Good Culture Flows From Good Management

    

The ongoing debacle at GM is providing a real lesson on culture. Seems certain CEO Mary Barra really doesn’t know why people would make decisions that would get the company into its current predicament, and that her telling the GM folks that they should really, really care about customers and product safety will actually fix things. Like so many leaders she seems to be under the illusion (delusion really) that culture is a product of what she says; no idea of the fact that culture is actually driven by management processes, rather than management talk.

GM has suspended two engineers for their role in the ignition system defects that have been directly tied to at least twelve deaths. They put cost ahead of safety, so the story goes. “It was a difficult decision, but I believe it is best for GM,” said Barra. Now that strikes me as rather bizarre – two design engineers taking it all upon themselves to design and perpetuate bad designs because they, and they alone, put cost and GM profit ahead of doing their craft well; while all of the assembled GM senior management puts a greater priority than these two guys on safe product designs, even if it comes at the expense of short term profits. Does that scenario make sense to anyone?

In fact, Ms. Barra, I am certain, spends far, far more time in meetings discussing costs, profits and stock prices than she does in meetings to discuss product safety. I am equally certain that GM has legions of accounting people, very sophisticated systems, mountains of reports and very detailed metrics concerning costs. In short, they measure the bejezus out of cost at every level. Not so much safety …. In fact, not hardly at all safety.

The culture of the company is a product of how decisions are made – not big, senior management decisions but the myriad of little decisions made by the thousands every day. Decisions affecting the tiny details of people, quality, production and the rest let everyone in the organization – middle managers and design engineers included - what the values and priorities are, and they send that message loud and clear.

GM has launched its ‘Speak up for Safety’ program, which very much proves the point. “GM must embrace a culture where safety and quality come first,” Barra said. “GM employees should raise safety concerns quickly and forcefully, and be recognized for doing so.” Barra should be asking why such a program is necessary in the first place. Where did the “perceived and real barriers to candid conversations between employees and their leaders” come from, and how does she think these barriers will be eliminated without getting to their source and killing it?

Reporting issues only matters if there is follow-up — and Barra said the Global Vehicle Safety Group will be accountable to take action or close issues within a prescribed time period.” Same thing … why does GM need a program in order to get this done? Why doesn’t the regular structure follow-up on any employee pointing out a product safety problem and take action within a prescribed time period? That is the real question and the answer is obvious to truly lean managers, but impossible for Mary Barra – and every other old school, big time manager to see.

The reason GM sat on the defect, opting for cost over safety, and the reason it will continue to do so is that it has a functional organization measured both organizationally and individually on the basis of financial metrics derived from GAAP accounting. Decision making is based on numbers, and virtually all numbers used for such decisions are financial ones. The idea that the very nature of its formal management approach is the source of its ‘safety is secondary’ culture will never cross GM leadership’s mind because they really cannot conceive of the idea that there is a different way to manage. Fundamental management processes are a given, to them. Accounting is true, command and control organizational structures are tried and true, the numbers are complete and true – or so they believe, and so they will go on. The culture that flows from such misguided thinking is one that will always put short term financial goals ahead of long term ones, and will always engender employees unwilling to speak up, because under such management employees are not people – they are headcount – and therefore expendable.

The notion that GM, or anyone else, can manage by the numbers and treat people as a variable cost, yet still create a culture of inclusion for any of the stakeholders other than those stockholders with near term goals is utter nonsense.

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