General Motors: Ethical Stance and Issues

Abstract

This research paper strives to answer the question who is General Motors while examining their stance on ethics and how they have dealt with any past ethical issues. General Motors is a leader in the automobile industry. Their corporate history spans for over a century and is so well-established that the national economy is said to be predicted based on General Motors success or failure. Therefore, the nation watches how a company of their caliber sets a standard of excellence and models ethical behavior especially in the face of adversity. An examination of General Motors actions leading up to and after the ignition switch crisis of 2014 is examined in this paper.

Every company must create their own culture. This identity must set them apart from their competitors and represent them day-in and day-out in the business. General Motors is no different. In a market full of automobile manufacturers, how do they distinguish themselves? What makes them different? This research paper will answer the question, who is General Motors while examining their stance on ethics and how they have dealt with any past ethical issues.

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The vision statement of General Motors (GM) is “We see a world with zero crashes, zero emissions, zero congestion, and our people are the driving force behind making this a reality” (General Motors, 2019c, para. 1). General Motors is a leader among automobile manufacturers. They must continue to advance as the world advances, especially in the area of technology. Technology helps to make the world and everything in it, including cars—safer, faster, and better than ever before. In response, General Motors wants to lead the way in this “transportation revolution” (General Motors, 2019a, para. 2). “Headquartered in Detroit, Michigan, GM is: Over 180,000 people; Serving 6 continents; Across 23 time zones; and Speaking 70 languages” (2019a, para. 5). With that many employees across the world, GM must do an excellent job at defining who they are and what they stand for. They do this with their We are General Motors belief statement, “We are committed to SAFETY in everything that we do, We earn CUSTOMERS for life, We build BRANDS that inspire passion and loyalty, We translate breakthrough TECHNOLOGIES into vehicles and experiences that people love, We create SUSTAINABLE solutions that improve the COMMUNITIES in which we live and work” (2019c, para. 2). This set of beliefs must be infused in all that they do. It must be communicated, constantly evaluated, and remain at the forefront of any and all operations to be effective.

Along with stating their beliefs, GM feels it is important to identify their values as well. These values include: customers, relationships, excellence, and seeking truth (General Motors, 2019c). The values are further defined by behaviors, specific ways GM expects its employees to act. These include: “Think Customer-I consider the customer’s needs in everything I do; Innovate Now-I see things not as they are but as they could be; Look Ahead-I make decisions now with the long-term view in mind, and I anticipate what lies ahead; One Team-I collaborate to cross-functionally to achieve enterprisewide results; Be Bold-I respectfully speak up, exchange feedback and boldly share ideas without fear; It’s on Me-I take accountability for safety and my own actions, behaviors and results; and Win with Integrity-I have a relentless desire to win and do it with integrity” (para. 4). General Motors has put a lot of time and effort into thoroughly outlining their vision, and then defining how that vision is to be carried out company-wide from top to bottom.

General Motors Board of Directors is made up of eleven members, including CEO, Mary Barra. “The Board is committed to overseeing the company’s integration of environmental, social, and governance principles throughout the enterprise” (General Motors, 2019b, para. 2). This includes emphasizing the importance of GM’s Code of Conduct for all employees. “GM’s Code of Conduct reinforces our commitment to a work environment founded on mutual respect, trust and accountability, and outlines the policies and obligations that guide our business conduct” (para. 13). The Code of Conduct is enforced by “100% of eligible salaried employees” completing the Code of Conduct certification and “76,565 employees and contract workers” completing 5 required ethics training courses (para. 17). It is often said in the business setting that what is monitored is what gets done. GM has done a thorough job of defining, cultivating, and sharing what they believe and why. Their Code of Conduct is their way of measuring all of what they believe and it applies to everyone in the company.

So the question is—has this always been the case? General Motors has a very thorough plan to address ethical behavior. Did this began at the fruition of the company or did a certain event or events cause the company to shift its focus? Previous FBI Director, James Comey, once stated, “There are only wo types of companies. Those who have experienced an ethical lapse and those who are not aware that they are in the development stage of one” (Jennings & Trautman, 2015, p. 3). In General Motor’s case, their ethical lapse was many years in the making.

In 2014, news headlines flashed General Motors, but not in a favorable way. Unfortunately, top stories “. . . emerged that eventually revealed and caused General Motors to admit that the corporation took more than ten years to recall millions of vehicles because of an elaborate cover-up related to defects in its engine ignition switches” (Jennings & Trautman, 2015, p. 3). A cover up, over a decade of silence, that resulted in over 100 tragic deaths. How is that possible based on the information just presented? Obviously, the culture that exists today is a result of a past that lacked a focus on ethical behavior.

“On September 17, 2015, criminal charges were announced against GM that resulted in a deferred prosecution agreement and a $900 million forfeiture” (Jennings & Trautman, 2015, p. 5). This was the culmination of years of cutting corners, deceit, hush-hush tactics, and a pervasive culture that allowed such behavior. It was General Motors worst moment—a time that they would have to ask if they would ever rebound from. How did it get to this point? This is a question that must be asked and requires a look back at GM’s history.

In 1953, GM President, Charles Wilson, “. . . during his 1953 confirmation hearings to become secretary of defense, reportedly said he believed ‘what was good for the country was good for General Motors and vice versa’ (soon that would be simplified to: ‘what’s good for General Motors is good for the country’)” (Jennings & Trautman, 2015, p. 7). This became an indicator for the U.S. economy. So much so, in 2008, when General Motors was suffering financially, the U.S. markets soon followed suit and collapsed. “Both the financial markets and GM recovered through combinations of bankruptcy reorganization and government assistance” (p. 7). The money GM received to rebound came with tight restrictions and specific operating guidelines. This is very important as these are the years leading up to the breaking news of a major GM cover-up. One has to wonder if the two situations are related.

General Motors initiated an in-depth investigation as to the how and why following the break of the 2014 scandal. This investigation studied many factors including the aforementioned financial crisis of 2008 and its effect on safety. “Repeated throughout the interview process we hear from GM personnel two somewhat different directives – ‘when safety is at issue, cost is irrelevant’ and ‘cost is everything.’ It is worth examining how those two messages collided” (Jennings & Trautman, 2015, p. 17).  CEO, Mary Barra, acknowledged in her congressional testimony that, “. . . GM had been operating under a ‘cost culture,’ but that was now changing to a ‘customer culture’” (p. 17). The investigation however found a culture that focused on safety and cost. The two, however, do not always go hand-in-hand—just ask the families of the 100+ victims that died in GM automobiles due to faulty ignition switches. CEO Barra also conducted an internal investigation as to how GM failed to issue a recall when the initial e-mail indicating an issue with an ignition was sent ten years earlier. A ten-year cover up—I cannot fathom how that is possible. Even in a large company such as GM, how does information stay that quiet for a ten-year period? I just do not see how that is possible. Barra made a promise to fix the process at GM. Ross Perot, who served on the board for GM twenty five years prior to this event, said it was not just something that had just started, he stated, “If you see a snake, you kill it. At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes and then you discus it for a couple of years. The most likely course of action is—nothing. You figure, the snake hasn’t bitten anybody yet, so you just let him crawl around on the factory floor” (p. 18). This analogy seems to be spot on when it comes to how GM has operated. Perot went on to say, “We need to build an environment where the first guy that sees the snake kills it” (p.18).

General Motors failed at this task. They failed all of their stakeholders, but especially their customers. “The history of business in the United States is full of examples of companies in which the analysis of risk was skewed because of the simple failure to ask the question - What would the reaction be if this decision and the reasons for it were made public?” (Jennings & Trautman, 2015, p. 21). Of course, GM is not alone in failure to ask this question and then respond accordingly, however, one time is more than enough. How has this changed how they do business?

 In 2018, GM cut 14,000 jobs. “While the job losses are a terrible blow to those workers and the families they support and the local economies where the factories are located, the decision could prevent the kind of crisis that resulted in it seeking bankruptcy protection in 2009 and a $50 billion bailout by the U.S. government” (Shih, 2018, para. 3). Many of the 14,000 jobs that were cut are factories only running one shift a day. “For example, the Lordstown, Ohio, factory that makes the Chevy Cruze is running one shift a day, down from three a few years ago, and last year produced 180,000 vehicles, down from 248,000 in 2013” (Shih, 2018, para. 12). I believe that the goal for a powerhouse company like GM is not to be in a situation where they are only running one shift; and, I would assume that one day they would want all of their factories to be running multiple shifts. However, GM is not in a position to increase operation costs of factories, because right now there focus is to do whatever it takes to make the safest vehicles possible without going into massive debt again. These decisions by management may have been different prior to the bailout of 2008-2009 or the scandal of 2014. We may never know, but rather than cutting jobs, they may have cut costs or safety measures ultimately leading to another disaster. GM has to find ways as an organization to ethically stay out of debt and ultimately that is up to the board and upper level management. They must find ways to keep customers buying cars while keeping safety as the top priority of the organization. 

As presented in the first part of this research paper, General Motors has worked hard to create a culture that puts ethics first and foremost in their organization. They adopted a code of ethics that applies to everyone from the board of directors down. They also adopted a supplier’s code of ethics that anyone they do business with has to agree to as well. In addition, they launched a Speak Up for Safety campaign, that cultivates an environment where employees are encouraged to speak up if they see something that could potentially involve a safety issue. The Speak Up! Non-Retaliation Policy brings weight to the campaign. GM emphasizes, “In addition to workplace safety, it is our job, every day, to produce high-quality, safe vehicles for our customers. We all must be personally responsible for safety and integrity in all that we do” (Jennings & Trautman, 2015, p. 27). While the culture change does not happen overnight, General Motors has made great strides in ensuring that they turn the tide on the days were concerns were swept under the rug to save a dollar or two.

In my opinion, General Motors has done many great things to try to recover from a very bad time. While you can never replace the lives that were lost, you can prevent it from ever happening again. Culture drives the ethical pulse of a company either up or down. “The failures at GM were ones of accountability and culture. If employees do not have the moral fiber to do the right thing, and do not have the awareness to recognize when mistakes are being made, then the answer must be to change the people or change the culture” (Jennings & Trautman, 2015, p. 29). GM has seen a culture shift since 2014, one for the better, now they must work to sustain it.

Sustainability starts with opening the lines of communication from top to bottom. When you have leadership that asks for and embraces employee feedback, you create a different work dynamic. This comes from upper management being out and about in the organization. You cannot just rely on others to disseminate your message with the same passion, you must get out and be seen and heard among the employees and worksites. They need to hear it from their leaders. They need to know they are seen and heard. They need to know they matter in the big picture.

Lastly, there is a lot to be learned from the General Motors crisis. Primarily, ethical behavior doesn’t just occur, it has to be cultivated. Secondly, leadership matters. “Leaders who have a mindset for 1) learning and adapting to rapidly changing circumstances; 2) seeing possibilities amid the tragic circumstances of a crisis; and 3) expecting trust and trustworthiness will be more inclined to identify positive outcomes in crisis situations” (Jennings & Trautman, 2015, p. 30). In the end, General Motors knows their work is not complete, creating a culture of high ethics requires a constant state of improving and transparency. This must continue to be GM’s number one priority today and moving forward.

References

• General Motors. (2019a). About GM. General Motors [Webpage]. Retrieved from https://www.gm.com/our-company/about-gm.html
• General Motors. (2019b). Governance and Ethics. General Motors [Webpage]. Retrieved from https://www.gmsustainability.com/manage/governance.html
• General Motors. (2019c). Our Purpose. General Motors [Webpage]. Retrieved from https://www.gmsustainability.com/aspire/purpose.html
• Jennings, M., & Trautman, L. J. (2015, December). Ethical culture and legal liability: Lessons in governance [PDF File]. Boston University Journal of Science and Technology Law. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2691536
• Shih, W. (2018, November 30). The challenges GM is facing, and the reasoning behind its plant closures. Harvard Business Review. Retrieved from https://hbr.org/2018/11/the-challenges-gm-is-facing-and-the-reasoning-behind-its-plant-closures