Mary Barra made a brave and ethical decision, and I admire her for it. One of her first decisions after becoming CEO of General Motors in January 2014 was to recall 1.6 million autos sold with defective ignition switches before GMs 2009 bankruptcy, which had released it from legal liability for such errors. These switches were installed in certain Saturn, Chevrolet and Pontiac cars during the 2001-2007 model period. The first-quarter recall was later expanded to 2.4 and then to 6.3 million cars and trucks (some for unrelated defects) through the 2011 model year.
This was no ordinary recall. Thirteen deaths had been linked to accidents which had resulted from an unexpected shutdown of engine, air bags, power brakes and power steering. An internal team had identified the defective Delphi part as far back as 2004, but top GM executives had been kept insulated and uniformed. To keep costs low, no corrective action was taken. Instead, dealers were asked to tell owners to eliminate heavy key chains, since the added weight could cause the ignition switch to fail. The National Highway Transportation and Safety Administration, which was aware of the accidents, now says that it had not been given sufficient information, as required by law, or it would have investigated earlier.
Barra made the right decision, but it was like opening Pandoras Box. It has been rumored that some senior executives advised against it, but she went ahead with the recall, hired an outside law firm to learn why it had not occurred a decade ago, established a new safety czar position, apologized to the families of those affected, and set aside $300 million (later expanded to $750 million) to cover repairs for this and other current recalls. Her company, well aware of Toyotas recent $1.2 billion criminal penalty for failure to report all the details of its unintended-acceleration investigation, is now facing a similar Justice Department inquiry, more congressional hearings, and the possibility of a massive payout. In addition, class-action lawyers are circling, as they did in the Toyota case – not with personal injury or death lawsuits, which were blocked by the bankruptcy, but with claims for the lowered resale value of the affected cars.
Mary Barra has shown that she is serious about GM product quality and safety. She knew that her decision would be a significant hit to her companys public relations and profitability, but shes looking to the future, hoping that her actions will help erase what had been the excessively self-confident, and even arrogant, image left over from General Motors former glory days. Its a different world now, and shes making a huge effort to regain customer confidence.
A difficult decision like this one must be made quickly and decisively. Had Ms. Barra dithered, it could have been much worse – particularly if pressure to take appropriate action had come from outside the company, as was the case with Toyota.
This saga is still unfolding; we will see what develops.
Jack Goodhue, management coach, may be contacted by e-mail at goodhue@aol.com.