The case study used in this study relates to the February 13, 2014 incident in which the General Motors (GM), an automobile manufacturer and assembler, announced that it was recalling a n umber of its ignition switch vehicles. This followed reports of a series of accidents involving the company’s vehicles and resulting in at least 13 people dead. This study is based on the contents of the Volukas report in which Mary Barra, the company’s CEO, takes us through some of the efforts made by the company to avert any future occurrence. However, according Kuppler, the author of this case study, the GM ignition switch crisis reveals serious problems with the company’s corporate culture of status quo or doing things similarly and expecting different outcomes that led to this tragic incident. It is therefore about challenges of cultural change in organizations or culture crisis in organizations. The question therefore is, what can other corporate leaders or managers and companies learn from the GM ignition switch recall crisis?
The organization, GM, is described in the case study as consisting of managers who lack knowledge of the on-goings in the organization and who do things using the same techniques over and over again. Its major attribute is the lack of responsibility and accountability among managers for the failures of the company and also lack of urgency and need for change in organization’ culture.
Organizational Modelling
A current behavioral model of the organization described in the case study is that of lack of responsibility and accountability for actions and omissions of the company’s top management. It is described as a ‘culture problem’ whereby a number of corporate culture issues are at play and evident in the crisis. These include reluctance to raise issues and concerns with GM’s culture, culture of avoiding responsibility- termed as ‘GM salute’, lack of follow up on planed corporate actions (termed as the GM nod), lack of a sense of urgency and conflicting top management messages about safety.
The current behavioral organizational model of General Motors differs markedly from the other models used within the industry and external related industries. First, the model of lack of accountability among managers is often unheard of in similar organizations in the same industry. In other service industries, the top management is held accountable and responsible for any action or inaction that is likely to adversely affect the company’s image and lead to public outrage. Safety issues should be communicated throughout the organization and made a keystone habit or custom. Moreover, in other firms, there are certain corporate values that guide decision making process, something that seems to be conspicuously lacking in GM’s organizational culture. The bureaucracy, lack of leadership succession development and transparency are cornerstones of corporate culture in other organizations, but were lacking in GM leading to the tragedy.
According to Sturgeon, Memedovic, Biesebroeck, and Gereffi (2009), the main organizational models used by many companies in the service or manufacturing industry include the traditional or classical bureaucracy model that functions in a top-down fashion, team model and matrix organizational model The organizational structure or model used by GM seems to be one whereby communications, responsibilities, lines of authority, directions, resource allocations and duties flow from a top management team down to the lower teams of employees. The main reason why there are differences between the organizational model used by GM and those used by similar organizations in the same industry is lack of vision and also the nature of the company. It is not based on culture change but based instead on bureaucratic procedures that hinder effective communication and reporting of safety issues within the organization. It may also be due to resistance from employees concerning the introduction of other models.
Culture plays an important role in an organization and its model given that it is considered the most powerful force in organization that drives change and defines an organization’s values. According to Ahmed and Shafiq (2014), organizational culture enhances an organization’s performance by influencing various perspectives or aspects of the organization such as customer satisfaction, learning and growth, improved shareholder value and preserving organizational image. It also affects productivity, employee performance and quality. The current impact of culture on current organizational model at GM has brought out in the case study is different from similar impacts on past organizations in that for GM, the impact has been devastating and lacking any positive impact. It has led to death of the company’s customers and seriously dented its image. However, other organizations such as Volkswagen have similar top-down organization structure and have led to fatal flaws in the past. This has at one point led to the famous Volkswagen emission scandal or the “diesel dupe”. This fraud involving use of defeat devices and software to conceal emission of poisonous gases was mainly due to a failure by the top management to detect and conspiracy to defraud the public and make easy profits while avoiding responsibility for environmental pollution.
According to Sturgeon et al. (2009), one of the unique features of the automobile industry is that firms use value chain system and internal structures that favor easy communication and decision making among the various levels of the organization. From the case study, it can be argued that GM is not operating within an organizational model unique to the industry which is largely a divisional organizational structure. This is because, as evident from the case study, there was no clear decision making and coordination structure through which individuals could be directly held accountable for poor decisions and negligence. According to the Volukas report upon which the case study is based, “determining the identity of any actual decision-maker was impenetrable” (Kuppler, 2014). Hence, there was not distinct organizational structure at GM leading to the crisis.
With changes and stiff competition in the automobile industry, there are shifts in the motivational models from traditional bureaucratic structures to organizational models that encourage efficiency and flexibility in decision making. There has also been motivation in light of these developments, to a lean management styles and more transparent organizational models (Turi, Mocan, Ivascu, Goncalves & Maistor, 2015).
References
Ahmed, M., & Shafiq, S. (2004). The impact of organizational culture on organizational performance: A case study of Telecom sector. Global Journal of Management and Business Research: Administration and Management, 14(3), 20-29.
Kuppler, T. (2014, June 8). The GM Culture Crisis: what leaders must learn from this culture case study. Retrieved April 30, 2016, from http://switchandshift.com/the-gm-culture-crisis
Sturgeon, T. J., Memedovic, O., Biesebroeck, J. V., & Gereffi, G. (2009). Globalization of the automotive industry: Main features and trends. Int. J. Technological Learning, Innovation and Development, 2(1/2), 7-24.
Turi, A., Mocan, M., Ivascu, L., Goncalves, G., & Maistor, S. (2015). From fordism to lean management: Main shifts in automative industry evolution within the last century. Management, Knowledge and Learning, 477-484.
