Senate and House panels next week will grill GM CEO Mary Barra. (David Coates / The Detrtoit News)
Just two months after becoming CEO of General Motors Co., Mary Barra is presiding over the most serious safety scandal in the automaker’s recent history.
As the industry’s first female chief executive, Barra already was under the microscope in a way that few other CEOs have been. Now, she has been summoned to testify before a House panel on Tuesday, and a Senate panel Wednesday.
How she manages questions about GM’s handling of a recall for faulty ignition switches — that the automaker says is linked to 12 deaths — will define her as a leader. And it will show the world just how much GM has, or has not, changed since its near-death experience in 2009.
It is an unenviable position, and one in which few newly minted CEOs have found themselves, according to crisis-management experts. But several say Barra has a good example to follow in Akio Toyoda’s handling of Toyota Motor Corp.’s recent recall crisis.
Like Barra, Toyoda had only been in the top job for a few months in 2009 when a fatal crash involving a Lexus prompted a National Highway Traffic Safety Administration investigation into reports of unintended acceleration involving Toyota vehicles. After some initial missteps, Toyota took responsibility for the problem, halted sales of affected cars and trucks until a fix was found and ordered dealerships to stay open around the clock to get customers back on the road.
But it was Toyoda’s self-effacing apologies and contrite testimony before the U.S. Congress that really helped extinguish the media firestorm and went a long way toward restoring his company’s vaunted reputation for quality.
“It’s a good benchmark for GM, the way (Toyoda) handled that. They took responsibility,” said Noel Tichy, an expert on crisis-management who teaches at the University of Michigan’s Ross School of Business. “Toyota clearly came out relatively unscathed. I don’t think it did much damage to their reputation. But I think this is a much bigger deal.”
Tichy says GM’s situation looks a lot more to him like the Ford-Firestone saga. And he should know. Tichy was a close adviser to Ford CEO Jacques Nasser during that crisis and was fired along with him in a move that he says was more about company politics than safety.
It is another lesson Tichy says Barra would do well to study.
“When you’re in a crisis, you better damn well have a trustworthy team beside you. She’s got a very difficult political situation with a very strong-willed chairman over her and the guy who lost out reporting to her,” he cautioned, referring to GM Chairman Tim Solso and product development chief Mark Reuss, who was also under consideration for Barra’s job.
Reuss, who replaced Barra as head of global product development, has said publicly that he is happy with the way things worked out following the departure of former CEO Dan Akerson from GM and bears Barra no ill will. Reuss was by her side last week when Barra fielded questions from the media about the company’s internal investigation.
'Stiff test for the CEO'
It is important not to appear to be hiding from the press, says Charlie Holleran, who joined Ford as vice president of communications shortly after Tichy’s departure and has gone on to advise other companies about crisis communications since leaving the automaker in 2007.
At times such as this, he says, there is usually a lot of tension inside corporations between their legal advisers and image advisers.
“I’ll bet there has been more than one heated debate between those who want to say nothing that can come back to haunt the company in a courtroom and those who want the company to be completely forthright as the price that has to be paid in order to try to regain some public credibility,” Holleran said. “It tends to be a very lonely time and a stiff test for the CEO. She needs unfiltered input from equally strong advisers. She needs to completely understands the pros and cons of both points of view. And then has to make a call — herself.”
Holleran said the real danger for executives dealing with crises of this magnitude is that they inevitably distract them from the important business of running the company.
Barra told reporters that the executive team working on the recall issue meets daily either in person or by phone. She said she devotes time to the recall daily and has had to postpone one trip to South America because of the issue, but plans to visit in a few weeks.
“She’s very involved with it, but (is) not consumed by it,” Reuss said.
While Holleran and Tichy applauded GM for making Barra and Reuss available to the press and stressed the need for her to be personally out front on this issue, other crisis experts cautioned against too much exposure.
GM posted videos of its chief executive answering questions about the recall on a blog and on the automaker’s YouTube channel Wednesday.
“A company has to be very careful about how it exposes its CEO in crisis,” said Gene Grabowski, a senior strategist and crisis management expert for the Washington, D.C.-based Levick public relations firm. “Generally speaking, you should withhold the CEO unless it’s absolutely necessary. Because she’s new to the position and because it is such as an important issue because Congress and federal prosecutors are involved, this is probably one of those times that the CEO needs to step up and speak for the company.”
Not Barra's first time
This is not the first time Barra has been thrust into the spotlight by safety concerns.
Shortly after she was named head of global product development for General Motors in 2011, the National Highway Traffic Safety Administration began investigating the Chevrolet Volt after the battery pack in one vehicle caught fire during crash-testing. Barra ordered her engineers to work closely with the NHTSA investigators and GM offered free loaner-cars to any Volt customers who were not comfortable driving their cars while that investigation was ongoing.
After other fires were reported, GM recalled the Volt to toughen the protection around the battery.
GM needs to take a similarly proactive approach today, Tichy said.
“They ought to not hide behind the old GM. Legally, they may be able to pull that off, but if they hide behind that, the cost to them in terms of credibility and brand image will be enormous,” he said, referring to the notion that GM’s bankruptcy filing in 2009 insulates the new company from product liability for vehicles produced before that date.
“There ought to be some restitution to those families. At the end of the day, it’s more costly to lose your reputation.”
Melissa Burden contributed.