Ignition Switch Report Spares CEO Barra, But Exposes GM's Culture

Jun 5 2014, 1:00pm CDT | by

On Thursday, General Motors chief executive Mary Barra met with employees and journalists before the company submitted a report to federal regulators outlining the problems that led to its ignition switch recall crisis.

No wonder Barra wanted to get her message out ahead of the details. The report by attorney Anton Valukas is a devastating take down of the inertia and incompetence inside GM over the defects that have killed 13 people, and possibly more. (Read the report here.)

The 325-page Valukas Report, made public by the National Highway Traffic Safety Administration, actually clears Barra and two other top GM executives, Mark Reuss, who runs global product development, and Michael Millikin, the company’s chief counsel, from responsibility in the situation.

It also makes clear that GM’s board got no specific information about the defects that have led GM to recall 2.6 million Chevrolet, Pontiac and Saturn vehicles.

But in doing so, the report also exposes what must be a CEO’s worst nightmare: a costly situation, in terms of money and lives, where lower-ranking employees either made decisions or did nothing without letting the company’s most senior leaders know.

Further, a layer of executives below the top also were involved in the situation, in areas such as public policy, engineering and legal, but didn’t tell their superiors, either.

GM said Thursday that 15 employees have been fired, while another five have been disciplined. Among those fired were engineer Ray DeGiorgio, who made a decision to change an ignition part but not change a part number, which kept investigators from finding the source of the problem for years. Also let go was Gary Altman, who directed the engineering team for the Chevrolet Cobalt.

“Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch,” Barra said.

The report, however, disclosed a number of things about GM itself that make it hard to believe that the “new GM” Barra says she is leading exists. The document describes a company where there was no sense of urgency to fix the ignition problem, right up until GM notified the government of its first recall for the cars in January.

Other things unmasked by the report:

The GM Nod. As described by Barra, this is a practice of GM managers sitting in a room, nodding in agreement at steps that need to be taken, then leaving the room and doing nothing.

The GM Salute. The Valukas Report defines this as the habit of employees going through meetings, with their arms folded and pointing outward at others, as if to say that the responsibility lay with them, not with the employee.

The fish scale. In 2012, engineers went to a junkyard to look at salvaged vehicles that might have faulty ignitions. They discovered that it appeared to shift an ignition out of the “run” position (meaning on) but hadn’t brought standard measuring equipment. So, an engineer wait to a bait and tackle store to buy a fish scale.

For Barra, the challenges will continue. She told analysts Thursday that GM could face additional expenses related to the recall, although the amount is not yet clear. She faces another round of Congressional hearings, with a number of lawmakers saying Thursday that they did not think the report answered sufficient questions.

Meanwhile, attorney Kenneth Feinberg will be determining how many victims deserve compensation from GM, and how much each will receive. That means a situation that began in 2002 promises to stretch throughout 2014, and likely beyond.

 
 

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