Rebuilding a Giant: Mary Barra, CEO, General Motors
After a decade of decline, can the automobile industry’s first ever female CEO, Mary Barra, pull General Motors back into line with the competition?
General Motors: A Giant in Decline
When Mary Barra took over as chief executive of General Motors in January 2014, she became the first ever female to head an automobile manufacturer. But whilst her appointment made waves for feminism in an industry that is, and always has been, male dominated, it was also the fifth CEO appointment in six years for GM.
Indeed, the car manufacturer ? which was once the envy of the automobile world and a great symbol of American industry, at one point selling more than half of the cars on US roads ? has seen a decade of decline. Flagging sales, inefficiency, high costs (at one point counting assets of $82.2 billion and liabilities of $172 billion), losses, failing designs, mismanagement, and a financial crisis saw GM file for bankruptcy in 2009. Lightened of Saab, Saturn, Pontiac, and Hummer, GM returned to profitability in 2010, but the company is by no means out of the woods.
Barra has spent her first year on the job dealing with the company’s largest ever recall which has had financial and reputational costs. And she is still to reshape a working culture and management system which, if left unchecked, could risk the company’s future. Her job looks set to be tough.
In the Veins
Barra, now aged 53, is a woman with GM in her veins: her father worked as a diemaker at the company for 39 years, and her own appointment followed 33 highly successful years within the company working her way up from intern to CEO.
Her first position, aged 18, was as a General Motors Institute (now Kettering University) co-op student, she officially joined the company in 1985 as a senior engineer, and an MBA at Stanford Business School on a GM fellowship followed before her first position as a manager. A series of increasingly visible jobs followed: Plant Manager, Executive Director of Competitive Operations, Vice President of Global Human Resources, and Executive Vice President of Global Product Development.
In every position, Barra was defined by action and quality: tackling inefficient internal systems and poor processes, turning around troubled plants, instilling a desire for quality and design, and bringing data and efficiency to human resources. She is famed for cutting down GM’s 10-page dress code to just two words: “Dress appropriately”. She removed management structures that, for example, saw three executives in charge of every car model.
Now, with her promotion to top job, Barra has two key short-term tasks: improve quality and change the damaging GM company culture for good.
First to quality ? or the lack thereof ?, which has become all too synonymous with the GM brand, and has dominated Barra’s first year as CEO as she has had to oversee the recall of over 30 million defective vehicles. This figure includes the high profile recall of 2.6 million cars with faulty ignition switches that made airbags inoperable ? now linked to at least 23 deaths ?, which only went ahead 12 years after the fault was first reported, 2 years after GM found the source of the problem, and 9 months after a report confirmed the source.
Barra faced investigation from the Justice Department, Congress, the Securities and Exchange Commission, and federal regulators, who all probed her on the report’s conclusion that GM failed to recall the cars fast enough because “responsibility was diffused and information went unshared within the company”.
GM paid a record $35 million fine and agreed to up to three years of intense oversight by the safety agency, but the most problematic result for the company was the damming assessment of internal culture. To survive, that must change, but removing something so deeply embedded within the company will be a colossal struggle.
Barra has begun her battle. First, in the wake of the recall, she placed very un-GM-like accountability by firing 15 employees, including a vice president and several senior lawyers. She also moved out seven high-level executives in her first eight months as CEO. She comments: “Everything was internal criteria. There was an idiotic assumption that if you fulfil all the internal criteria, somehow the car will be a success.” Now accountability is back.
And for the other 216,000 employees, Barra is trying to change behaviour. She says: “culture is behaviour” and “it’s about finding a balance that actually improves the quality of work output rather than detracting from it”. Leading by example, she hopes to show staff that they must give their all during the day and then leave their meeting on time to pick up their children or get to their football club in order to create a happy and productive workforce.
Back into Line with the Competition
But alongside all this handholding, it must not be forgotten that Barra must also think about the cars. GM must play catch-up with the competition in the global market where it has fallen significantly behind (since GM stock resumed trading in November 2010, the car market as a whole has jumped 60%, but GM has remained flat). And Barra must also position the company in the race to self-drive, not only to keep up with the traditional competition, but in order to fight off the new: Google and Uber.