The Public Relations Strategist

How a Culture of Secrecy Plagued GM

July 15, 2014

There is an old saying in politics: “If you want to get along, go along.” In other words, keep a low profile and don’t make waves, even if something questionable is going on. That seems to define the previous culture at General Motors.

In years past, GM’s culture has favored cover-up over candor and legal considerations over customer safety. And the company concealed product defects from the public, dealers and top management, while customers were crashing cars and dying from problems that GM could have, and should have, fixed.

In late May, Harry Wilson, a former auto adviser for the Obama administration, said that the company’s current crisis is par for the course. “They would do anything to save a penny, including some really bad decisions, both economically and morally,” Wilson told The Detroit News. “That was a part of the culture that was driven by a company that was living on the brink of disaster for many years prior to 2009.”

It’s going to take a drastic change in the way GM executives view its products, customers and societal responsibilities to turn its image around.

New leadership, new culture?

The culture of secrecy seems inbred at GM, for which a string of former CEOs can be blamed.

In any company, values and ethics come from the top down, not from the bottom up. Top management sets the moral tone and, while cutting corners and cover-ups are never publicly encouraged, employees usually understand where the boundaries are.

A company whose culture results in turning a blind eye to safety problems invites crisis, and in this case, disaster.

Mary Barra, a longtime GM executive whom the automaker named CEO on Jan. 15, has insisted that she’s leading a “new GM,” one whose corporate values have been rewritten to banish the cost-first, safety-second mentality of the recent past. So far, her record has been uneven.

On Jan. 31, Barra reportedly first learned the details and lethal impact of the flawed ignition design, spurring massive recalls of 13.6 million vehicles. GM initially acknowledged 13 deaths from its faulty ignition switches, but that total will likely go much higher. (By July 1, GM had issued more than 40 recalls this year, totaling nearly 29 million vehicles worldwide. Of these, GM recalled 6.5 million of the vehicles specifically for ignition switch-related issues.)

The ignition debacle has a history of poor communication. For example, GM refused to publicly reveal the names of those killed because of the problem. Employees say they didn’t take notes in meetings about the problem because they thought that the lawyers didn’t want them to. And families of victims claim that GM lawyers withheld crucial information from them in settlement discussions.

Barra has made some right moves in the face of this questionable history. She has held face-to-face meetings with journalists, families of victims and GM employees. She has cooperated with regulatory authorities and started to mend relations with customers and shareholders. She has ordered more recalls, launched an internal investigation and hired a vice president for global vehicle safety.

But she has made some wrong moves as well. For example, after a damaging internal GM report on the situation came out in early June, Barra fired 15 people and disciplined others. But she refused to reveal the names of those terminated or their severance terms. And GM told employees not to publicly discuss what others said at her recent internal town meetings.

That is hardly a culture of openness and transparency.

Judging by news stories about the report, the legal department appears to have shared little information on the fatalities with other departments, including corporate communications and even top management. It’s hard to believe that PR professionals would have recommended a cover-up policy if they had known what was going on.

Barra delivered a mixed performance during the congressional hearings in early April. Citing the ongoing internal investigation, she often deflected lawmakers’ questions about why GM didn’t immediately reveal and fix the ignition-switch problems that led to the deaths. (On April 6, “Saturday Night Live” mocked Barra’s testimony, with cast member Kate McKinnon answering all questions with “We are looking into that.”) There were too few answers and too much “later.” One congressman referred to some of her testimony as “gobbledy-gook.”

But the spotlight on Barra seemed to be fading. At the June 10 shareholder meeting, only 29 people attended, not one asked about the ignition defect, and only a handful of protestors were outside the meeting.

However, Barra returned to Capitol Hill to face the Justice Department and other lawmakers on June 18.

“I want this terrible experience permanently etched in our collective memories,” Barra said in prepared remarks to the congressional committee.

On that same day, a complaint that attorneys filed  with the federal court in Riverside, Calif.,  says that GM should compensate millions of car and truck owners for lost resale value, potentially exceeding $10 billion. 

Fixing the problem

Restoring trust and confidence in GM has to start with a commitment to truth and transparency at all levels, breaking down the silos that breed secrecy. Barra should make it clear to all employees that this will be the standard of her “new GM” and that tolerating an unsafe GM car or remaining silent about one is a firable offense.

Will the future bring a new, stronger, trusted GM or a reversion to old habits and policies? Time will tell. Eliminating the code of silence is job No. 1.

What can we learn from all this?

  • A culture of secrecy invites disaster.
  • With any situation that could endanger lives, someone should immediately bring it to the attention of top management and the board of directors.
  • GM and other companies should seriously consider establishing a “whistleblower hotline,” where employees can anonymously report cover-ups, deception or matters affecting product safety.
  • PR professionals must become involved when any problem is discovered that could affect public safety or a company’s reputation.
  • Management must cultivate a culture of openness, honesty and commitment to doing the right thing. 
Virgil Scudder
Virgil Scudder is the author of “World Class Communication: How Great CEOs Win With the Public, Shareholders, Employees, and the Media,” which received an Award of Distinction as one of the best business books of 2012. Email: virgil@virgilscudder.com.

Comments

Williams Ekanem says:

Scudder's great piece on reputation management at GM is a show case of an organisation where accountants and lawyers are in charge. It is time for strategic communications, both internal and external to be at the drivers seat at GM.

Sept. 1, 2014

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