Black Friday Sale! 50% Off All Access

With GM's Massive Recall, Is Corporate Culture to Blame? Did the mistake lie not with a faulty part but rather with how the entire company dealt with problems?

By Brian Fielkow Edited by Dan Bova

Entrepreneur+ Black Friday Sale

Our biggest sale — Get unlimited access to Entrepreneur.com at an unbeatable price. Use code SAVE50 at checkout.*

Claim Offer

*Offer only available to new subscribers

Opinions expressed by Entrepreneur contributors are their own.

I've been carefully watching General Motors navigate its way through its current recall of 2.6 million cars due to defective ignition switches. How could a company take a decade to implement a recall, one linked to several deaths? Why was a cost-benefit decision made to give greater weight to saving 57 cents per switch than to protecting the safety of customers and the public?

The answer lies in the company's culture.

Related: Taking the Bite Out of a Workplace Crisis

Prior to its 2009 bankruptcy and bailout, GM was bleeding cash and producing substandard vehicles. Managers knew that the company's existence and their jobs were at stake. GM's internal problems created a culture that could justify saving a few cents on a critical repair. The company's CEO, Mary Barra, admitted that in her recent congressional testimony.

Barra contrasted the old GM, whose culture weighed costs against improved safety, with the new GM that has a customer-centric culture.

Business leaders need to learn from GM's mistakes. The reality is that no one is immune from adversity in business, but the best protection always has been fostering a vibrant culture that detects and attacks problems early on.

Your company's culture is your secret ingredient. It separates you from your competition and makes your products and services unique and valued by customers. This culture is assessed internally by your employees and externally by customers. A healthy culture is likely to produce favorable results and is essential to a robust bottom line.

So when it comes to fostering a healthy corporate culture replete with core company values, here are a few lessons to glean from GM's recall debacle:

Related: Radical Transparency Can Re-Energize a Company's Culture and Deliver Results

1. Don't let a business cycle define the company. Many businesses go through cycles and cost issues become critical in a downturn. Nonetheless, never let cost concerns compromise core values, especially not the safety of customers.

2. Always maintain long-term vision. During a time of crisis, a siege mentality can develop. When the whole organization is threatened, short-term thinking can arise and lead to unfortunate results. The role of the leader is to maintain a long-term view. I'm willing to bet that someone thought he or she was helping solve GM's crisis by not upgrading the ignition switches and thus avoiding a recall in the mid-2000s.

2. Foster honest communication. Employees are often afraid to give bad news. It's essential to create a culture that promotes the complete and accurate exchange of information. Never penalize anyone for coming forward with bad news, as long as it's accurate.

Groupthink and conformity are toxic for a business. Discourage half-truths and sugarcoating at all costs. What the CEO wants to hear is not important. What he or she needs to hear is critical.

Related: How to Fight Denial and Start Tackling Your Biggest Problems

3. Stop Ignoring company problems. When a problem arises, large or small, deal with it head-on. The problem will likely be resolved over time. It's human nature to gravitate toward the positive. Foster a culture that attacks today's problem with transparency rather than simply kicking it down the road.

4. Keep the entire company accountable. It's critical to distinguish between individual and organizational accountability. Often a single employee is blamed for a service or product failure, leading the organization to conveniently ignore deeper issues.

5. Demolish silos. Organizations are destroyed by a silo mentality, when a department or group within a company cares only about what's best for that unit and not the greater good of the whole company. As leaders, we must tear down silos and foster cross-communication within our companies.

Only time will tell if there's really is a difference between the old and new GM. Let's learn from GM's culture mistakes today.

Related: Success or Failure: Which Breeds Stronger, More Resilient Entrepreneurs?

Brian Fielkow

Business Leader, Author, Keynote Speaker

Corporate culture and management advisor Brian Fielkow is the author of Driving to Perfection: Achieving Business Excellence by Creating a Vibrant Culture, a how-to book based on his 25 years of executive leadership experience at public and privately held companies. With a doctorate in law from Northwestern University School of Law, he serves as owner and president of Jetco Delivery, a logistics company in Houston that specializes in regional trucking, heavy haul and national freight. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

The Two Richest People in the World Are Fighting on Social Media Again

Jeff Bezos and Elon Musk had a new, contentious exchange on X.

Science & Technology

I've Spent 20 Years Studying Focus. Here's How I Use AI to Multiply My Time and Save 21 Weeks of Work a Year

AI is supposed to save time, but 77% of employees say it often costs more time due to all the editing it requires. Instead of helping, it can become a distraction. But don't worry — there's a better way.

Real Estate

Why Real Estate Professionals Should Prioritize Social Responsibility

Integrating social responsibility into real estate can foster community change, build trust and drive long-term business success.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Leadership

Here's the One Trait You Need to Be a Successful Entrepreneur

Entrepreneurs are often lauded as being risk-takers. But there's a distinction between being a risk-taker and being brave — and only the latter is necessary for entrepreneurs.

Money & Finance

Why Donald Trump's Business-First Policies Trump Harris' Consumer-Centric Approach

President Donald Trump's pro-business agenda is packed with policy moves encouraging investment to drive economic growth. The next Congress has a unique opportunity to support entrepreneurship and innovation, improving U.S. competitiveness with the rest of the world.