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Posted by on Jun 8, 2014 in Business, Culture, Customer Service, Engagement, Featured, Leadership, Strategy, Transparency | 26 comments

The GM Culture Crisis: what leaders must learn from this culture case study

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The independent investigation of the GM ignition switch recall crisis that led to at least 13 deaths was completed and the report (Volukas Report) was just released.  GM CEO Mary Barra also shared some major changes they are making.  It’s a live case study on a sad culture crisis we all can and must learn from since 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 that still accomplishes amazing work on a global scale in spite of it all.

A Sad Culture Story

The Volukas Report reads 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 junk yard 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.”

It’s a live case study on a sad culture crisis we all can and must learn from since culture is the most powerful force in organizations.

Mary Barra was called before House and Senate Subcommittees two months ago to explain the GM ignition switch recall crisis.  I wrote a post for Switch & Shift and predicted Mary Barra would lead the greatest culture transformation of all time.  There were many signs that seemed to indicate she understood the scope of the culture challenge ahead of her and some of her initial steps were in the right direction.  That predication isn’t looking good after release of the Volukas Report and Mary Barra’s initial response in a Town Hall meeting with employees.

The GM Culture is the problem

After pouring through the 325 page investigation report and the transcript of the Town Hall Meeting, 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 to tragic 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.

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.

Obvious culture issues in the investigation 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:

  1. “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.
  2. 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.
  3. 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.
  4. We announced the creation of, and have implemented, a new Global Product Integrity organization that will enhance our overall safety and quality performance.
  5. 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 implement the recommendations “on an expedited timetable.”

I found myself in total shock as Mary Barra took the “accountability bait” and explained the inappropriate behavior of a select number of employees.

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.

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)

What must happen?

The jury is still out on whether Mary Barra will directly take on real and meaningful culture change.  It’s clear to me that this will not be the greatest culture transformation of all time as I predicted.  I was wrong since culture and leadership inexplicably disappeared from the communication landscape.

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.

I reviewed a number of specific improvements in my prior Switch & Shift post I believe are necessary to support meaningful change.  Some of these changes have been covered but most have not.

Mary Barra showed genuine concern for the victims and it is commendable.  I want 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 ponder is: 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 acknowledgement of the power of culture in shaping behavior and the role of top leadership in this saga.  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.”

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 a 325 page report. Stay-tuned for a future post on Switch & Shift as we continue to watch this live culture case study unfold.

What did you think of Mary Barra’s remarks and some of the details from the special investigation? Is GM on the right track?

 

Workplace Morale 1

 

Editor’s Note: We are excited to announce the launch of a new series: Workplace Morale – What Works? beginning TOMORROW! Interested in how we can improve Workplace Morale? This week our top experts share on how to AND who is doing it right! Stay tuned…

 

 

 

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Tim Kuppler

Tim Kuppler

Tim Kuppler is the co-founder of CultureUniversity.com which features some of the top culture thought leaders in history. He is a performance culture specialist, author, speaker, co-founder of The Culture Advantage, and a business coach with AdviCoach. He co-authored the 2014 book – Build the Culture Advantage, Deliver Sustainable Performance with Clarity and Speed and is the former President of Denison Consulting. He led many culture transformations as a senior executive and now helps leaders and teams to effectively overcome their most significant culture and performance challenges.

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  • Terrence Seamon

    Great
    analysis, Tim. I like how you keep hammering away at the Leadership,
    Ownership and Culture aspects of this story. You are right that Nothing
    Will Change unless they get “to the core” of the GM culture.

    • Tim Kuppler

      Thanks Terrance. Many of the improvement actions are very good but they just don’t seem steered towards that “culture core” and they come across as very top-down. The lack of accountability at the top for creating this environment or allowing it to grow is also puzzling. It’s great to use the safety issue as a key area to focus on changing that environment but it will not absolutely prevent issues like this until they focus more clearly on culture & leadership.

      They need to create an environment where there is absolutely zero chance a situation like this would ever happen again due to the ownership of safety results that pervades every part of GM (instead of the cost reduction / control focus). They are hitting many aspects of the formula but missing some of the most critical.

  • BarbaraKimmel

    Keep dreaming Tim. As soon as the token fine was levied, Mary Barra changed her tune. It’s textbook stuff that we’ve seen over and over again. Culture is “so yesterday.” Pay the fine and back to the same old same old.

    • Tim Kuppler

      I’ll keep holding out hope Barbara. Hopefully culture isn’t viewed as “so yesterday” by too many but maybe it is. More pain, fines, and embarrassment will follow if something doesn’t change.

      • http://www.savvycapitalist.blogspot.com TedCoine

        I’m with you, Tim. Unhealthy cultures are more expensive (or less profitable, take your pick). Sooner or later, even the most hidebound and unenlightened among our legacy enterprises will come around.

    • http://www.savvycapitalist.blogspot.com TedCoine

      LOL – Barbara, we’d shut down this website today if we thought that, as a community of purpose, we can’t effect the change to a healthier culture that Tim espouses. As frustrating as the dinosaurs can be to change, they’ll come around – or go extinct, replaced by competitors with healthier cultures.

      • BarbaraKimmel

        Yes Ted. The dinosaurs will (and should) go extinct. But if they continue to be bailed out and let off the hook with token fines, there is no incentive for culture change. Kind of like the child whose parents never say “no.”

        • http://switchandshift.com Ted Coine

          110% agreed. When someone (in this case, the US government) gives money, there should be strings attached – in this case, “Here’s the bailout you need to stay afloat and keep all those jobs in the US. Now let’s work together to break your company up into many smaller, independent ones so that ‘too big to fail’ is never a phrase we need consider again.” Having said that, it is indeed remarkable that GM paid back its bailout so quickly. A true case of government intervention gone right.

          My issue about those strings and the practice of bailout when companies are literally too big to fail leans even more to the banks than to GM. The notion that central banks in any country would give money in the hopes that bankers then lend that money to stimulate the economy… um, hope isn’t much of a strategy.

          So glad to see you on S&S. You’re a leader whose work we’ve admired here for years. Indeed, at least two of our Leaguers (Jamie Notter and Frank Sonnenberg) are in your Top 100 – I’m sure more, as well as more contributors.

          Friends, if you’ve never been to http://www.trustacrossamerica.com …Now’s you’re chance! You’ll find it a remarkable resource.

  • Phil

    Getting rid of the list of banned words would be a great place to start.

    • Tim Kuppler

      You must be referring to the training they did internally on “words to avoid” and “suggested replacements.” They gave the example of “problem” being replaced with “issue, concern, or matter.” I guess the “issue” has turned into a “crisis.”

  • Pete

    An interesting article, and one that addresses the core issues that need to be addressed at GM. I do feel that your surprise that a major international company can display such disfunction is, in itself, surprising.
    I recently worked at an executive level for a small, well established manufacturer. I was brought on to grow a business that had been flat for years and, within my first few weeks, began identifying ingrained cultural issues that were at the core of the companies acknowledged problem. I raised these issues at our executive meetings and in one – on – one meetings with the president, giving examples and suggesting changes.
    Ultimately, after less than a year, I was let go as I was deemed a “bad cultural fit”. My point is that, in many organizations, the issues that may be obvious to the rank and file employees, the customers, the competition and the suppliers, may be to challenging for management to acknowledge. I would suggest that issues like those that surfaced at GM are more common and more deeply rooted in businesses of all sizes than we would like to admit. The “Canary in the coal mine” is more often silenced than heeded as maintaining the path of least resistance appeals to most managers.

    • Tim Kuppler

      Pete, thank you for sharing and I completely agree with you. Many top leaders and business owners would rather continue to manage the way they have in the past rather than look fear in the face and transform their organization to something that is truly special. Many people share your story and frustrations.

      You fortunately acted on what you knew was right even though it negatively impacted you in the short-term. The VERY specific insights on how to deal with culture issues and opportunities are not well understood and they are diluted by all the over-simplified popular press on the subject of culture. We all have experienced the power of culture in our own way and fortunately there is a growing trend of leaders ready to take on meaningful change.

  • Robert Hein

    Tim, thanks for the well written article covering this important topic that only seems to get the typical 30 second media spot in the news. I also wish I could share your optimism that GM can and will change. But as long as their shares are rising and people are still buying their cars there is no real motivation. Secondly, as much as Mary Barra may want to change the organization, she is only one person. If her senior management team is not 100% behind her, the changes will be superficial and short-lived.

    • Tim Kuppler

      Great points. This crisis had a direct impact on the lives of many people. It would hopefully over-shadow share price but the cost culture of GM will take years to change. You are right about her being one person and who knows if the entire senior leadership team is behind her. They probably think they are already covering this issue at a deep level but you definitely aren’t hearing about her engaging teams at all levels to really change things.

    • BarbaraKimmel

      Don’t forget about the composition and role of the Board in supporting the CEO.

  • Bee Heller

    As I read your article Tim, I had a looming sense of deja vu as I was reminded of the Mid Staffordshire Hospital scandal in the UK and the cultural failings that led to numerous patient deaths and unnecessary suffering. The context may be different but the story is the same: culture plays a huge part in shaping people’s behaviour in large organisations. The worst part (or best if we’re looking for ways to affect change) is the failures are predictable. Psychological studies have shown how human beings behave in predictable ways in certain contexts. I wrote a blog about the psychology at play behind the Mid Staffs Hospital scandal (http://thepioneers.co.uk/blog/3-predictable-cultural-failings/) but I think a lot of the same issues are at play in GM and, although not explicitly, also are a theme throughout your article. Anyway I thought sharing the blog might add another angle to some of the issues being discussed here.

    • Tim Kuppler

      Very interesting. Thank you for sharing. There was an issue with the link so here it is for others: http://thepioneers.co.uk/blog/3-predictable-cultural-failings/

      The Asch Conformity seems to be the part that is especially consistent.

      “Asch Conformity – where individuals conform to the choices people around them make, even when these choices are obviously erroneous. In the 1951 Asch experiments individuals are asked to choose which of a group of three line segments matches the length of another single line. The choices people made were heavily influenced by the choices of other people in the group (even though these had been set up to be wrong). This demonstrates that, even when it is wrong, the prevailing opinion is very difficult for people to ignore. In Mid Staffordshire Hospital, staff were unwilling to speak out against the prevailing view. There was a common fear among staff of being disloyal to their employer.”

  • S A Smith

    “Culture eats strategy for lunch”….think Tom Peters said this.
    “Culture is what happens when the boss is not around”…
    I taught a course in Las Vegas about 8 years ago…about 15 GM managers attended and it was SO obvious they were on a huge, self entitled boondoggle…just wanted to take the manual, run and get credit for the class. Others in the class from other companies and I agreed then that we’d never by a GM car….

    • Tim Kuppler

      “Culture eats strategy for breakfast” was popularized by Peter Drucker but many have talked about the connection. I like your “culture is what happens when the boss is not around.” So true!

  • http://greatmanagersaremademyblog.wordpress.com Steve Sapato

    Hi Tim! Great article and well worthy of note as way to many corporations pay little or no attention to the management styles and therefore the leadership of their companies. I had the task of training a group of middle managers at a major coporation a while back and my simple question was, who would like to be happier, healthier, have better relationships and possibly make more money? All hands went up. I then asked of these managers, who is willing to do one thing to make that happen? And not one hand went up. I repeated my original question and all hands went up again. So I asked again, who is willing to do one ting to make that happen and again, not one hand went up.
    I was stunned. Not one manager was willing to do anything, was even willing to ask what that one thing might have been. They were happy in their complacency.
    It spoke volumes to me about their ‘culture’.
    I truly appreciate you speaking out about culture and look forward to learning more about how you will recommend affecting cultural changes in the corporations we are training.
    Steve Sapato http://www.mentalprosperityblog.com

    • Tim Kuppler

      Interesting story. The only positive was that people were straight with you about no plan to take action. At least you knew what you were working with versus the GM Nod and GM salute where people might act like there will be action but there is no follow through.

      I am glad you also raise the point about culture and training. I would guess literally billions of dollars are being wasted on training in organizations where the broader culture issues are the barrier to meaningful change and an excellent training program will not make a bit of difference. Start fixing the foundation culture issues in a meaningful way, layer in training on areas to support the behavior shift, and then you have a powerful combination.

  • http://batman-news.com Hurricane

    The CEO of Target resigned. He accepted that as the leader of the company he was ultimately responsible for the data breach affecting millions of consumers, yet no one died. This is integrity and leadership. The fact that GM’s CEO will fire others but stay on as the “leader” of the company shows an appalling lack of integrity. If you hope to see any change at GM stop buying GM vehicles and tell them you’ll consider purchasing again when the CEO and senior leaders accept responsibilty and step down. These people only care about money. The fact that this went on for eleven years knowing that millions of people were at risk proves it.

  • Robert

    “Rarely do we have a chance to pull back the covers and see a culture with some serious dysfunction that still accomplishes amazing work on a global scale in spite of it all”. I found this particular statement to be very profound, the culture of the organisation very much dictates how matters are dealt with whether they be safety, customer, client or efficiency related. Organisations need to move from reactive positions and start tackling issues head on. A collection of committees as demonstrated in the GM case does not in its self address matters at hand

    • Tim Kuppler

      Thank you for the feedback. You are highlighting a point that I wanted to probe more deeply but i was trying to keep the article at a digestible length. The investigation revealed many major issues, like the committee approach with lack of accountability, that not only impacts this safety issue but countless other customer, efficiency or other problems. I bet at least some of the committees and groups that support the GM cost reduction efforts don’t lack that ownership or accountability in some form or that cost reduction emphasis would never “permeate” the entire culture.

      I led some pretty large organizations where we created “business team charters” that highlighted roles, responsibilities, objective formats, communication / reporting and other fundamentals that were critical for team operation. All “business teams” covered these bases whether they were a functional or cross-functional team. My point is that the major safety issue creates an initial area to focus improvements AND the organizational learning of the entire organization so people start naturally applying what works well to other areas.

  • Rachel

    Tim
    In these initiatives where there is a requirement to make a significant change in culture I feel that there should be a strong focus on creating an agreed and “safe” environment where leaders can change. I haven’t seen many articles or examples of where this has been done successfully, if you know of any that you could share that would be of interest to me

    • Tim Kuppler

      I agree with your comments. I like to use a process I call “building culture muscle” to help engage employees in a positive direction and to reduce fear. We’re not hearing anything about Mary Barra or others reaching into their organization and being the example to create that safe environment to hear what she needs to hear as a foundation for doing what they need to do. I have experienced plenty of specific examples but I can’t point to an article.

      The first time this is done, ideally with open-ended questions (I like some questions that are future oriented and based on appreciative inquiry concepts), a fraction of the truth is revealed. It’s critical to prioritize a small number of improvements as a team, without great analysis, and then leaders must take action to support improvements in a constructive way. If there is action in a positive direction then the next time leaders engage that team or others with the same process they will hear even more of the “truth” and the cycle continues so it’s like building a muscle. It only strengthens with practice, positive results and great sensitivity to being open and encouraging about hearing ANY type of feedback.

      I have seen the process take hold in some organizations where you then see a dramatically increased frequency of groups meeting, prioritizing as a team and leaders supporting / enabling those actions. It’s unfortunate that many leaders short-circuit the process and unintentionally, in some cases, drive fear (http://www.tlnt.com/2014/05/14/workforce-fear-not-only-a-disease-but-also-the-ultimate-culture-killer/).

      The leader sets the tone and any mixed messages will only reinforce the presence of fear (like GM terminating 15 employees but not even referencing the role of culture and leadership in allowing the entire situation to exist).

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