GM's Chief Threads The Needle: Look In Charge While Keeping a Distance From 'Old' GM

Jun 5 2014, 5:46pm CDT | by

General Motors Chief Executive Officer Mary Barra on June 5 threaded the needle.

Barra, who took the helm of the largest U.S. automaker in January, appeared more in charge concerning the automaker’s ignition switch recalls while keeping some distance from “old” (i.e. pre-bankruptcy) GM. Attorney Kenneth Feinberg will handle the work of running a compensation fund for victims of the automaker’s faulty ignition switches.

When Barra testified before Congress earlier this year, it was a disaster. Exhibit A: the April 5 installment of NBC’s Saturday Night Live, which led off with a skit based on Barra’s congressional testimony. The SNL version of Barra was afraid to comment on anything in detail. In real life, especially during a Senate hearing, Barra took a lot of heat.

Saturday Night Live may be great exposure for up-and-coming comedic actors. It’s deadly for corporate CEOs. In 2008, the show did a parody of Detroit automotive CEOs asking Congress for a bailout. Two of the three real-life executives (GM’s Rick Wagoner and Chrysler’s Robert Nardelli) would be gone in less than a year. A CEO may not want to be feared. But a CEO would rather be feared than laughed at. Ford Motor's Alan Mulally, who was present in support of GM and Chrysler, suffered one of the few public hits to his image.

What’s more, a number of GM CEOs who had a public perception of not getting it during a crisis. They included Roger Smith (who ran the company for almost all of the 1980s), Robert Stempel (Smith’s immediate successor, forced out by the board in the early 1990s) and Rick Wagoner (forced to quit in 2009 as part of the U.S. bailout). Whether such a perception is fair or not, it undercuts a CEO’s ability to lead.

“New,” or post bankruptcy, GM wants to show it’s a different company.  (Technically a new company was created in the 2009 bankruptcy, which is why it’s called General Motors Co., instead of General Motors Corp.)

On June 5, Barra’s job was to demonstrate the difference is real. The CEO presented a sober picture. She disclosed the firing of 15 employees and the discipline of five more.

There was some tough language. She told employees at a town hall meeting — which was streamed on the company’s media website — that a company investigation showed GM had a “history of failures” with the faulty ignition switches and there was no sense of urgency “right to the very end. I want you to hear it. I want you to never forget it.”

The CEO still is keeping some distance from old GM.  The faulty ignition switches have resulted in the deaths of at least 13 people. GM will have a compensation program for victims that attorney Feinberg will administer independently. The program will cover 1.6 million model year 2003-2007 vehicles with faulty ignition switches and 1 million model year 2008-2011 vehicles repaired with a recalled ignition switch.

In effect, GM is outsourcing a major part of the task to Feinberg. Whether it’s intentional or not, “new GM” is keeping some distance from “old GM.”

The initial coverage of GM’s report has focused on the firings and Barra’s presentation. Certainly, nobody was laughing at the GM CEO on June 5. That’s a start.

 
 

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