promotes the complete and accurate exchange of information. Never penalize anyone for coming forward with bad news, as long as it's accurate.
Groupthink and conformity are toxic for a business. Discourage half-truths and sugarcoating at all costs. What the CEO wants to hear is not important. What he or she needs to hear is critical.
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3. Stop Ignoring company problems. When a problem arises, large or small, deal with it head-on. The problem will likely be resolved over time. It's human nature to gravitate toward the positive. Foster a culture that attacks today's problem with transparency rather than simply kicking it down the road.
4. Keep the entire company accountable. It's critical to distinguish between individual and organizational accountability. Often a single employee is blamed for a service or product failure, leading the organization to conveniently ignore deeper issues.
5. Demolish silos. Organizations are destroyed by a silo mentality, when a department or group within a company cares only about what's best for that unit and not the greater good of the whole company. As leaders, we must tear down silos and foster cross-communication within our companies.
Only time will tell if there's really is a difference between the old and new GM. Let's learn from GM's culture mistakes today.
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