Barra: Response to crisis will define GM's image
NEWS ANALYSIS

For GM, a need to show sense of urgency

Barra: Response to crisis will define GM's image

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DETROIT -- As General Motors' head of product development, Mary Barra gave employees a clear order: "No more crappy cars."

Not even two months into her tenure as CEO, the crappy cars of old GM are having their revenge on the born-again automaker, with a global recall of 1.6 million cars over a deadly, decade-old ignition problem threatening to overshadow GM's painstaking advances in quality and customer satisfaction.

Tapped to carry a newly unburdened GM into the future, Barra and her executive team must now claw through a thicket of pre-bankruptcy cobwebs to figure out how the problem arose and why it took management so long to grasp its significance. The process has the potential to be dirty and embarrassing for GM, but it also represents a necessary step toward rooting out remnants of the old company that could undermine its gains.

"Our company's reputation won't be determined by the recall itself, but by how we address the problem going forward," Barra wrote in a message to employees last week. "What is important is taking great care of our customers and showing that it really is a new day at GM."

CEO Mary Barra told employees last week that GM's executives "acted without hesitation" when they learned of the safety issues.

Barra takes charge


Until last month, the vehicles under recall -- including the Chevrolet Cobalt, rated least reliable small car in 2006 by Consumer Reports, and the Saturn Ion, Edmunds.com's choice as the sixth-worst car ever sold in America -- were merely unpleasant memories that today's GM was eager to erase.

But documents that have emerged in conjunction with the recall and related lawsuits have also spotlighted a sluggish management culture that kept urgent quality and safety issues from receiving attention from the highest levels of the company.

As it grapples with the fallout from design issues first identified a decade ago, GM's new executive team, and Barra in particular, must squarely confront that culture issue with a clear sense of urgency.

Barra, who replaced Dan Akerson as CEO on Jan. 15, said in her message last week that GM "acted without hesitation" when the matter "was brought to my team a few weeks ago." A spokesman declined to say whether that meant no one in the management team was aware before that of any ignition problems with the affected vehicles.

After first letting Alan Batey, GM's North American president, speak for the company in a nationally published apology, Barra last week said she has assembled and taken charge of an executive team to direct GM's response to the recall. In her message, she told employees that doing "what is best for our customer" will come above all else.

GM has begun what Barra promised would be an "unvarnished" internal review. A spokesman confirmed that the company has hired an outside law firm to lead the inquiry but would not identify members of the recall-response team Barra formed.

She and Mark Reuss, GM's chief of global product development, are devoting considerable time to the matter and are treating it with more urgency than executives have shown during previous recalls, according to a person with knowledge of the situation.

"That's the thing about being in charge," said Robert Wiseman, a professor of strategic management at Michigan State University's Eli Broad College of Business. "You walk into a job like that and have your agenda that you want to do, but things happen that take your time up and keep you distracted from the agenda. ... Being the figurehead of a company, you've got to solve problems that you didn't create."

Transparency needed


GM has made big strides in quality since 2007, when it stopped building the recalled vehicles, and it has sought to portray itself as more innovative and customer-focused since its 2009 bankruptcy. All four of GM's U.S. brands scored above average on last month's J.D. Power 2014 U.S. Vehicle Dependability Study, with both Buick and Cadillac landing in the top five. But such gains could mean little if consumers believe the company has not truly reformed itself in a way that would prevent future lapses.

Wiseman said it's critical that GM avoid coming across as though it is hiding anything, which is the impression he said Toyota Motor Corp. projected in 2010 during the recall of millions of vehicles after drivers reported experiencing unintended acceleration.

"What customers, and especially potential customers, appreciate is transparency and honesty," Wiseman said. "If you try to sweep it under the rug, which is what Toyota was trying to do with the accelerator issues, those things from an outsider's view, as a customer or an investor or a potential customer, just undermine the image of the company."

GM President Dan Ammann, speaking on the sidelines of the Geneva auto show, said GM is working to be "proactive" and "transparent" in response to the recall. "This is a new leadership team," Ammann said. "We're aiming to do things in the right way."

Mike Colias contributed to this report.

You can reach Nick Bunkley at nbunkley@crain.com. -- Follow Nick on Twitter


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