General Motors has had a deservedly rough time in the public relations sphere. The company’s failure to acknowledge and repair the Chevy Cobalt’s faulty ignition switches has cost the company over $1.1 billion and resulted in the deaths of at least 13 people.
Mary Barra took the reins at GM in 2014 just before the company issued its first Cobalt recalls. According to a report by former U.S. Attorney Anton Valukas, GM knew enough about the ignition problems to start recalls over two years ago. When Valukas released his report, Barra fired 15 GM employees, of whom half were executives. She has also vowed to reinvent a culture that currently values bureaucracy over safety and customer service.
Of all Fortune 500 companies, only 24 have female CEOs. Even though nearly 50 percent of graduate business school students are female, female MBA graduates have yet to reach parity with male co-workers in the highest echelons of American business. Mary Barra has a strong educational pedigree and comes from a family that, collectively, has invested 73 years in working for GM. She enrolled in the GM Institute at age 18, earning a degree in electrical engineering before studying for her MBA at Stanford on a GM Fellowship.
The biggest problem at GM, according to both Barra and the Valukas report, is how the company’s extensive bureaucracy erodes individual accountability. The company’s proliferation of committees will be studied in MBA programs everywhere as a negative example of how information systems work within the business environment. According to Fortune, committees made most decisions at GM, and most committee meetings were useless because the outcome was decided before the meeting. Individuals weren’t held accountable for failing to act, and few, if any, GM employees were fired for performance problems.
Mary Barra Mandate
Within many companies, a CEO facing a bureaucracy like GM’s might create an internal committee to make suggestions for improving accountability. By creating an internal committee, workers could feel that they had a say in fixing the company’s problems. However, the last thing GM needs is another committee.
So far, Barra has acted decisively and unilaterally — and very un-GM-like.
Mary Barra fired 15 people after the Valukas report, and she’s let at least seven additional high-level execs go in just her first nine months in office. It doesn’t sound like a high number of firings, but in a company that rarely separates employees for performance issues, it’s a major signal that the culture has to change. Barra has also refused to let GM dispose of the issue quietly. She told employees that the incident should become part of the company’s collective memory and that every executive at GM, henceforth, was to prioritize transparency and candor. As Barra told Fortune, “I’m not asking people to do it. It’s a requirement — not only that they hold themselves accountable to do it, but they hold each other accountable.”
Support From All Sides
Mary Barra has a major ally in her quest to reshape GM. Warren Buffett, legendary investor and CEO of Berkshire Hathaway, has purchased GM stock during the past year and has publicly thrown his support behind Barra’s agenda. Barra also has internal support thanks to her family’s history at GM and the years she spent rising through the company’s ranks. According to Buffett, Mary’s experience with the culture gives her the insight that she needs to make real change. GM might accept reform from someone who grew up in its culture, someone who isn’t an outsider.
In addition to changing the committee culture, Barra wants to focus people not on completing internal checklists but on building the cars that consumers want. Arguably, a more consumer-focused GM would have cared less about catching flak from managers and more about saving people’s lives. She also wants to encourage more open debate instead of allowing people to conduct meetings that include presentations but no vigorous discussion of the issues.
Mary Barra isn’t the first to attempt to reform GM, but many investors think she’ll be the one to gets it done. “Mary is as strong as they come,” Warren Buffett has told reporters. “She is the person to have there. She is as good as I’ve seen.”