WASHINGTON (Reuters) -- For more than 10 years, scores of General Motors engineers, inspectors and other employees engaged in a deadly cover-up over an easily fixable ignition-switch defect. An estimated 13 to 300 people lost their lives when their car suddenly shut off, disabling their power brakes and airbags.
GM discovered the problem in 2001 with its Saturn ION, according to documents the company belatedly sent to the National Highway Traffic Safety Administration. Though the defect was evident in other models, GM did not notify the federal safety agency until 2006. The company then sent its dealers a service bulletin to look out for but not recall the cars.
GM finally declared a recall this February. It was just days before the new CEO, Mary Barra, says she was told about the millions of cars containing the faulty switch.
How it happened
I am a longtime observer of the auto giant. People ask me, "How could this happen, and for so long?"
Welcome to GM's multi-tiered corporate bureaucracy.
The structure is tailor-made to avoid responsibility, shifting blame to someone else up, down or sideways among the company's many top executives, project directors and review committees that have long ossified this industrial goliath on so many fronts.
Years ago, when trying to pinpoint just who in GM was responsible for various lethal vehicle designs, I counted 18 tiers of bureaucracy between the shop floors and the CEO's office. Then, as now, the incentives were directed toward cost controls. Being able to shave off a few dimes per vehicle from suppliers or cut corners on internal design decisions produced kudos and bonuses.
There were few incentives to spur employees who might object to faulty designs or assembly-line speedups that could produce dangerous vehicles. On the contrary, this move could mark an employee as not a team player, or worse.
Now, GM's managerial imperfections, combined with an understandable, frightening motorist peril -- one's self-switching ignition key, not some esoteric handling dynamic -- has produced the perfect storm. This is a continuing corporate nightmare of congressional investigations, with tough bipartisan questioning of Barra, a Justice Department criminal inquiry and the likelihood of continuing negative disclosures coming from GM's own investigations.
Add growing litigation by grieving families and potential litigation by plaintiffs denied their day in court because of GM's bankruptcy, and you have very strong pressure to get out yet more incriminating inside information. All these stresses generate internal turmoil, conflict and accusatory disdain that rupture the solidarity of a company.
As a self-appointed consultant to GM, I recommend that Barra's "new GM" pursue the following actions:
- Expedite recalls of the 2.6 million affected vehicles for repairs and continue providing loaner cars in the meantime.
- Move to settle litigation with reasonable compensation for cases both before and after the bankruptcy. In addition, a prominent thank you to U.S. taxpayers' billions of dollars that saved GM would be authentic public relations.
- Do not stonewall the Justice Department but locate the culpable personnel and practices in the company. Barra has already suspended (with pay) two project engineers.
- Cooperate with congressional legislators to update and strengthen the motor-vehicle safety law.
Pinpointing responsibility is one way Barra can change the GM culture. It will reverse the perverse incentives and reward employees who conscientiously come forward to warn about serious defects.
Creating an independent GM ombudsman, who would receive these confidential employee complaints and report directly to the CEO, could institutionalize a safeguard that might otherwise atrophy over time.
Barra recognized the value of this internal incentive last month with her program to recognize employees "when they see something that could affect customer safety." She now has to create the ombudsman office to make it bureaucracy-proof.
Stronger laws and law enforcement, greater internal quality control and building congressional and White House support for a revived highway safety administration, would continue the remarkable regulation-driven reduction in motor-vehicle casualties over the past half century.