Rubbernecking the General Motors Crisis
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Jun 12, 2014

Rubbernecking the General Motors Crisis

By Fred Schmalz

Mary Barra took over as CEO of General Motors in January 2014, and the company’s check engine light came on almost immediately. By March, the company had instigated the largest automobile recall in history, with millions of cars recalled because of a faulty ignition switch tied to at least 13 deaths and dozens of injuries. People within the company had known about the problem, but nothing had been done to correct it. For Barra, the timing couldn’t have been worse.

Having slowly emerged from its 2009 bankruptcy and government bailout, the company seemed to be gaining momentum. Now it appears GM will be digging out for the foreseeable future.

With the company facing fallout from both internal and governmental investigations, recall costs that will reach into the billions, potential fines, and wave after wave of negative press coverage about the company’s handling of the crisis, many in the business community, including Kellogg School faculty, are keeping close tabs on the situation. Insight spoke with two faculty members to get their take on different aspects of the GM crisis.

Alice Eagly is a professor of psychology at the Weinberg College of Arts and Sciences and a professor of management and organizations at Kellogg who has written extensively on gender and leadership. She sees some validity to the “glass cliff” phenomenon about the timing of Barra’s appointment:

“When she was appointed, somebody asked me about the glass cliff, and I said, ‘I don’t think so, General Motors is doing pretty well.’ Now I think, ‘they knew all about that and Mary got chosen.’ It looks like a classic glass-cliff phenomenon.

"When women do get chances in leadership roles, it is often peculiarly risky. General Motors now has all kinds of problems, which had to have been known. They surely knew that these things were going to become very public. And guess whom we get as CEO? This very nice woman.

"In some situations the stereotypical qualities of women—like an ability to resolve conflict, getting along with people—might be useful. If the company’s having internal difficulties, maybe a woman can fix it with her mysterious feminine management skills, right? But also, there’s the issue of it being just sheer risky—no intelligent man would take it, perhaps because there’s too much chance his career would be ruined. Having fewer options, women may be pushed into it: ‘Ah, we’re giving women a chance, it’s very progressive.’ It may be very dangerous, too.”

What interests management and organizations professor J.Keith Murnighan is the fact that GM’s corporate culture kept news from reaching the company’s top management.

"One of the things we see historically that can lead to disaster is when you don’t encourage employees to take on leadership roles when appropriate. At GM, it seems likely that fear led people to hide this information. GM’s general counsel didn’t know about it. It never filtered up that far. Somebody should have been running to his door the first time that was discovered.

"You need to develop an atmosphere of trust. When you’re a leader, you want people to bring you bad news right away. Instinctively, they don’t. So it’s up to you to create an atmosphere that supports them in doing that, so they don’t think they’re going to get their head chopped off. All you have to do is have somebody that raises one issue and gets squashed for it, and everybody else disappears.

"If you have one person who raises a small issue and they get rewarded for it, people open doors, people walk through and tell you stuff. It makes a world of difference. And it’s very subtle but very clear what you have to do. Too many people, their natural tendency is to dwell with fear. We all understand that, but it’s not only self-destructive, but organizationally destructive."

Photo by John F. Martin for General Motors
* interviews condensed and edited for clarity