Monday, July 21, 2014

GM’s CEO: Ridding GM of Its Dysfunctional Culture or Enabling It?

I suspect that we tend to vastly underestimate the amount of energy, or raw force, sufficient to rectify an organization’s dysfunctional culture. The typical assumption is that replacing the CEO is not only necessary, but also sufficient. “A fish rots from the head down,” one might say. However, the head of a fish cannot necessarily stop, not to mention reverse, an infection spreading somewhere in the body. A sordid mentality can easily spread once it has taken hold in an organizational body. Indeed, such a pathogen can develop defense mechanisms geared to the standard antibiotics. To rely on the body to heal itself involves considerable naiveté. Relying on GM’s CEO Mary Barra to exculpate the mentality behind the faulty ignition-switch lapse and ensuing cover-up is thus arguably based on a faulty assumption of sufficiency.

On July 17, 2014, U.S. Senator Claire McCaskill, chair of the Senate Subcommittee on Consumer Protection, Product Safety and Insurance, demanded of Barra, who was testifying before the committee, “How in the world did Michael Millikin keep his job?” Stating that Millikin should be fired, U.S. Senator Richard Blumenthal noted that lawyers on Millikin’s staff were involved in “cover-up, concealment, deceit and even fraud.”[1] In return, Barra defended GM’s top lawyer as having “high integrity.” Moreover, she said that Millikin is a key part of the legal department she wants at the company—the “new GM,” as she had previously described GM under her helm. Yet can having fired only 15 people for their roles in the faulty ignition-switch episode, which led to 13 deaths and a delayed recall of 2.6 million cars, possibly turn an “old” company into a new one? The assumption that the enabling of covering things up had been limited to the 15 people fired (with financial incentives to leave—hardly a message of deterrence) is as faulty as the problematic ignition-switch itself.

To take Barra’s opinion of Millikin as having high integrity as a given involves ignoring the possibility that Barra wanted both to present a picture of a “new GM” to the world and protect GM veteran employees—essentially having it both ways. Put another way, relying on Barra means ignoring her conflict of interest.

Taking into account Barra’s possible motives, McCaskill took a look at the support for Barra’s defense of her company’s top lawyer. Millikin had said that information lawyers in his department had in April of 2013 of the link between ignition-switch and airbag failures did not get to his desk; hence he did not know of the defective switches until February 2014. If this is true, the senator reasoned, then Millikin is guilty of either “gross negligence or gross incompetence.” Whether the head of GM’s legal department acted with integrity or not, his job description includes running his department. That Barra, a manager herself, somehow omitted this point is odd. To borrow a line from the film, Inglourious Basterds, the head of the American Nazi-hunters told a German informant, “Yeah, we got a word for that kind of odd in English; it’s called suspicious.” It was suspicious that the informant arranged a meeting place at a pub being frequented by Nazi officers.

In overlooking Millikin’s failure to keep abreast of important information reaching his subordinates, Barra was essentially protecting the “old GM” even as she was selling a “new GM” to the world. There’s a word for this; it’s called lying. Were she serious about removing the culture enabling unethical and incompetent management in the company, a wholesale replacement of personnel would be needed throughout the company. To be sure, such a mammoth effort would have to take place over some time, in stages (and without giving the old guard financial incentives to leave). “Crime does not pay” and “Incompetent management is not to be tolerated” would be the messages sent in word as well as deed, and this is what integrity is all about. Contrariwise, trying to have something both ways in line with a conflict of interest is just more of the “old GM.” Even though Barra came in after the ignition-switch cover-up, indications point to her having joined the old guard even as she gives lip-service to a new GM. 

The old will of course take care of the old, so a new spark must infuse considerable energy into a company gripped by the status quo as its default in order to move the entire entity to a new, higher orbit. That is to say, much ballast must be tossed over as the trust is engaged. We as a society tend to assume that the movement comes about from mere window-dressing by a CEO. We are naïve.

1. All quotes in this essay come from James Healey, “Senators Tell GM to Fire Top Attorney,” USA Today, July 18, 2014.