Lack of Attention to Core Values Could Cost General Motors Billions

General Motors ignition switch problem has resulted in anywhere between 13 and 300
deaths depending on which source proves to be accurate and a recall of more than 2.6
million vehicles. It took more than 11 years for the organization to take the necessary action
to fix the problem, according to a report issued by Anton Valukas, the former US Attorney
charged with investigating the issue.
The Valukas Report identifies aspects of the corporate culture that prevented the issue from
escalating to higher levels of management, including, an unwillingness to raise problems for
fear that it may delay the launch of a vehicle, a fear of reprisals against employees that
raise safety issues, a devotion to cost control that permeates the fabric of the whole
culture, and the lack of accountability referred to as the GM salute.
Core Values and Culture
An organizations core values should be the foundation of its culture. In the case of GM, it is
clear that the values embedded in the organization are not the same as their stated core
values. At the very least, they violated their stated values of safety, accountability,
quality, and customer focus. One could also argue that they violated a few more too.
The chart shows all GM's core values in the context of the Consilient Universal
Organizational Values Framework, highlighting which ones were explicitly violated in the
ignition switch scandal.

Detroit Free Press credits Kathryn Harrigan, professor of business leadership at Columbia
University, with saying that the old GM structure demonstrated to employees that safety
was not a top priority to management and that this culture migrated into the rebooted GM
after it obtained bankruptcy protection in 2009.
All too often we see companies that proudly display their core values, but make no effort at
embedding them into the organizations. It is often a checklist item that a management
consultant is tasked to develop based on an off-site meeting of senior executives and then
its back to business as usual. These tend to be organizations that do not understand the
importance of values, and how they can work for an organization. In some cases, it is just
an organization that has lost its way. But the very essence of a core value is that it is
prioritized over short-term profits.
Costs
The cost of the GM ignition switch saga is likely to exceed $3 billion, according to the
analysis conducted by Consilient Inc., and includes: the actual costs of the recall itself;
additional fines by regulatory authorities; class action lawsuits; and wrongful death suits.
We can also expect increased regulatory scrutiny of the company and the industry as a
whole and reputational damage to GM could have a far-reaching long-term impact on
market share and profitability.
The Valukas Report, while scathing and calling out incompetence and neglect, concludes
that the top three senior executives in the organization were not aware of the problem until
very recently, exonerating them from any guilt. Some have viewed this conclusion with
skepticism, maintaining that the investigation was funded by GM and there has been a long-
standing relationship between Valukas and the firm.
US Senator Richard Blumenthal is on record as saying that the report amounts to circling
the wagons to marshal a legal defense, and has labelled it as whitewashing.
It is likely the reputational damage to the firm will, at least in part, be determined by their
actions going forward. Newly appointed GM CEO, Mary Barra, has already announced
some sweeping changes in the safety management regime at GM, ushered 15 people out
of the door, and pledged to bring the company back on track. But there is the issue of
whether the company will shield itself behind its 2009 bankruptcy protection and distance
itself from pre-July 2009 claims, or whether it will waive its immunity.
If GM chooses to ignore earlier claims, the reputational damage could be severe, even
though it may have a sound legal footing for doing so, because customers will no longer
trust GM to do the right thing. This will demonstrate another set of values violations, namely,
integrity and respect in favor of wealth creation.
While the costs of embedding its core values into an organization with 220,000 employees
will be large, there would be huge benefits, namely, a reduced risk of adverse events such
as this one, improved organizational functioning, increased employee pride (coupled with
improved employee engagement and lower turnover) and increased customer commitment.
Over the long-term, it will pay for itself many times over, and may even act as a bulwark
against intense competition.
Author: Christie Christelis, CEO, Consilient Inc.
www.consilientinc.com