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Culture Woes at General Motors: 3 Takeaways for Sales Leaders

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Today’s guest post is by Tristam Brown, CEO of LSA Global. Download one of his latest white papers, “Top 5 Warning Signs that Your Performance Environment and Culture May Be in Trouble.”

 

Back in 2009 when General Motors (GM) first filed for bankruptcy, things weren’t looking totally dismal. GM recaptured some lost market share, posted profits, and garnered positive attention from critics and consumers over new vehicle models.

Then came the tidal wave of recalls. As of early June, GM had issued 44 recalls in 2014 (here’s the ongoing tally of GM recalls). The real headline grabber was issued on February 7, 2014, when GM recalled a whopping 800,000 cars due to faulty ignition switches, which could shut off the engine while it was being driven and prevent the airbags from inflating. According to CNNMoney, GM has already recalled “more cars and trucks in the U.S. [in 2014] than it has sold here in the five years since it filed for bankruptcy."

What’s worse than the billions of dollars GM has lost in revenue and the damage to its brand is the fact that these recalls have so far been linked to at least 54 car crashes and 13 deaths. The company is currently facing a federal criminal probe to investigate these matters, and journalists are pulling back the curtain on a pass-the-buck-and-keep-your-head-down corporate culture. According to one report by Bloomberg Businessweek (“GM Recalls: How General Motors Silenced a Whistle-Blower”), the head of a nationwide GM inspection program, Courtland Kelley, was put on a career ice floe after repeated attempts to raise awareness about product flaws:

“Kelley had been the head of a nationwide GM inspection program and then the quality manager for the Cobalt’s predecessor, the Cavalier. He found flaws and reported them, over and over, and repeatedly found his colleagues’ and supervisors’ responses wanting. He thought they were more concerned with maintaining their bureaucracies and avoiding expensive recalls than with stopping the sale of dangerous cars. Eventually, Kelley threatened to take his concerns to the National Highway Traffic Safety Administration. Frustrated with the limited scope of a recall of sport-utility vehicles in 2002, he sued GM under a Michigan whistle-blower law. GM denied wrongdoing, and the case was dismissed on procedural grounds. Kelley’s career went into hibernation; he was sent to work in another part of the company, and GM kept producing its cars.”

It seems this was hardly an isolated case. According to the Valukas Report, compiled by attorney Anton Valukas as part of an internal investigation and published in early June, GM has systematically been suppressing product-safety concerns from employees for at least a decade. In its by-the-numbers summary of the Valukas Report, the Wall Street Journal noted that it took GM 11 years after first learning about its defective engine switch to issue a recall.

What can sales leaders learn from GM’s woes?

1)   Culture matters. Culture is not “soft” stuff best left to human resources. It is a critical consideration for leaders and has an impact on everything from your ability to hire the right people to your level of success in pursuing a given business strategy. One recent Harvard Business School research report described how an effective culture can account for up to half of the differential in performance between organizations in the same business.

2)   Culture exists at all levels. Your company’s culture does not begin and end with you. What your employees do day in and day out is a reflection of your brand and how you do business. At GM, supervisors and executives were actively ignoring safety concerns pushed up from employees. As a leader, you want to think about what messages aren’t getting through to you.

3)   Culture is not whether you win or lose business. A winning organizational culture is not necessarily one that promotes revenue over all else (though it certainly could be). Your culture reflects your corporate values. Those values drive key business practices and behavior. Internally, GM employees became familiar with “the GM nod.” Safety issues might be reported and discussed during meetings, but the tacit understanding was that no one would ever act on these reports, and they would be quietly ignored. Thus GM created a corporate culture that prioritized pushing out faulty products over the safety of its consumers. Think about what kind of behavior your culture promotes and whether it is effectively aligned with your strategy. 

How would you describe your corporate culture? Would your salespeople agree or disagree? Share your thoughts in the comments section.

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Tristem Brown

How do people currently measure the strategic effectiveness of their corporate culture?

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