Case Study:
Safety Culture at General Motors Post the Ignition Switch Recall Crisis

Sireesha Mamidenna
Associate Professor, Dept of HRM and Soft Skills, IBS Hyderabad (Under IFHE - A Deemed to be University u/s 3 of the UGC Act, 1956), Hyderabad, Telangana, India. E-mail: sireesha.m@ibsindia.org

Balaswamy Pasala
Research Associate, IBS Hyderabad (Under IFHE - A Deemed to be University u/s 3 of the UGC Act, 1956), Hyderabad, Telangana, India. E-mail: balaswamy@ibsindia.org

The case study describes how faulty ignition switches in some car models of General Motors (GM) led to one of the biggest recalls in the history of the US automobile industry. The recall happened almost 10 years after customers first complained about safety issues related to the ignition switch that automatically turned the car's engine off while the vehicle was in motion and caused non-deployment of airbags during crashes. The defect was linked to 124 deaths and 275 injuries and GM paid about $2.6 bn in penalties and settlements, including the fine. The case looks into the various reasons identified for this fiasco when Mary Barra, soon after becoming the CEO of GM in 2014, appointed a law firm Jenner & Block LLP and former US Attorney Anton Valukas to conduct a thorough investigation into the circumstances that led to the recall. One of the primary observations of the Valukas Report was the absence of a culture of safety at GM. The report also cited issues related to working in silos that impacted cross-functional communication and technical operations. GM undertook a number of measures to bring about a change in its safety culture.

We are not going to be satisfied with just solving our current problems. We are going to be industry leaders.1
- Mary Barra, CEO, GM, in July 2014

Openness and accountability are two things that are very different at GM now. Everyone is encouraged to speak up on safety issues. They'll be followed up on and we'll take action.2
- Maryann Combs, Vice President of Global Vehicle Safety, GM, in September 2019

We reinforce safety on a monthly basis, but once a year we dedicate a week to product safety and workplace safety and making sure people know why it's so important. That kind of commitment over many years ... needs to continue.3
- Mary Barra, CEO, GM, in June 2020

Introduction

In September 2018, a federal judge in New York dismissed criminal charges against General Motors Company (GM) in connection with faulty ignition switches in some of its vehicles that had led to one of the deadliest vehicle defects and biggest recalls in the US automobile industry's history. The issue began over a decade ago after customers first complained about safety issues related to the ignition switch in the Chevrolet Cobalt (Cobalt), a compact car launched by Chevrolet (a division of GM), in 2004. GM had paid a total of $900 mn in fines to settle a US Department of Justice criminal case. The company also paid about $2.6 bn in penalties and settlements, including the fine,4 and agreed to Federal monitoring by an independent monitor appointed under the 'Deferred Prosecution Agreement' that the company entered into as part of the US Department of Justice investigation of the ignition switch recall.5

GM announced a recall in February 2014 that ended with some 30 million small cars being recalled by the end of 2014 beginning with the Cobalt and Pontiac G5 models. Two weeks later, it had to add other Chevrolet, Pontiac, and Saturn models such as Chevrolet HHR SUVs, Pontiac Solstice, and Saturn Sky sports cars, following a complaint filed by Lance Cooper, a lawyer for one of the accident victims, to the National Highway Traffic Safety Administration (NHTSA). All of these recalled cars were suspected of having a faulty switch that automatically turned the car's engine off while the car was in motion and caused non-deployment of airbags when a crash occurred. The defect related to the ignition switch was linked to 124 deaths and 275 injuries and the company paid about $2.6 billion in penalties and settlements, including the fine6 (Refer to Exhibit I for a detailed timeline of the entire issue since 2004).

Mary Barra (Barra), who assumed the CEO role on January 15, 2014, wanted to prevent the reccurrence of such a situation in future. In March 2014, Barra appointed a law firm,

Jenner & Block LLP (Jenner), and former US Attorney, Anton Valukas (Valukas), to conduct a thorough and unimpeded investigation into the circumstances that had led up to the recalls due to the flawed ignition switch. The investigation was directed to determine how and why it had taken GM so long to announce a recall. The investigation team submitted the final report with its observations as well as recommendations in about three months.

Based on the recommendations in the Valukas Report, GM took a number of measures. These measures, which led to an intensive focus on workplace safety, had a considerable impact on the number of recalls in just three years. As of September 11, 2019, recordable injury rates at GM had dropped by 33%, and total incident rates by 30% since 2016.7

Background
GM, an American multinational corporation headquartered in Detroit, was founded by William C Durant on September 16, 1908, originally as a holding company. It designed, manufactured, marketed, and distributed vehicles and vehicle parts. It also sold financial services through GM Financial, the captive finance company and wholly-owned subsidiary of GM. As of 2019, the company had about 164,000 employees spread across 396 facilities located in 30 countries in six continents. It reported operating income of $5.481 bn in 2019 and secured #13 on the Fortune 500 rankings of the largest US corporations by total revenue.

Eager customers, who bought the Cobalt after it rolled off the production line in 2004, found that the engine shut down even if their knees accidentally bumped against the key while driving. The company received several complaints about the faulty ignition switch. GM's engineers looked into the complaints in 2004 and 2005 and even developed potential solutions to fix it. But GM's management decided that the tooling cost and replacement of each piece were too high. GM ultimately informed its dealerships to advise Cobalt's owners to remove heavy objects from their key chains to prevent the engine shutting down. A year later, GM decided to fix the ignition switch and asked its supplier, Delphi Mechatronics,8 to increase the torque in the ignition switch so the key would not move out of the run position and into accessory mode, causing the engine to stall.

As early as 2007, GM again started tracking incidents of the air bags not deploying in car crashes involving the Cobalt. Along with GM, the NHTSA was also evaluating concerns related to the Cobalt. The NHTSA, however, did not look at the ignition switch problem and restricted its investigation to only airbag non-deployment. In 2011 and 2012, GM assigned two different groups of engineers to examine the problem. However, it was not until December 2013 that the company finally put the pieces together and linked the problems of the non-deployment of air bags to the faulty ignition switch problem. This was almost 10 years after customers had first told GM about problems with the Cobalt ignition switch (see Exhibit II for the technical details of the ignition switch defect). In February 2014, GM formally notified the NHTSA about the ignition switch issue that existed in its Cobalt and a few other car models manufactured between 2005 and 2007.

Valukas Report
After Barra asked for a thorough enquiry, GM provided access and cooperation to Valukas throughout the entire investigation period of three months. The investigation covered a time period of more than 15 years and involved more than 350 interviews with over 230 individuals and more than 41 million documents. The final report was submitted on May 29, 2014, with the investigation team's observations related to the faulty ignition switch as well as its recommendations.

Report Observations
Valukas' investigation pointed to the fact that this was not merely an engineering, manufacturing, or legal problem-it was fundamentally related to GM's culture. Some of the report's findings pinpointed GM's culture of resistance to raising issues, the GM Salute and the GM Nod, and the presence of information silos as the root causes.

Resistance to Raising Issues: One of the primary observations in the report was that there was resistance or reluctance to raising safety issues or concerns in the GM culture. If an employee tried to raise a safety issue, he/she would get pushed back by the superiors. The report found that during a vehicle launch before Cobalt, engineers were unwilling to identify issues out of fear that it would delay the launch. Line managers sometimes even warned engineers against putting technical glitches above the commercial interests of the company. The report stated that in the case of Cobalt too, GM personnel had failed to raise significant issues with key decision makers. Senior attorneys, general counsel, and engineers also did not escalate the issue to their superiors.

The GM Salute and the GM Nod: Another observation was that the GM culture did not encourage noting down the minutes of meetings. It was often difficult to ascertain who had sat on committees or what issues they had considered. No employee owned any decision. Employees stated that when they raised the Cobalt ignition switch issue and proposed a solution, it had reached a dead end within some committee or ad hoc group exploring the issue. This phenomenon of avoiding responsibility was labeled the 'GM Salute'-the habit of employees going through meetings, with their arms folded and pointing outward at others, as if to indicate that the responsibility lay with someone else. Another phenomenon, which Barra labeled the 'GM Nod', was an empty gesture where everyone nodded as if agreeing with a proposed plan of action but then leaving the room with no intention of following through.

Information Silos: GM employees did not have a culture of information sharing. In 2004 and 2005, when initial complaints on the ignition switch came in, the engineers looking into the issue were not aware that the airbags did not deploy when the ignition switch was in accessory mode. As a consequence, the engineers looked at it as a mechanical issue and failed to recognize the complaints as a safety issue and to take concrete steps to resolve the problem quickly.

Report Recommendations
The Valukas Report said that there were a number of interrelated factors that had led to GM's decade long failure to discover the safety defect in the ignition switch and initiate a recall. It was very important that GM minimized the risk of such instances happening again. The report made preliminary recommendations to GM that would help it to reexamine its policies, procedures, and culture, and provide it with an opportunity to innovate and become an industry leader in the processes used to ensure consumer safety.

Based on its investigation, the Valukas Report made recommendations of safety at both the operational and cultural levels. It recommended a relook into Data Storage, Retrieval, and Analysis; Engineering Processes and Databases; Product Investigation Process; Compliance, Auditing, and Oversight; and Field Performance Evaluation (FPE) Processes to improve safety at the operational level. On the other hand, the report proposed emphasis on Safety Culture; Policies and Training; Creation of an additional position for Vehicle Safety directly reporting to the top management; and annual training on improving safety at GM's culture level. Safety at the operational level was directed more toward external factors whereas the safety at the cultural level focused on the company's internal elements.

Organizational Structure: The report advised GM to create a position of vice president of Global Vehicle Safety who would report directly to the CEO and the Board. All organizational departments, divisions, or groups that had safety-related responsibilities had a direct or indirect reporting line that led up to the vice president of Global Vehicle Safety.

Emphasis on Safety Culture: An organization-wide emphasis and commitment to safety was a critical component to avoid undesirable situations. To ensure consumer safety as a prominent aspect of GM's culture, the report recommended creation of a mechanism for regular communications with employees, suppliers, and the NHTSA about safety. The report also suggested promoting and rigorously enforcing the non-retaliation policy, and developing protocols for escalating potential safety issues to appropriate levels of management. It emphasized that GM should encourage employees to share information across functional areas and disciplines.

Policies and Training: The Valukas Report found that in many cases, employees were either ignorant or did not sufficiently understand an existing policy. Many of them reported receiving little to no training on policies and substantive issues relevant to their roles. The report recommended that GM ensure appropriate policies were in place and that sufficient training was provided. Also, a continuous and timely review of policies and procedures that had a bearing on safety issues was recommended so that they could be easily understood and were readily accessible. In addition, the report advised that ways should be found to improve or create standards for elevating safety issues and to train employees on lessons from previous safety issues like the ignition switch defect in the Cobalt.

GM's Safety Initiatives
To avert safety problems like the ignition switch issues, GM took various initiatives even before the Valukas Report was tabled. The company paid keen attention to the Valukas Report's recommendations also. It created a senior position for vehicle safety and introduced a 'Speak Up' program, silos to systems approach, and new-employee orientation and annual training on improving the safety culture. Barra also fired 15 employees, including eight executives, for their role in failing to call attention to or respond urgently to the defective switches.9

Creation of Senior Position on Vehicle Safety
GM created the position of vice president for Global Vehicle Safety and recruited Jeff Boyer (Boyer) whose first priority was to quickly identify and resolve product safety issues. In the newly created role, Boyer held the global responsibility for the safety development of GM vehicle systems, confirmation and validation of safety performance, as well as post-sale safety activities including recalls. Boyer's appointment was intended to avert a recurrence of safety issues in the future. He was asked to report to John Calabrese, vice president of Global Vehicle Engineering, and was also made a member of the Global Product Development team led by Mark Reuss, executive vice president, Global Product Development, Purchasing, and Supply Chain.

Boyer had to provide regular and frequent updates on vehicle safety to Barra, other senior management members, and the GM board of directors. Barra said, "Jeff's appointment provides direct and ongoing access to GM leadership and the Board of Directors on critical customer safety issues. This new role elevates and integrates our safety process under a single leader so we can set a new standard for customer safety with more rigorous accountability. If there are any obstacles in his way, Jeff has the authority to clear them. If he needs any additional resources, he will get them."10

Speak Up Program
GM introduced an initiative called 'Speak Up for Sharing Concerns' and the 'Speak Up for Safety' program. These initiatives were intended to remove perceived and real barriers to candid conversations between employees and their leaders and help foster a safety- first culture. GM also encouraged employees to speak up when they suspected misconduct. GM introduced many resources through which employees could 'Speak Up for Sharing Concerns' and 'Speak Up for Safety'.

Speak Up for Sharing Concerns: Employees could speak up for sharing their concerns through the 'Let Managers Know' and 'Contact the Awareline' programs.

Let Managers Know: GM asked its employees to share their concerns first with their direct supervisor who would be able to offer guidance and answer any questions and report it to another internal resource. If employees were not comfortable discussing the situation with their direct supervisor, they could even approach their HR or the global ethics and compliance center or legal staff or local leadership. Barra said, "If you see a problem that you don't believe is being handled properly, bring it to the attention of your supervisor. If you still don't believe it's being handled properly, contact me directly."11

Contact the Awareline: The Awareline was another resource through which the employees could raise concerns. The Awareline was operated by an independent third party and was available 24/7 from any location around the globe. GM encouraged employees to report their concern anonymously, where permitted by law. The company gave the assurance that it would strictly exercise discretion to avoid disclosing the sources of information it received and would keep information confidential. The company said it would take the concerns seriously and would investigate and respond appropriately.

Speak Up for Safety: GM considered safety to be the driving force behind every action. It believed that quality and safety were its foundational commitments, and it would never compromise on them. It held that everyone at GM had a personal responsibility for vehicle safety. To maintain the highest standards and to put the safety of its customers first, GM encouraged employees to take part in identifying, reporting, and escalating safety issues that they learned of or suspected so that the company could strengthen its approach to vehicle safety. This program was open to hourly and salaried employees, contract workers, and suppliers working on GM's behalf. They could share their safety concerns or suggestions about how to improve the safety of its vehicles or workplace. For instance, at a GM plant in Brazil in 2018, a security guard noticed a parked Chevrolet Spin12 was on fire. The fire was extinguished and the car was handed over to the engineering team. GM determined a starter motor crank had caused the fire when it short-circuited because water had been able to get inside the underhood electrical center. The investigation resulted in a recall, and the guard who reported the issue was recognized as a '2018 Safety Hero'.

To ensure that its employees felt comfortable raising safety concerns, GM suppressed retaliatory approaches against anyone who raised a concern in good faith. If employees suspected or experienced retaliation, they could report it through the 'Speak Up for Sharing Concerns' program or 'Speak Up for Safety' program. The Global Vehicle Safety Group would then investigate the matter and take disciplinary action within a prescribed time period. Sometimes, based on the severity of the retaliation, it could lead to even termination.

Employee Safety Concern Process: The company initiated this program at all manufacturing sites globally. GM encouraged employees and others working at manufacturing sites to report workplace safety concerns first through the Employee Safety Concern process. The company also intended to raise its safety concerns using the Speak Up for Safety program and announced rewards to anyone finding issues related to safety. "We will recognize employees who discover and report safety issues to fix problems that could have been found earlier and identify ways to make vehicles safer"13, Barra said. Each year at Global Safety Week, the company recognized 'safety heroes' and thanked team members whose actions, both big and small, made General Motors a safer workplace. This recognition program encouraged its members to look out for one another and respectfully challenge unsafe behaviors everywhere - from the shop floor to its Detroit headquarters.

Share with GM's Independent Monitor: GM had an independent monitor appointed under the 'Deferred Prosecution Agreement' that the company entered into as part of the US Department of Justice investigation on the ignition switch recall. If an employee noticed any unethical or illegal conduct that was not reported to the proper US federal, state, or municipal agency as per the newly instituted policies and mechanisms, they were obliged to report it to either the independent monitor or the Global Ethics and Compliance Center. Once the report of suspected misconduct was received, GM would maintain the confidentiality of the resource and then appropriately investigate it. As investigations often involved complex legal issues, GM asked its employees to refrain from conducting their own investigation. It believed that if employees acted on their own, it might compromise the investigation and that could negatively affect both the employee as well as the company.

Silos to Systems Approach
GM added a systems engineering organization to oversee how each part impacted the whole vehicle. It encouraged employees to learn and share knowledge with each other so that they could connect the dots and understand how their own cars were built. Prior to the ignition switch issue, engineers at GM worked in silos. "I'm responsible for this part, someone else will handle another part and it's not my responsibility to connect the dots. Now, part of our process is to make sure we are looking at things from a system perspective"14, said Maryann Combs (Combs), vice president of Global Vehicle Safety at GM. Silos to systems meant that if there was a problem with a wire harness, for example, employees were compelled to know how that would affect other parts of the car and the entire system. It was necessary to tackle that issue before building the car to avoid a recall later. GM also sought to enhance communication among employees, suppliers, and dealers.

New-Employee Orientation and Annual Training on Improving Safety
The ignition switch crisis led to GM looking more deeply into its safety culture. It discovered workplace injuries that needed to be addressed and realized that employee engagement around safety needed to grow. The company started a Global Safety Week during which it reinforced the safety culture. The company reiterated to its employees the importance of workplace and product safety. GM used the Global Safety Week program every year to share safety hero stories.

As part of driving this change, GM leaders wanted their employees to keep the safety scandal in their minds so that it would not be repeated. "Every day we make our safety processes better, but we don't want people to ever forget (the ignition switch crisis), and if you're new, you learn about it",Combs said.15 GM continuously trained and encouraged new and existing employees to communicate freely and openly about the safety issues that they came across and to learn from them. The training also drilled into new employees how they should openly and freely speak up for safety.

Looking Forward
After the ignition switch recall, GM intensified its focus on workplace safety so that there would never be another safety lapse. The company's efforts on safety helped it to reduce recordable injury rates and total incident rates (Refer to Exhibit III for details on US and worldwide recall figures). However, GM was determined that it would pursue further safety initiatives until that figure was 100% injury-free.

GM believed that the process of keeping its customers safe should begin in its own house, with its own workforce. Any culture change would start with behaviors, and with continuing to hold each other accountable for personal safety. Combs said, "Safety is personally important to me. I live it every day with teenagers and little ones going in and out of the car. Not everyone knows how seriously we take this. We don't wait to see what's happening in the field. We're using our own data to say there might be a problem because we're on the road to zero crashes."16

Suggested Readings and References

1. Mike Spector, Jaimi Dowdell and Benjamin Lesser, "Special Report: How secrecy in U.S. courts hobbles regulators", https://in.reuters.com/, January 16, 2020.
2. Jamie L LaReau, "He uncovered GM crisis, took on automaker when NHTSA didn't", https://www.freep.com/, September 10, 2019.
3. Sam McEachern, "GM Places New Found Focus on Accountability Post-Ignition Switch Scandal", https://gmauthority.com/, September 6, 2019.
4. Mark Huffman, "GM wins major Ignition Switch Defect Lawsuit", https://www.consumer affairs.com/, August 8, 2019.
5. Eric D Lawrence, "GM Settles Deadly Ignition Switch Cases for $120 million", https:// www.usatoday.com/, October 20, 2017
6. Max Blau, "No Accident: Inside GM's Deadly Ignition Switch Scandal", https://www. atlantamagazine.com/, January 06, 2016
7. Heather Long, "GM Recalls Reach 30 million for Year", https://money.cnn.com/, October 04, 2014.
8. Tim Kuppler, "GM Culture Crisis Case Study - A Tragedy and Missed Opportunity", https://www.humansynergistics.com/, June 24, 2014.
9. Peter Cohan, "Six Hard Steps To Fix GM's Culture", https://www.forbes.com/, June 06, 2014.
10. Micheline Maynard, "'The GM Nod' And Other Cultural Flaws Exposed By The Ignition Defect Report", https://www.forbes.com, June 05, 2014.
11. Anton R Valukas, Jenner and Block LP, "Report to Board of Directors of General Motors Company Regarding Ignition Switch Recalls", https://assets.documentcloud. org/, May 29, 2014.
12. "The GM Ignition Switch Recall: Why Did it Take So Long?", https://www.govinfo.gov/April 01, 2014.
13. Tanya Basu, "Timeline: A History of GM's Ignition Switch Defect", https://www.npr. org/, March 31, 2014.
14. "Fixing a Weak Safety Culture at General Motors", https://caraccidentinformation. wordpress.com/, March 22, 2014.
15. Amy C Edmondson, "Fixing a Weak Safety Culture at General Motors", https://hbr. org/, March 20, 2014.
16. Joann Muller, "GM Creates Vehicle Safety Job In Wake Of Recall Questions", https://www.forbes.com/, March 18, 2014.
17. Tom Krisher, "Barra apologizes for GM's Handling of Recall, Names Longtime Engineer as Safety Chief", https://www.canadianbusiness.com/, March 18, 2014
18. "Message from Chairman and Chief Executive Officer", https://investor.gm.com/