The General Motors Cultural CrisisGeneral Motors

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Introduction

General Motors (GM) is one of the largest car manufacturers in the United States and an industry leader. However, despite the company’s competitive advantages, it also faces internal and external challenges. GM’s cultural crisis in 2014 led to technical problems in the ignition of automobiles, resulting in the death of several people and the recall of cars (Kuppler, 2014). This event was the impetus for a change in the internal culture and leadership of the company. Consequently, this paper will consider the features of the organizational culture and leadership style of General Motors presented in the case study to determine the impact of these aspects on the activities of the company.

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Organizational Modeling

The organizational model of General Motors is custodial. This model implies ensuring the economic and social security of workers but pays less attention to their motivation and personal development (Christiana, 2018). For example, the provision of benefits, high wages, and health insurance are employees’ motives to do their job. However, this model reduces the dependence of employees on managers and their responsibility to them. Consequently, like General Motors, employees can shift blame to other employees or departments.

Alternative models are autocratic, collegial, supportive models. Due to the autocratic model, the boss dictates the rules and orders to which employees must obey or be punished. The collegial model implies the joint work of colleagues in which there is virtually no leader and subordinates, and all decisions are made together (Christiana, 2018). The supportive model is based on a strong leader who takes into account the needs of employees, motivates, and directs them, but does not control or interfere with their work. The systemic model combines a leader who pushes employees’ development and a sense of importance by engaging the emotional side, as well as support with resources and rewards (Christiana, 2018). These models are the most common and have their advantages and disadvantages.

In general, there are many reasons to apply a particular model in different companies, for example, product type, or organization size. General Motors uses the custodial model as this approach is the easiest for the management. The company has sufficient resources to provide its employees with material support, but at the same time, the complexity and hierarchy of its structure require an effort to apply other models. For example, the collegiate model is convenient for small companies or departments, while General Motors needs a more definite structure to ensure the accountability of all departments and brands. The supportive model also has drawbacks as in automobiles manufacture, the accuracy of every employee is required, and the lack of supervision can lead to negative consequences. The systems model is the most effective in the industry because it provides control and interaction; however, the organizational culture of General Motors did not allow its application.

Organizational culture has an equally significant impact on all organizational models since it affects employees’ performance, responsibility, and interaction. The General Motors case demonstrates that the peculiarities of the company’s culture were the shifting of responsibility, the fear of arguing with the leaders, a lack of conscientiousness, and a sense of urgency (Kuppler, 2014). Moreover, such principles were inherent in all levels of the hierarchy, with the result that important issues were simply ignored. A similar culture in any organizational model would lead to the same results since poor performance leads to negative consequences. For this reason, while the organizational model is not unique because many large and small companies use it, it is characterized by a weak organizational culture that does not encourage employees to perform well. Moreover, the case study demonstrates that the motivational model practically did not shift after the incident, since the main emphasis was on finding the culprit but not on changing the culture. The only shift was encouraging employees to report security issues (Kuppler, 2014). However, it is not known whether this had a real effect on employee performance and interactions.

Evaluation of Leadership Style

Although the organizational model is custodial, GM’s leadership style is autocratic. This type of leadership differs in that the boss mostly gives instructions and orders but does not listen to the recommendations, questions, and concerns of employees (Tang, 2019). This style manifests itself in the fact that Barra was unaware of the security issue, probably, because her employees were afraid or did not see the point in communicating their concerns. Firing fifteen employees is also a manifestation of autocracy since the company’s problem was organizational culture, and firing the “guilty” was more a manifestation of managers’ power (Kuppler, 2014). In addition, such relationships between the manager and subordinates impede adequate and deliberate decision-making, since the leaders do not have and consider all the facts to give orders. This feature became the cause of the problem of the safety of cars and the death of people.

However, in the changes proposed by Barra, one can see a shift in governance. First, Barra changed the communication system so that senior management was at the center of the problem. In addition, attention was focused on the importance of communicating with employees to be aware of all issues and concerns. Consequently, a shift in leadership style has taken place in improving the quality of communication with employees at different levels. The most significant reason for these changes was outside pressure from the press, and the public over the car recall scandal, since the company needed to take action to protect its reputation. The internal factors were awareness of culture and leadership problems, as well as listening to the needs of employees, which could no longer be ignored. In other words, the cultural crisis has highlighted the need for change, and one of the key steps to overcome was changing leadership style.

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Organizational Culture

The case study demonstrates that General Motors has many problems with an internal culture that have led to the scandal. A good organizational culture consists of several elements, among which a shred purpose or values, good communication, and effective leadership, but the GM did not have them (Christiana, 2018). While GM had a goal of making a profit and gaining a competitive advantage, the internal culture did not have shared core values ​​that employees could follow. Top executives’ messages point to this factor as they have changed and contradicted each other all the time (Kuppler, 2014). Consequently, the key values ​​of safety and uniqueness were not established either for employees or the company.

Lack of communication is also an organizational culture problem, which is evident in the fact that the highest management levels were not aware of the security issue. In addition, features such as the GM Salute and the GM Nod, which reflects in shifting responsibility and disrespect for managerial decisions, are also examples of poor communication (Kuppler, 2014). If employees and their leaders had a team spirit and shared values, constant communication would not allow shifting responsibility. This aspect is also the result of a lack of an effective leader who inspires and motivates employees and creates and maintains organizational culture principles. As Kuppler (2014) emphasizes, the changes proposed by Mary Barra are superficial, and they do not change the organizational culture and leadership approach. Therefore, these shortcomings must be corrected to avoid future problems in the company.

Insights and Conclusion

The General Motors case demonstrates that the leadership style and internal culture of the company complement each other as they are based on the same principles. First, the leader influences his subordinates by establishing, promoting, and controlling the principles of the culture; for example, managers’ reluctance to listen to questions and recommendations from employees leads to an unwillingness of employees to take responsibility. Lack of shared goals and cultural values ​​deprives employees of the motivation to take the initiative and communicate their concerns.

Changes in leadership style and organizational culture also affect each other. The leader guides the organizational behavior of employees and managers at all levels, setting an example and controlling the activities of the company. At the same time, in the conditions of a strong and open organizational culture, an autocratic leader cannot work effectively, since the decisions of such a manager are constantly doubted, or he or she gradually changes the organizational culture. The GM example also demonstrates that leadership style and internal culture also influence employee behavior. These aspects are so vividly represented in the company’s activities that they got their name, such as GM Salut and GM Nod, as well as the lack of a sense of urgency. Therefore, while GM’s safety problem was a technical issue, all indications point to the need to change the internal culture to improve GM’s performance.

References

Christiana, M.B.V. (2018). Organizational behaviour. New Delhi, India: Educreation Publishing.

Kuppler, T. (2014). The GM culture crisis: What leaders must learn from this culture case study [PDF].

Tang, K. N. (2019). Leadership and change management. Singapore, Singapore: Springer.

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BusinessEssay. 2022. "The General Motors Cultural CrisisGeneral Motors." May 12, 2022. https://business-essay.com/the-general-motors-cultural-crisis/.

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