The GM Culture Crisis: What Leaders Must Learn from This Culture Case Study

Instructions:-

The GM culture crisis
OL 342 Milestone One Guidelines and Rubric
This milestone is designed to introduce the case study and begin a critical analysis applying knowledge gained within the course. This short paper assignment is the first step in your final project analysis of the company. It should begin with a brief description (one paragraph) of the case study that is being used. The largest component of this short paper should focus on the culture crisis with specific feature details as contributing factors, based on the elements listed below. This assignment will be submitted in the form of a 750-word minimum paper.
Prompt: Use the following case study for your organizational analysis: The GM Culture Crisis: What Leaders Must Learn From This Culture Case Study.
After reading the case study, address the following critical elements.
I. Introduction
A. How is the organization described in the case study? What are its key attributes? What are its strengths and weaknesses?
II. Organizational Modeling
A. Describe a current behavioral organizational model used in the case study.
B. Compare the current behavioral organizational model used above to other models used within the industry and also within externally related
industries.
C. Explain why there are differences between the organizational model used by the organization in the case study and those used by organizations
in another similar industry. In other words, what are some of the reasons for using these different organizational models?
D. Compare the current impact of culture on current organizational models to the impact culture has had on past organizational models.
E. Explain how the organization is or is not operating within an organizational model unique to its industry.
F. Explain if motivational models have shifted in comparison to the organizational modeling trends.
Guidelines for Submission: Milestone One should follow these formatting guidelines: 750 words minimum, double spacing, 12-point Times New Roman font,
one-inch margins, and citations in APA format.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.
Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value
Introduction:
Organization
Meets “Proficient” criteria, and the description is an especially comprehensive overview of the organization
Describes key attributes, strengths, and weaknesses of the organization in the case study

Solution

The GM Culture Crisis: What Leaders Must Learn from This Culture Case Study

The GM Culture Crisis

GM, an automotive manufacturer headquartered in Detroit, Michigan, has a workforce of 180,000 people and operates in six continents (GM, 2020). Unfortunately, the company was recently ordered by the National Highway Traffic Safety Administration (NHTSA) to pay a civil penalty of $35 million due to its delay in reporting a defect in the ignition switch of roughly 7.6 million cars over 11 years (Basu, 2014).

Organizational culture, which is defined as the collective values, beliefs, attitudes, and norms that shape employee behavior (Perkins & Arvinen-Muondo, 2013), plays a significant role in how companies like GM handle problems. The recent culture crisis at GM has shed light on the challenges that large organizations face when addressing issues and taking responsibility for their actions. This has prompted discussions about the importance of creating a positive organizational culture where employees feel supported and encouraged to speak up and address problems.

According to Fast Company, GM’s reputation has suffered as a result of its culture crisis, with the company being described as “a dysfunctional, bureaucracy-ridden has-been” (Tetzeli, 2017). This highlights the fact that companies must continuously strive to maintain a positive organizational culture, not only for the benefit of their employees but also for their public image and overall success.

The case study of GM highlights several key attributes that contributed to the company’s issues, including a lack of communication, poor leadership, and a refusal to accept responsibility. Despite the seriousness of the problem, which resulted in multiple deaths and injuries, there was a lack of urgency to resolve it. According to Kuppler (2014), multiple individuals were involved in the issues related to the vehicle’s ignition switch, but none of them were willing to take responsibility or bring the problem to the highest levels of the organization.

The case study also highlights GM’s potential to make significant changes to its culture. Although CEO Mary Bara expressed genuine concern for the victims, she failed to recognize how the culture of the organization contributed to the actions of the 15 employees who were fired during the crisis. However, since being notified of the problem in 2013, Bara has made significant efforts to address the issues within GM and rectify the errors.

Organizational Modeling

The organizational behavior displayed within GM is based on the autocratic model, which is characterized by a dependence on strength, power, and formal authority. In an autocratic organization, top management has formal authority to control lower-level employees and make key decisions, with little input from the employees themselves (Organizational Behavior, 2015). This is evident in Kuppler’s observation that there were conflicting messages from top management, with one engineer stating that the emphasis on cost control “permeates the fabric of the whole culture” (Kuppler, 2014).

The autocratic model is most appropriate in industries that require high compliance and little room for error, such as the newspaper industry. An example of this is Howell Raines, who led the New York Times as an autocratic leader in 1970 and raised efficiency while contributing to growth in the highly demanding newspaper industry (Nayab, 2020). However, in organizations like GM, the autocratic model may not be the most effective way of addressing problems and promoting innovation.

Ford operates based on the Collegial Model of Organizational Behavior, contrasting with GM’s approach. This model aims to establish a framework in which managers play a role similar to coaches, and employees are seen as team players. Power is shared to some extent, and the coach leads by inspiring. The allegiance in this model is to the overarching goal and team responsibility, not to a specific individual. Employees feel a sense of investment in the company’s success and take pride in the successful accomplishment of goals (Leonard, 2019). In the One Ford plan, teamwork is deemed one of the most vital aspects of the company’s organizational culture, which includes employee involvement. Additionally, the company places emphasis on personal growth through team involvement and support. Ford’s organizational culture supports teamwork along with the development of individual knowledge and skills (Lombardo, 2017). On the other hand, Apple employs a Supportive Model, where its cultural traits center on maintaining a high degree of innovation that involves creativity and a mindset that questions established norms and standards. The success of the business is contingent on cultural support and coherence, which play a crucial role in determining competitiveness and industry leadership, especially in the face of fast-paced technological advancements and product development (Meyer, 2019).

GM must work to change a culture that has become deeply ingrained over the years. Changing a company’s culture takes significant effort, especially in a large organization like GM. Poor communication was a major issue identified in GM’s organizational culture. Barra was praised for her handling of the crisis, earning the title of “Crisis Manager of the Year” from Fortune magazine. She made a commitment to address the crisis by being transparent and putting the needs of customers first, something previous leaders had not done (McIlvaine, 2018).

There is no single motivational model within an organization that is superior. Each individual and each team are motivated by different things based on their wants and needs.  Researchers working in the fields of OB and HRM have demonstrated that employee motivation varies according to individual employee expectations, evaluations, performance feedback, rewards and the nature of the work itself (Perkins & Arvinen-Muondo, 2013). In order to make the best decisions in regard to employee motivation, human resource personnel as well as management should be aware of the multiple motivation models and have the knowledge to know which model best suit the needs of their team or their individual employees.

The ignition switch crisis was a decade long saga that eventually outed GM for their lack of leadership and their inability to accept accountability for the organization’s wrongdoing. These behaviors were embedded deeply within the organization, from top management down to assembly line workers. Fostering a culture of “not my problem” lead to the company losing billions of dollars and worst of all, they lost the trust of their customers.

            Strong leadership is the foundation that any successful organization is built upon. Leadership is what sets the precedent and the standards of culture in which the organization is expected to adhere to. There are eight common leadership styles within organization. They are Democratic Leadership, Autocratic Leadership, Laissez-Faire Leadership, Strategic Leadership, Transformational Leadership, Transactional Leadership, Coach-Style Leadership, Bureaucratic Leadership (Becker, 2020).

Leadership Theory

The leadership style most identifiable within GM is a combination of Autocratic and Laissez-Faire leadership. Autocratic leadership is rarely effective, the leader makes decisions without taking input from anyone who reports to them. Employees are neither considered nor consulted prior to a direction and are expected to adhere to the decision at a time and pace stipulated by the leader (Becker, 2020). This type of leadership is apparent in the fact that many senior executives did know about the problem GM was facing with its ignition switch problems (Kuppler, 2014). These senior executives made their own decisions on how to (not) handle the situation, with no regard for anyone else and everyone else as expected to follow suit. Laissez-Faire leadership much like Autocratic leadership is only sometimes effective. It is the least intrusive form leadership, and leaders who embrace it afford nearly all authority to their employees (Becker, 2020). In this type of leadership, management is “hands-off”, and employees/departments/teams are allowed to make their own decisions. While employees were left to make their own decisions within GM, there was no one willing to responsibility or action for fixing the problems. Mary Barra referred to this phenomenon as the “GM Nod”. This occurs when everyone nods in agreement to a proposed plan of action, but then leaves the room with no intention to follow through, the nod is an empty gesture (Kuppler, 2014). The recommendations of the Volukas report were that GM adopt a more Coach-style leadership approach. Which would focus on strategies that will enable their team work better together. Amongst those recommendations listed were promoting the “Speak Up for Safety” program through visible communications, such as posters on employee bulletin boards.  Bulletins or newsletters could include features recognizing employees who have raised safety issue. Visibly promote and rigorously enforce the non-retaliation policy. Explicitly communicate to employees that they should not be reluctant to classify issues as safety issues or potential safety issues. Develop protocols for escalating potential safety issues to appropriate levels of management. As well as Continue to review and strengthen the process for expeditious reporting by employees of potential or actual safety issues and non-compliance (Kuppler, 2014). Barra has used these recommendations as a tool to transform the culture of GM.

Some witnesses said that there was reluctance to raise issues or concerns in the GM culture (Kuppler, 2014). This was an internal driving force to correct the culture within GM. How can problems, especially safety problems be addressed if there is reluctance to bring issues to higher management? If there is push back or a lack of urgency shown by those in upper management, there should be an outlet where employees can bring the problems directly to the CEO of the company. Knowledge is power and without knowledge of the problem there is no way for the correct people to fix the problem, even if others had made the choice to ignore it. An external force that drove GM’s culture change was when Mary Barra was called before House and Senate Subcommittees to explain the GM ignition switch recall crisis. The CEO of the company was now not only required to answer to subordinates and the customers of GM, she was now being forced to explain the actions of her company to the government. This is much like the difference between a child being spoken to by their teacher, then the principle, then their parents. The higher the authority the harder the push back is for changed behavior.

GM’s decision-making process throughout the ignition switch crisis is synonymous with its leadership style. The employees of GM were “brought up” in a culture of “not my problem”. This attitude was strewn throughout the entire organization, from the top down. When the leaders of GM decided to be “hands off” and expected their employees just do as they were told they engrained this behavior into the organization. There was no urgency to correct the problem that was costing lives and there was no one to take responsibility for the problems. Essentially there were no “leaders” within the GM organization, only those in charge of continuing to sweep serious issues under the rug until they became too large to ignore.

Organization Culture

            An organization’s culture defines the proper way to behave within the organization. This culture consists of shared beliefs and values established by leaders and then communicated and reinforced through various methods, ultimately shaping employee perceptions, behaviors and understanding (SHRM, 2020).

            GM’s internal organizational culture fell very short of ideal. It lacked supportive management, employees were reluctant to address concerns with management, there was no urgency to resolve serious issues and there was a severe lack of accountability. Because of these short comings, the GM culture suffered negative self-fulfilling prophecies. Self-fulfilling prophecy refers to a belief or expectation, regardless of whether it is true or not, that influences one’s own behavior and that of others in a way such that the belief or expectation becomes true (Perkins & Arvinen-Muondo, 2013). If no one takes responsibility, if no one brings up the concern, if no one really addresses the problem, no one can be held accountable. This was the belief imbedded within GM that became true after it had been practiced for years within the organization. This deficient way of thinking lead to major safety problems that were left ignored for 11 years.

Leadership styles and internal organizational culture go hand in hand. GM’s leadership style was extremely hands-off. This led to the deficient internal culture. Leadership is responsible for internal culture, good or bad. Mary Barra has made significant strides to adopt a more supportive culture within GM. Encouraging her employees the ability to bring concerns forward is a step in the right direction for this culture change. Bringing concerns to management and being praised for it will also change the “not my problem” attitude fostered by GM. Culture is not this surface phenomenon, but it is our very core.  Edgar Schein stated, “We live in a culture, we display a culture, we’re always driven by our culture” (Kuppler, 2016). This suggests that culture is present in every act of an organization. Changing the leadership style of an organization will indefinitely influence the culture of the organization.

References

Basu, T. (2014, March 31). Timeline: A History of GM’s Ignition Switch Defect. Retrieved from https://www.npr.org/2014/03/31/297158876/timeline-a-history-of-gms-ignition-switch-defect

Becker, B. (2020). The 8 most common leadership styles & how to find your own. Retrieved from https://blog.hubspot.com/marketing/leadership-styles

GM. (2020). About GM. Retrieved from https://www.gm.com/our-company/about-gm.html

Kuppler, T. (2014, September 10). The GM Culture Crisis: what leaders must learn from this culture case study. Retrieved from https://web.archive.org/web/20161013135112/switchandshift.com/the-gm-culture-crisis

Kuppler, T. (2016, October 3). Leadership, humble inquiry & the state of culture work – Edgar Schein. Retrieved from https://web.archive.org/web/20161003223412/www.cultureuniversity.com/leadership-humble-inquire-the-state-of-culture-work-edgar-schein/

Leonard, K. (2019, March 27). Types of Organizational Behavior in the Workplace. Retrieved from https://smallbusiness.chron.com/types-organizational-behavior-workplace-11188.html

Lombardo, J. (2017, February 5). Ford Motor Company’s Organizational Culture Analysis. Retrieved from https://panmore.com/ford-motor-company-organizational-culture-analysis

McIlvaine, A. R. (2018, March 26). 403 Forbidden. Retrieved from https://hrexecutive.com/changing-culture-amid-constant-challenge/

Meyer, P. (2019, February 15). Apple Inc.’s Organizational Culture & Its Characteristics (An Analysis). Retrieved from https://panmore.com/apple-inc-organizational-culture-features-implications

Nayab, N. (2020, February 9). A Review of Companies with Autocratic Leadership. Retrieved from https://www.brighthubpm.com/resource-management/77233-examples-of-companies-with-autocratic-leadership/

Perkins, S., & Arvinen-Muondo, R. (2013). Organizational Behaviour: People, Process, Work and Human Resource Management. London, England: Kogan Page Publishers. 

SHRM. (2020, February 28). Understanding and developing organizational culture. Retrieved from https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/understandinganddevelopingorganizationalculture.aspx

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