With 1.6M Recalls, 31 Failures, and 13 Deaths, GM’s Reputation Hinges on Just 3 Words
If you offered a product that resulted in 31 failures and 13 deaths, you’d take that product off the market pretty quickly, right?
Well, if you’re General Motors you might decide that to recall 1.6 million cars would hamper your attempt to fight back from bankruptcy and might hurt your already fragile reputation.
Evidently you sit on that data for 10 years and hope that it never becomes public. You hope that no one ever discovers the skeleton in your closet.
Until February of 2014.
That’s when accusations started flying that GM deliberately withheld information that ignition problems in some cars, could lead to stalling, shut downs, and even air bag failures. Now, newly minted CEO, Mary Barra, has the unenviable task of trying to mitigate damage to the car company’s image.
While hindsight is 20/20, the negative buzz surrounding GM could have been reduced considerably. Car manufacturers issue recalls all the time. It’s become so common that consumers rarely give such news a second thought—and you could argue that a recall actually demonstrates that the car company cares enough about the quality of its product, that it would rather incur cost, than sacrifice quality. The problem for GM is that the perception is it deliberately covered up the issue for ten years.
Instead of ripping the band aid off quickly, GM kept on adding new band aids in hopes it could keep its festering problem from the public. Now the company is facing greater scrutiny, not just over the quality of its cars, but over the integrity of its leadership.
When facing an issue that could cause a reputation crisis, 99% of the time covering it up is the worst thing to do. Sure, you may buy yourself some time, you may even save your share price from an immediate drop, but ultimately it will leak out. When it does, you face having to answer for the original problem and why you tried to cover it up. As GM is seeing, questions about the recall itself are superficial. Where the real pain is being inflicted is from the probing questions about whether the company sat on the data for 10 years.
For Mary Barra, and any other leader facing a similar reputation crisis, my advice comes in the form of three, easy to remember, words: sincerity, transparency, and consistency.
What Barra needs to do is be sincere in her apology. It should come from her, it should be bold, and it should not be crafted by anyone with a law degree—consumers can smell a non-apology from a mile away.
Next, she needs to be transparent with the information she has available. Why was this covered up? Who knew about it? And what steps are being taken to not only avoid a similar mass safety issue, but to ensure that we never again have to worry about GM sweeping such issues under the floor mat.
Lastly, Barra needs to show consistency going forward. I’m willing to bet we’ll see another GM recall in the next 5 years—it’s practically inevitable. What is in Barra’s control is how that recall is handled. Were her apologies and transparency just rhetoric to get the media off her back? Or, did GM truly learn its lesson and change the way it treats its customers and stakeholders.
Fortunately for GM, Barra seems to get the gravity of the current crisis. In an email she wrote to employees, Barra states, “our company’s reputation won’t be determined by the recall itself, but by how we address the problem going forward. What is important is taking great care of our customers and showing that it really is a new day at GM.”
A new day, yes. A better day? The jury of public opinion is still out.
1 Comment for “With 1.6M Recalls, 31 Failures, and 13 Deaths, GM’s Reputation Hinges on Just 3 Words”
The big wrinkle in your analysis is that the fed safety people knew what GM knew back in 2004 or earlier, and they also did nothing. Some have asserted that the treasury department pressured GM to withhold the information until they sold off tens of billions in government owned GM stock. While I agree that confronting bad news, being transparent and solving the issue quickly is smart advice, what do you do when your partner is more concerned about protecting themselves, at your expense?
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