Business

March 14, 2014

Recall interrupts CEO honeymoon for GM’s Mary Barra

Few chief executive officers would want General Motors CEO Mary Barra’s job right now. Facing massive and mounting problems from the recall of 1.6 million vehicles because of a faulty ignition switch and rebuilding GM five years out from bankruptcy, it seems like it’s all uphill for the first-time chief. But some experts believe the problems could benefit Barra as she is still in the honeymoon phase of her tenure.

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.

Related content

Comments

Editor's Choice Videos