GM and the “Switch From Hell”

That’s the label the GM engineer who designed the faulty ignition switch that was first used in 2003 gave to his own baby. Oh, and when engineers learned that the ignitions were going into the off position, thereby shutting off the engine, randomly, at highway speeds, they labeled it an “issue of customer satisfaction, not safety.” Sure, it is a pesky thing to have your car stop suddenly on I-95. Being a sitting duck on a freeway whilst cars approach at 70 mph is a bit more than a “I’m not crazy about my Cobalt” type of complaint. In 2011, lawyers warned GM that it “could be accused of egregious conduct” because it was not following up on accidents, deaths, customer complaints, and continuing problems with the switches and airbag deployment. Still, no action was taken.

As amazing as these disclosures in the Anton Valukas report for GM are, what is worse are the conclusions. “Dysfunction,” “Bureaucracy,” but no “conspiracy.” CEO Mary Barra has fired 14 people and reorganized the company so that there are now reporting lines to officers regarding vehicle design and safety. Now there’s a novel idea — executives knowing what’s going on in their companies? What next? Accountability?

Mr. Valukas offered a lawyer’s report. The report threads the needle to prevent its use in product liability suits for possible punitive damages. But, by focusing on legal issues of “no conspiracy here,” the report misses the cultural issues. The report does not answer this basic question, “Why would these engineers and anyone else who was aware of the problem believe that it was okay to not fix the switches, to not follow up on root-cause analysis, and to not make the information public?” We know that they were bureaucratic. We know that they remained silent. We know that things were not fixed. We knew that before the first gumshoe headed out to gather 14 million documents from the company. What we still don’t know is why.

Ms. Barra told employees in a speech following the report’s release that if they see a problem affecting safety that they should talk with their supervisors. And if their supervisors are not handling it, she told them “Contact me directly.” A good start, but she still needs to look at why no one was doing that before. Compensation systems, fear, perceived inaction or lack of response — all of these are factors that influence employees’ lack of action. “Incompetence and neglect” are the symptoms. We still do not know the cause. The unexplained is why everyone at the company remained silent about both.

If the report is correct, the waters of inaction run wide and deep in GM. A speech by the CEO will not effect change. Culture change requires signals. What Ms. Barra needs to do is what Alan Mulally at Ford did in order to get employees to bring bad news to him. He promoted the manager who was the first to speak about problems in the company. That manager is now Ford’s CEO. Ms. Barra has fired 14 people and done the usual shuffling of the deck chairs, but what she needs is positive reinforcement. She needs an opportunity to recognize those who come forward with issues and encourage all supervisors and managers in the company to do the same. And she might want to see what impact deadlines, budgets, and corresponding incentives had on creating GM’s culture of silence that allowed the incompetence and neglect to trump safety.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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