The Crisis at General Motors

Photo of PaltheGM has announced another recall due to faulty ignition switches, this one for 3.36 million cars and coming on top of a recall in February of 2.6 million cars. The switches have been linked to 13 deaths and 54 crashes. Now the automaker is recalling nearly 30,000 Chevrolet Cruises over defective airbags made by Takata Corp. Despite all the trouble, it presents GM with an opportunity, says Dr. Jennifer Palthe, a WMU associate professor of management.

"They're in a crisis situation right now," Palthe says. "(GM CEO) Mary Barra has described this herself as a tragedy that should never, ever happen again. But she's also made promises repeatedly that she wants to change the organizational culture and if we understand organizational culture both from a theoretical perspective and a practical one, it takes about eight to 10 years to do that effectively. One advantage of this unfortunate crisis is that it provides a notional to finally make this change happen that in the past maybe they thought about changing their culture, but now they have to."

GM is under incredible pressure to change, Palthe says. It will be important for employees to buy into the restructuring for it to be successful.

"They need to now operationalize some of the values that Mary Barra announced last year," Palthe says. "She said, 'We need to make the customer our compass. We need to emphasize relationships and recognize that they matter and we need to emphasize individual excellence.' So just espousing those values, we know is not sufficient. Now I think she's in a position to take advantage of this and say, 'Let's make it happen.'"

Palthe says GM could learn from the near death of British Airways, which was in a worse crisis than GM in the early '80s. With the help of outside consultants, the airliner implemented a performance management system and turned the company around by putting people first.

Palthe says GM's corporate culture has been focused "too much on end results and not the process to achieving those results. I think there was a lot of carelessness and incompetence and that carelessness comes from just generating end results and emphasizing cost too much."

To listen to audio clips of Palthe's views: Audio clips can be heard atwmich.edu/wmu/news/radio. Palthe can be reached by calling her office at (269) 387-5798.