GM's Barra: It's time to get candid
General Motors Co. CEO Mary Barra has a message for her employees: Help the Detroit automaker reform how it does business, or get out of the way.
"We'll either change the people or we'll change the people," she told Detroit News editors and reporters Monday in a 70-minute roundtable discussion at the company's Renaissance Center headquarters. "We know what General Motors can be. We're on it. We're committed to doing it. It's personal."
Barra, on the job for 10 months, has been laboring to change the 106-year-old automaker's culture that has been criticized for decades as insular, slow to take responsibility for problems, hesitant to deliver bad news to superiors and reluctant to fire poorly performing executives. She has said in recent interviews that both she and the company were "too nice."
In mid-September, Barra met with the company's top 300 global executives at a warehouse in Detroit and pressed the need for reform.
She sent a tough message: Executives shouldn't stay at the automaker if they aren't in agreement with her plans to reform GM.
"If you don't believe in this plan, then you clearly have other things you could do. And please do so, because the task is hard enough if we all are aligned — and if we're not, it will be even more difficult," Barra said. "If you believe there is a different strategy, there's probably some company you can go work at and execute what you think is right. ... The conversation's not even hard, because why would you want to be here if you don't believe in where we're headed or you don't believe we're taking the right steps?"
The task has been made far more urgent since GM's recall of 2.6 million older vehicles for ignition switch defects that have now been linked to 30 deaths. GM faces investigations from the Justice Department, Congress, 48 state attorneys general, the Securities and Exchange Commission and federal regulators.
The company in May paid a record $35 million fine to the National Highway Traffic Safety Administration and agreed to up to three years of intense oversight by the safety agency.
In a unusual step for GM, Barra in June announced she had fired 15 employees — including a company vice president and several senior lawyers — after a scathing internal report by a law firm found GM suffered from "organizational dysfunction" in its handling of safety issues and other matters.
Barra said she is holding employees accountable.
"You are not really being nice if you don't say the truth in the meeting and you say it behind someone's back later. I think we just have to get candid," Barra said, saying she wants employees to be accountable and drive for results. "This is not a company of best efforts. It's got to be a company, if you say you are going to do something, get it done."
Barra said: "There's only so much time where you can say 'ya, ya' and it doesn't get done, and that's where the accountability piece comes in. It isn't best efforts or it isn't explaining why the dog ate your homework." She added: "My God, you're a senior executive. You could do other things. Why — life is too short — stay and do something you don't believe in?"
GM's CEO wants to shake things up by doing more to force departments to work with each other. She and top leaders including President Dan Ammann and Mark Reuss, head of GM's global product development, are changing behaviors to quicken culture change. She also told the company's 300 leaders that if they see the company's top 17 executives "not being consistent — call us out on it," giving them permission to raise concerns.
Barra said she personally was "called out" about a decision-making process. The concern prompted a new meeting. "What we realized is we didn't have everyone's view on the table," Barra said.
A record-setting 30 million vehicles recalled this year in 78 campaigns has cost the automaker $2.7 billion. GM's ignition switch compensation fund said Monday it had approved 30 death and 31 injury claims through Friday — up from the 13 deaths GM initially said were linked to the ignition switch defect.
The number of total claims filed as of Friday was 1,580, up 4 percent from the previous week.
Wall Street analysts think GM may eventually need to pay billions to settle government investigations. Barra said she would like to resolve the investigations.
"We don't control the timeline — others do," she said. "That's why our approach has been on every step of the way since Day 1: We will cooperate fully. We want to have those issues resolved and put behind us — all litigation and discussions with (government) agencies — but we don't control it, so all we can do is cooperate."
Five years after GM's near-collapse and bankruptcy restructuring, the company reported more than $4 billion in adjusted pretax earnings in the first nine months of the year — buoyed by strong SUV and truck sales. And it plans to introduce several updated and cars next year. The automaker's sales don't appear to have been hurt by the recall crisis.
Barra said she is actively searching for a new top lawyer for the automaker. She defended retiring general counsel Michael Millikin, who announced this month he is retiring early next year. Since taking over as CEO in mid-January, Barra has named several new senior executives, including creating a new vice president for global safety. GM hired away a former top Infiniti and Audi executive to run Cadillac, ousted the top lobbyist and spokesman, named a new human resources chief and restructured engineering operations.
Those changes are spread through the ranks: Nearly 40 percent of the 35,000 salaried workers in the U.S. have worked for the company less than five years, which Barra said helps bring in new ideas.
Asked if she is contemplating more management changes, she said she "feels really good" about the company's top 17 executives.
"We're going to continue to look and put the best people in the jobs, whether they come from inside or outside the company," Barra said. "You want the best person for the job — regardless of where they come from — at all levels of the company."
Barra conceded it will take time for the culture change to take hold and said in a recent Fortune interview that she hopes to drive cultural change in five years.
But Barra says the company's mindset is changing for employees to take responsibility for each other's problems. And she said the company is focused on doing a better job of managing relationships with government officials and regulators.
"One of the lessons General Motors has maybe had to learn more than once, is relationships matter," she said.