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Recall interrupts CEO honeymoon for GM’s Mary Barra

By Jena McGregor
Washington Post
GERMANY OPEL
Ralph Orlowski - Bloomberg
Mary Barra, chief executive officer of General Motors Co.

More Information

  • Deaths attributed to ignition flaw may climb

    The death toll related to an ignition flaw in eight small-car models that General Motors sold a decade ago is likely to climb, lawyers and safety advocates said.

    Automakers often make upward revisions to fatality figures related to recalls as they unearth fresh information, while attorneys are racing to line up plaintiffs seeking compensation for alleged wrongful deaths or injury. GM’s liabilities are also poised to rise as lawyers and safety advocates press the biggest U.S. automaker to pay restitution to victims even from before GM’s 2009 bankruptcy reorganization, which shielded the new GM from the old company’s liabilities.

    GM, which said it has identified 12 deaths in connection with the recall of 1.6 million models made in the mid-2000s – including some Chevrolet Cobalts and HHRs and other Opel, Pontiac and Saturn models – has said it continues to review data and information related to the recall.

    “For every incident that gets reported to the automaker, there are usually nine or 10 more,” said Clarence Ditlow, executive director of the Washington-based Center for Auto Safety, a consumer advocacy group. “You can expect the number of deaths associated with this recall to rise.” Bloomberg News



WASHINGTON Few chief executive officers would want Mary Barra’s job right now.

The company she leads, General Motors, is just five years out from bankruptcy and a government bailout. It is recalling 1.6 million vehicles to fix a faulty ignition switch, a problem the company now says it has known about for more than 10 years. Lawmakers in both the House and the Senate have announced plans for hearings. There are reports of a probe by the Justice Department, too.

And she reportedly first learned of the problem after being on the job just a few weeks.

Other CEOs have faced monumental crises this early in their tenure. The Sept. 11, 2001, terrorist attacks happened just four days after Jeffrey Immelt took over as CEO of General Electric. Within two months of Steven Newman becoming CEO of Transocean, its Deepwater Horizon oil well exploded, creating a massive spill in the Gulf of Mexico.

Still, few CEOs have faced such major internally induced crises as the one Barra confronts at GM.

As a result, it’s easy to see nothing but the massive challenges she faces. On top of managing the recall and the investigations – Barra has said she’s personally directing the effort – there is still the not-so-simple matter of continuing to revamp GM’s bureaucratic culture and building on the company’s rebound.

In addition, there are the unique challenges given she’s this new to the role. She may not yet have made all the changes on her senior team she hoped to make. No new CEO is practiced in the art of being the external face of the company to investors, the media or especially congressional committees. And then there’s the tricky tightrope she'll need to walk between distancing herself from the past and looking like she’s making excuses.

“It doesn’t do any good to blame people and settle scores,” said Bill George, the former CEO of Medtronic and Harvard Business School professor.

But for all those thorny challenges, she may have certain things working in her favor. For one, Barra – or any CEO facing a crisis this early in his or her tenure – is likely to be showered with resources and advice from GM’s board. Board members don’t want the CEO they just put their stamp of approval on to fail, nor do they want to go through the difficult process of naming another chief executive any time soon.

“She actually has more latitude given that it’s so new,” said Jim Citrin, who leads the North American CEO practice for the executive search firm Spencer Stuart and is the co-author of the book “You’re in Charge. Now What?” “She’s still in the honeymoon phase. The board, everybody really, wants to give her the benefit of the doubt. … There’s this perspective capital, this honeymoon capital that she can draw on now.”

The crisis also presents her with several opportunities. Especially for an internally promoted CEO such as Barra, who used to be peers with the people she now manages, a crisis gives her the chance to establish herself as the one in charge much faster. Everyone immediately looks to the CEO for direction – with some even breathing a sigh of relief it’s not them.

“When a crisis hits, you switch from a normal organization to a wartime one,” said Michael Watkins, a professor at the Lausanne, Switzerland-based business school IMD who consults with executives in new leadership roles. “And a war-fighting structure has a four-star general at the top.”

Moreover, she'll have the chance to immediately get to know the strengths and weaknesses of her team in ways that a normal business environment wouldn’t offer.

“Is there a better way to get to know your team than seeing how they deal with this?” Watkins asked. “One of the key things you do as you’re starting as CEO is evaluate the team. This is really going to accelerate that process.”

And if she manages the crisis well – no easy feat for anyone – it will define her career. It will let her rebuild the culture more than any management program or training session ever could.

“You can become known as someone who does what they say they’re going to do or doesn’t,” said Douglas Conant, the former CEO of the Campbell’s Soup Co. and now a leadership adviser. “You have an opportunity to model the behavior you want your organization to have.”

For Barra, that will mean taking the moral high ground and worrying about the future of the company rather than herself.

“The day you start doing your job to save your job is the day you start to lose your job,” Conant said.

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