General Motors – A Culture of Dysfunction

Recently, the Wall Street Journal discussed the scathing portrait of the General Motors Co. corporate culture, painted in the 315-page report on the company’s mishandling of deadly defects in ignition switches in up to 2.6 million cars.

You can read the full report by Anton R. Valukas here.

Before we dive into the report, let’s take a look at how GM describes its culture:

DESIGN, BUILD AND SELL THE WORLD’S BEST VEHICLES

We think big and move fast. We value simplicity, agility and believe in action. We believe in accountability from every member of our team and we demand results from everyone. In short, the GM culture is all about creating excellence — and providing our team members with the momentum they need to contribute to that success.

We have focused leadership in every area of the company, and with fewer brands, we can put more resources into our core brands, resulting in quicker production and, ultimately, better products.

GM is a place where you have the opportunity to grow personally and professionally through a powerhouse of talent and collaboration worldwide. And, your career can take you to work on different brands, in different lands, on different global teams. At GM, we’re moving forward, and we’re taking you with us.

GM GOALS

In order to achieve our goals, GM has remained committed to the following formula for success:

• Move faster and take risks to achieve sustained success, not just short-term results
• Lead in advanced technologies and quality in creating the world’s best vehicles
• Give employees more responsibility and authority and then hold them accountable
• Create positive, lasting relationships with customers, dealers, communities, union partners and suppliers, to drive our operating success

Sounds inspiring, right? Now for some highlights of the report:

• A Dysfunctional Culture: ‘The GM Nod’ and ‘The GM Salute’

o   Page 255: The “GM Salute” and the “GM Nod.” Solutions proposed, die in committee. “But determining the identity of any actual decision maker was impenetrable. No single person owned any decision.”

o   “One witness described the GM phenomenon of avoiding responsibility as the ‘GM salute,’ a crossing of the arms and pointing outward towards others, indicating that the responsibility belongs to someone else, not me. It is this same cabining of responsibility, the sense that someone else is responsible, that permeated the Cobalt investigation for years.”

o   “Similarly, Mary Barra described a phenomenon known as the ‘GM Nod.’ The GM nod, Barra described, is when everyone nods in agreement on a proposed plan of action, but then leaves the room with no intention to follow through, and the nod is an empty gesture. It is an idiomatic recognition of a culture … that does not move issues forward quickly, as the story of the Cobalt demonstrates.”

• GM employees for more than 11 years heard from customers, dealers, the press and their own ranks that the ignition switch led to moving stalls, but continually failed to take action, the report found.
• In April 2013, engineers and GM Legal staff knew that the Chevrolet Cobalt had a history of the ignition switch being turned accidentally to the Accessory position, and that airbags didn’t deploy when that happened. They also knew that the switch had been changed for the 2008 model year, because of discoveries by the lawyer for the family of a crash victim.
• “But the search for root cause became a basis for doing nothing to resolve the problem for years,” Mr. Valukas wrote.
• “While the issue of the ignition switch passed through numerous hands at GM, from engineers to investigators to lawyers, nobody raised the problem to the highest levels of the company,” the report said. “As a result, those in the best position to demand quick answers did not know questions needed to be asked.”

Your True Culture Doesn’t Always Match Your Description of Your Culture

Does it surprise you that GM’s self-described culture directly contracts the culture described from Mr. Valukas’s report?

Instead of thinking big and moving fast, GM thought small and moved slowly.

Instead of holding team members accountable, GM passed the buck and took no action. Instead of demanding results, they created bureaucracy and avoided the real issue.

Instead of creating excellence, they used a defective switch, which was known to fail, which probably lead to the deaths of innocent people.

How sad.

Would it surprise you that some of the greatest business failures occurred because the companies created a culture that rewarded lying, cheating and stealing?  Not only did it happen here at GM, but it also happened with WorldCom, Enron and Arthur Andersen and the list continues to grow.

Lessons from Your Family

Space limits my comments here but I want to give you just a few thoughts about why culture might be the most powerful force in your organization.  Dr. Daniel Denison, one of the foremost authorities in the world on organizational cultures and its impact on the business, wrote in his best-selling book entitled “Leading Culture Change in Global Organizations”  that culture is “the collective capacity of a group of people to gather together and create value.”

We all have a strong sense what a powerful force culture can be. We learn it early in our life from our family. Think about your own family for a moment. What is it like being a member of your family? How do you treat others, both inside of and outside of your family? What do you believe as a family about major issues? What do you collectively value? How do you handle differences? What is tolerated and what is not allowed? What’s kept secret within the family? What’s not talked about? You get the point.

Companies are the same when it comes to their culture; they are like a family. The surprising part is that very few executives seem to pay attention to this or know how to change it when they sense it’s going the wrong way. And sadly, many executives are the cause of the toxic culture and they realize that no one will challenge them about it.

The 4 Major Elements of a Company’s Culture

An organizational culture is made up of 4 major areas of your company:

• The organization’s sense of purpose and direction. Do people really know the vision for the future of the company and the strategy for reaching this, and are they engaged in it?
• Responsiveness to the business environment. What is most important, money or people? Do you say one thing publicly but act another way? People in your company know the difference – they did at GM and Enron. When money becomes more important than the employees and the customers … the end is near.
• The values which everyone agrees to live by at all levels. Do people trust the management and leaders?  Is there an environment that allows for dissent when things are not being addressed according to these agreed upon values? (This didn’t occur at GM and Enron.)
• The degree of autonomy people have and the level of engagement they feel toward their work. Are people proud to work for the organization? Do they like their team, the products and services they provide, and do they feel they are better because they work at the company? (I’m not sure the folks at GM or Enron would agree.)

I want to give you more than just a sermon on the power and influence of culture in this article. I want you to have a practical next step if you chose to act on this, so here it is. You can do one of three things:

• Get Daniel Denison’s book mentioned above, read it, have those around you read it, discuss it, and ask yourself the questions that are outlined in Dr. Denison’s book.  It will change your thoughts and ideas about how your organization deals with its culture forever.  I wonder what would have happened at GM or Enron if they had taken this advice.
• Call me and I’ll share with you the tool I use that will measure your organizational culture and compare you to 1,100 other companies.  It will also give you specific areas of focus you need to address to create a more consistent winning culture.  I use the survey created by the Denison Organization, it’s powerful and extremely effective.
• Ignore it. Many families do this and just hope that no one notices the dysfunction.