The Challenge Faced by General Motors
In 2014, General Motors conducted a recall of approximately 800,000 small vehicles due to a faulty ignition switch (Pope, 2018). The defective mechanism could shut off the engine as the vehicle was in motion, which would prevent the inflation of the airbags. A few months in, General Motors would recall almost thirty million cars worldwide. 124 deaths were directly associated with the malfunction, which General Motors paid compensations for. The most detrimental aspect of the situation arose when General Motors admitted to having known of the issue at least a decade prior to the recall. While engineers, investigators, and lawyers at General Motors knew of the design defect, the managerial team of the company decided to keep the flaw a secret due to the costs of recalls.
Cases of brain damage, amputation, and quadriplegia increased, while General Motors considered 124 deaths to still be a low number of casualties in comparison to general rates of vehicle-related deaths. Within the company, the design defect was widely known. The problem with the ignition switch was due to two specific requirements that were not met. Though the engineering defect is an issue in itself, it could be avoided if the recall began at the earliest realization of the flaw. However, General Motors faced an ethical challenge in debating whether to save cost and continue sales or recall the vehicles and lose substantial capital. General Motors decided to pursue sales for a decade until deaths and injuries became increasingly visible and lawyers of the affected were able to find the cause of the accidents.
The Response of the Management Team
Anton Valukas, a former US attorney, compiled a report that concluded that the managerial, engineering and legal teams knew of the defect since 2001 (Eifler and Howard, 2018). None of the individuals involved came forward with this knowledge in the thirteen years. Only in 2014, did the recalls begin, with the collection of vehicles with faulty ignitions as well as general poorly engineered products and cars. This displayed the neglect and secrecy within the company culture that the management team adhered to. The consequences of the hidden issue were very severe for both consumers and producers, in this particular incident, the needs of the two are almost directly opposed. The problem is expanded by the fact that some countries do not have an external, independent overview of a product that is innovative and new on its launch in the market. Accidents are likely to happen with any vehicular model due to circumstances and human error which cannot be attributed to any party. However, the neglect of quality and secretive nature of the design flaw that the management team at General Motors perpetrated suggested that the 124 deaths were no longer due to these factors. The lack of reporting and breaches of safety on behalf of the engineers, legal representatives, and other involved personnel contributed to the incident.
In slight contrast to the ignorance of previous executives, the newly appointed CEO of General Motors, Mary Barra, acknowledged the issue in a public manner. Barra also initiated a full investigation and stated that General Motors would compensate and resolve the issue without consideration of costs (Stanisic, 2018). Though the open approach may have been risky, it displayed a change in the corporate culture of General Motors which may hold integrity above the company’s economic value. Barra continued to make changes and highlight transparency within the company with programs such as ‘Speak Up for Safety’. This culture allowed employees to report issues without the fear of punishment. Though not directly intended, her alterations assisted General Motors in increasing stock prices and reaching the highest value it has ever had.
Critical Analysis of Response
The corporate culture and response of the managerial teams were directed by interest-oriented ideologies. It is an approach that favors the organizational interest over all others while supporting the domination of one group over its competitor. The culture at General Motors can be summarized as what benefits General Motors benefits the country, and vice versa (Klikauer, 2017). It illustrates an ideology in which the success of the company is synonymous with the success of the nation, though that is not always true. As such, it was expected that the personnel working at General Motors at the time may adhere to this business philosophy and prioritize company interests over the well-being of the consumers. Though these actions adhere to General Motors’ values at the time, they are unethical in both humanitarian and business-oriented capacities.
An ethically conscious company is likely to prioritize the satisfaction, well-being, and needs of the customer alongside their own interests, but not after. Due to the fact that the past ideology of General Motors was based on self-preservation and greed, their response did not meet the expected ethical guidelines. However, it should also be acknowledged that after Barra’s involvement and changes to the company during the ignition switch crisis, many of the issues were addressed and resolved. The recall was the first and primary action that led to General Motors improving its business ethics. The significance of transparency initiated by Barra through programs also sparked associations within the company that addressed issues female employees had. This led to other organizations within the company that addresses issues faced by minorities working within General Motors. Though initially considered unconventional, these actions were future-oriented and proved successful as General Motors was able to escape a crisis and continue to observe economic growth.
Though the responses and initiatives driven by Barra improved the situation at General Motors, a reaction to the design flaw should have come much earlier from the prior managerial team. The previous personnel should have foreseen the catastrophic effects the design flaw may have had, as any engineering flaw within the vehicle industry should be considered and tested thoroughly and seriously. General Motors were likely to lose monetary value if the recall was initiated within the timeframe of the identification of the defect. However, the cost would most likely have been smaller than what General Motors paid in lawsuits, compensation, and recall costs a decade later (Trautman et al, 2018). The early response would have to have been initiated by better communication between legal, engineering, and managerial teams. The engineers should have been clear about the severity of the issue and would have benefited from more authority within the company as they are the only ones that can identify the physical issue. Both the legal and management team should have had more responsibility and acknowledgment of both the ethics of business and international law. It is likely that the neglect and fear of punishment that drove the secrecy within the company were due to the hostile work culture of General Motors at the time. As such, steps were taken by Barra with further improvements in company communication and humanitarian over business values, and General Motors increased in product quality, consumer-producer relationship, and workplace culture.
Eifler, Tobias, and Thomas J. Howard. “The importance of robust design methodology: a case study of the infamous GM ignition switch recall”. Research in Engineering Design, vol. 29, no. 1, 2018, pp. 39-53. Springer. Web.
Klikauer, Thomas. “Business Ethics as Ideology?” Critique, vol. 45, no. 1, 2017, pp. 81-100. Routledge. Web.
Pope, Kenneth, S. Five Steps to Strengthen Ethics in Organizations and Individuals: Effective Strategies Informed by Research and History. Routledge Focus, 2018.
Stanisic, Biljana. General Motors CEO Mary Barra – Leadership style analysis Individualassignment – Critical essay. 2018. Linnaeus University, Master’s dissertation.
Trautman, Lawrence, J. et al. “Teaching Ethics and Value in an Age of Rapid Technological Change.” Organizations & Markets: Motivation & Incentives eJournal, 2018. Web.