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Change Initiative Assessment: General Motors
Liberty University
BMAL504: Leading Organizational Change (D03)
Dr. Pickens
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General Motors: How Corporate Culture Set the Company up for Failure
“Here in the real world, they’re shuttin’ Detroit down”
-John Rich, Shuttin’ Detroit Down
Paul was in his late 20s and had worked at one of the General Motors plants in Lansing
Michigan since he’d graduated school. Due to very low seniority, he was cut during the first
round of layoffs. With no other available openings for someone with such low seniority, he
packed up and moved to Kansas City, Kansas, the only place he could find a job opening at a
General Motors plant. His wife was attending Michigan State University and in the middle of a
program, so was unable to transfer. Paul’s wife stayed in Michigan while Paul went to work in
Kansas City. Their marriage didn’t last the separation.
“Cause in the real world they're shuttin' Detroit down, While the boss man takes his
bonus paid jets on out of town” (Rich, 2009). Enrique was in his late 30s and had also worked at
General Motors for his entire adult life. With four young children and a wife depending on him,
he had to scramble when he was laid off. He survived the first round of layoffs, but was cut in
the second round, just when he thought his job was safe. Enrique ended up taking the job of
someone less senior, a process called ‘bumping’. This person, whom he had considered a friend,
was left jobless because of him.
Well that old man's been working in that plant most all his life, Now his pension plan's
been cut in half and he can't afford to die And it's a crying shame, cus he ain't the one to
Blame. When I looked down to see his calloused hands, Well let me tell you friend it gets
me fightin' mad. (Rich, 2009)
Bob was in his early 50s, hands severely crippled with arthritis after years and years of
repetitive motion on the General Motors assembly line. He and his wife lived in a modest house
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just outside of Lansing, Michigan. Bob had settled for early retirement the year before. Bob
worked daily to stretch his hands to prevent losing even more range of motion in his joints. His
arthritic hands prevented him from most work, but his pension was cut due to financial issues at
General Motors. He had worked his entire adult life at General Motors and expected the pension
plan he’d been promised, but now, he could barely make ends meet.
Established in 1908 and based in Detroit Michigan, General Motors builds automobiles,
employs over 91 thousand workers in the United States with over 118 locations, and has a
revenue of $127 billion[ CITATION Enc22 \l 1033 ]. General Motors was originally created by
merging multiple automakers, and throughout the years, they obtained more companies,
including aircraft and electronic appliances[ CITATION Enc22 \l 1033 ]. This meant that General
Motors had more vehicle models than any other car manufacturer in the United States
[ CITATION Enc22 \l 1033 ].
General Motors did well through the years, even pioneering yearly changes to car models
and consumer financing; however, by the mid-1980s, they were competing with much cheaper,
more fuel-efficient Japanese imports[ CITATION Enc22 \l 1033 ]. General Motors executives,
lulled into a false sense of complacency, failed to continue changing, with the same processes in
place that had been in place for years (Columbia Business School, 2020). In the early 1990s,
General Motors was showing losses, so instituted some changes to try and turn it around, such as
selling off their aircraft line, and closing plants[ CITATION Enc22 \l 1033 ]. Through the 70s,
80s, and 90s, the General Motors executives seemed to skate through, standing on the shoulders
of their predeccesors, but not doing much to improve the company and keep changing. Due to
failure of the General Motors leadership team to assess the changing market, they “lost 17% of
market share from the early 1970s to late 1980s” (Zada, 2022, p. 2).
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Prior to declaring bankruptcy, General Motors’ management tried changes to turn the
company around, including closing the Oldsmobile plant and layoffs, however, due to their
contracts with car dealerships, General Motors had to pay steep fines for stopping this production
(Columbia Business School, 2020). General Motors was showing losses but had planned for the
new Saturn brand to turn things around, however, these cars contained faulty ignition switches
[ CITATION Wan18 \l 1033 ]. It was too little too late and, in 2009, General Motors declared
bankruptcy and accepted a government bailout (Bertoldi et al., 2018).
In 2010, things were looking up and General Motors was able to pay back some of the
government bail-out [ CITATION Wan18 \l 1033 ]. However, by 2014, General Motors
compensated $594.4 million for death and injury claims due to a defective ignition switch
[ CITATION Wan18 \l 1033 ]. When the ignition switch was received from a vendor, originally
in 2002, the engineers at General Motors noted that it wasn’t exactly to specifications, but they
approved it being installed into the planned vehicle makes and models [ CITATION Wan18 \l
1033 ]. In 2004, after reports that the ignition switch defect meant the engine could accidentally
be shut off in the middle of driving, General Motors engineers reviewed and decided it wasn’t a
safety issue [ CITATION Wan18 \l 1033 ]. Unfortunately, the engineers hadn’t figured out that
when the engine was shut off, the airbags wouldn’t deploy [ CITATION Wan18 \l 1033 ]. The
National Highway Traffic Safety Administration (NHTSA) were also tasked with reviewing this
and even attended a presentation given by General Motors in 2004 exhibiting that after the
switch turned off the vehicle, drivers could still control the vehicle [ CITATION Wan18 \l 1033 ].
However, airbag deployment was not included in this presentation, whether on purpose, or due to
an oversight isn’t clear [ CITATION Wan18 \l 1033 ]. By 2005, General Motors had their
Product Investigation Group (PI) look into the ignition switch issues and, after one month,
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reported no safety issues from the faulty switch [ CITATION Wan18 \l 1033 ]. Although other
committees at General Motors developed some ideas for how to fix the issue, but these ideas
were vetoed due to the prohibitive cost [ CITATION Wan18 \l 1033 ]. The engineering team, at
some point, realizing there was a safety issue, replaced the faulty part in the switch without
notifying anyone, and later denied any memory of the switch under oath [ CITATION Wan18 \l
1033 ]. Although reports of airbags not deploying were created, they weren’t passed along to the
General Motors executives [ CITATION Wan18 \l 1033 ].
Ultimately, there were 124 vehicular deaths and 275 injuries attributed to the faulty
switch [ CITATION Mam21 \l 1033 ]. Of the fatality victims, 15 were less than 25 years old
[ CITATION Wan18 \l 1033 ]. It wasn’t until 2014 that General Motors began to settle claims.
Unfortunately, during this time, vehicle owners who had issues with the ignition switch had
faced criminal charges for the accidents [ CITATION Wan18 \l 1033 ]. General Motors never
issued a recall during this period [ CITATION Wan18 \l 1033 ].
The subsequent lawsuits put General Motors further into debt while turning the public’s
view of the company sour (Mamidenna & Pasala, 2021). What had caused General Motors, a
company representing the American Dream, to flounder so astoundingly? Their toxic
organizational culture was the culprit. The main engineer working on the switch gave a great
example of the culture. The signature says it all: “Ray (tired of switch from hell) DeGiorgio”
(Wanasika & Conner, 2018, p. 76). The corporate culture had become toxic and General Motors
executives were not even aware, that is how out of touch they had become.
Definition of the Project
Throughout the years, the decisions made by General Motors leadership resulted in a
company culture which precipitated fatal ignition switch issues not being acted on when they
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were first identified. The culture put saving money before anything else[ CITATION Sin20 \l
1033 ]. Fadnavis et al. define organizational culture as a soft skill required for successful ongoing
improvement within an organization as it serves as an invisible guide for the activity and conduct
of employees (2020). One of the driving traits which caused this type of culture is a high level of
bureaucracy which had existed at General Motors for years. According to Merriam-Webster,
bureaucracy is an ‘excessively complicated administrative procedure, or red-tape” [CITATION
Mer \l 1033 ]. With the fear of job loss, even though engineers found defaults in the new ignition
switch and recommended changes, they were afraid to bring problems to leadership[ CITATION
Mam21 \l 1033 ]. When the engineers did finally bring the problems forth, ideas to fix it were
vetoed because of the cost [ CITATION Wan18 \l 1033 ].
Diagnosis of Current Situation
The General Motors corporate culture, with saving a dollar as the end goal, was their
ultimate downfall. The culture was so ingrained, that the “GM nod” was well known within the
executive ranks at General Motors, this happened often, where everyone in a meeting nodded
that they agreed with what was being proposed, however, they didn’t act on it once they left the
meeting [ CITATION Wan18 \l 1033 ]. The main cause of the toxic culture was the bureaucracy,
due to the restrictive top-down structure, and included delays in decision making, business units
which still worked autnomously and didn’t share information, and a general lack of
accountability (Khan et al., 2017). General Motors executives never mixed with non-executives
and had their own floor, with a separate elevator, locked doors, and guards [ CITATION Wan18 \l
1033 ]. This was a leadership team that was not open to ideas from anyone but other leadership
team members. This very top-down orientation meant that most employees were not involved in
any decisions surrounding change, which can be detrimental to changes [ CITATION Hei22 \l
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1033 ]. There was a general lack of accountability, no meeting minutes, so no attendance rosters
and a culture of blaming others, instead of individual accountability.
The next largest contributor, after bureaucracy were the huge losses suffered by the
company. Losses were due to failure to keep up with market demands for new features on
vehicles, including new technology and more fuel efficient vehicles. General Motors cars
weren’t fuel efficient and the increasing price of fuel meant that consumers weren’t willing to
buy less fuel-efficient vehicles (Khan et al., 2017). General Motors also hadn’t included newer
technology, which the younger consumers were looking for [ CITATION Wan18 \l 1033 ].
The Japanese company, Toyota, was selling more fuel-efficient vehicles for less. How
could Toyota provide cars at such a lower cost even though they were shipping the cars across
the ocean? Toyota had created what is now known as “lean” practices which eliminated steps in
the production that added no value (Fadnavis et al., 2020). Lean was developed by Toyota and
perfected in the 1970s (Fadnavis et al., 2020). General Motors was paying high wages and
benefits and large pensions for retirees. When the General Motors executives frst bargained with
the United Autoworkers Union (UAW), they didn’t seem to ask themselves what would happen if
they ended up with more retirees than workers and how those benefits would be paid. Japanese
automakers, however, in addition to lean practices, did not have to contend with the UAW so
paid their employees about half of what General Motors did and didn’t have extensive retirement
benefits [ CITATION Wan18 \l 1033 ].
The leadership team failed to create a clear vision for the company, without a clear
‘roadmap’, the General Motors employees were floundering [ CITATION Sei18 \l 1033 ]. The
company did not involve ‘regular’ employees in decision making. The CEO at General Motors
had changed four times in five years [ CITATION Wan18 \l 1033 ]. Repeated CEO changes can
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be detrimental to the success of a company (Kim et al., 2021). Including, in this case, making it
difficult to create a clear vision and to get the employees buy-in on the vision. As General
Motors bought different car companies throughout the years, each of these acted autonomously,
how business had been done before the merger/acquisition
The executives at General Motors spent decades being overconfident. Being the number
one car manufacturer for so long, they couldn’t imagine that one day there may be more retirees
than workers and that they needed to change to keep up with the times. Being very successful
can create an overconfident organization, making the company team feel that they are doing
things correctly and are untouchable (Habersand et al., 2019). This overconfidence can ensure
that executives don’t want to hear any opposing views, or new ways of doing things (Habersand
et al., 2019).
Recommendations
The recommendation is to be more effective in implementing and sustaining changes in
the future. To do this, the corporate culture will need a complete overhaul, and quickly.
Resistance to change, one part known as GM nod, was an ingrained part of General Motors
previous culture. Quite often, employees may state they are onboard, but will purposely or
unconsciously sabotage changes, (Limba et al., 2019). A culture of placing blame instead of
taking accountability can result when employees are punished for bringing forth potential
problems, instead of rewarded (Fadnavis et al., 2020). General Motors should make ‘don’t shoot
the messenger’ one of their key tenets. Reward people for finding issues, for finding ways to
save money and increase efficiency.
In order to enhance production, problems must be solved and in order to solve problems,
the problem must first be identified (Fadnavis et al., 2020). While General Motors executives
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were failing to accept that there was a problem, Toyota’s executives had an eight step process in
place to identify and solve problems (Fadnavis et al., 2020). Keeping apprised of what similar
companies do can assist with streamlining processes [ CITATION Hei22 \l 1033 ]. General
Motors’ previous change attempts were unsuccessful, as the company still required bailout after
bailout, even after layoffs. Fadnavis et al. note that keeping the lines of communication open and
promoting teamwork are the best practices to enhance corporate problem solving (2020).
Ensuring an organizational culture where being flexible, but still having consistency is best for
identification and solving problems (Fadnavis et al., 2020). Also General Motors leadership
should take a long term view of the company, be good stewards to ensure the company survives.
Remove the space and difference from the excutives. There will no longer be a separate elevator
and closed doors guards between the workers and the leadership team.
Implementation Plan
Companies must change to survive in the fast-paced digital world in which we live,
making organizational change inevitable [ CITATION Hus18 \l 1033 ]. Layers of bureaucracy
also make it difficult for successful changes to occur in an organization (Limba et al., 2019). An
assessment of similar companies shows Toyota’s lean manufacturing, and this should be applied.
The first step for General Motors in their problem-solving process should involve triage, instead
of placing in a queue, or holding area (Fadnavis et al., 2020). General Motors should make
implementation of the change their next-to-last step and make the last step evaluation of the
effectiveness, to ensure that the issue is being followed-up on (Fadnavis et al., 2020).
To ensure accountability, projects and problems should be formally assigned to force
ownership until this is imbued in the culture. An executive, a middle manager, a lower manager,
and the employee working on the project should be assigned and expected to provide regular
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updates on progress. Additionally, making meeting attendance and minutes mandatory, ensuring
meeting agendas are provided prior to a meeting, with the meeting minutes being distributed
within 48 hours of the meeting. Approval and sign off of the minutes by those officially assigned
to the project will be required.
To improve communication amongst units, leadership will be rotating through
departments which can assist them to understand the tasks involved and the issues faced by each
department (Thongpapanl et al., 2018). Managers should be familiar with what occurs in each
department, this can faciliate cooperation and communication (Bertoldi et al., 2018). Change
plans should be a living document and should be reviewed and updated periodically to ensure the
change remains on the correct path [ CITATION Hei22 \l 1033 ].
The strategy is to use a director approach with the executive team to ensure they are
following the new processes and not just issuing a GM Nod. For the the employees, it would be
more of a caregiver approach, to get them onboard. Instead of placing blame, lessons learned
should be used, not punitive, as people are more likely to come forward with issues early on if
they are not punished for doing so (Bertoldi et al., 2018).
Summary
The General Motors teams could have prevented injuries if they had remembered
Matthew 7:12, “Therefore, all things whatsoever ye would that men should do to you, do ye even
so to them: for this is the law and the prophets” [ CITATION Kin22 \l 1033 ]. Maintaining
change is difficult without employee support [ CITATION Ony21 \l 1033 ]. People are more
inclined to change if they can see a benefit for themselves, and focus on the positives of change,
not the negatives [ CITATION Hei22 \l 1033 ]. General Motors culture was such that people did
things how they had always been done. That, overconfidence, and the GM nod were all red flags
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that there would be a high resistance to change. This resistance was apparent, since nothing at
GM really changed, except that saving money became the ultimate goal. Layers of bureaucracy,
multiple CEO changes, a top-down management structure, overall lack of accountability, fear of
job loss, failure to adapt to technology and make changes per market pressures, failure to take a
long-term view of the company, performing processes because it’s always done it that way, too
many car models, increased gas prices and changes to assembly lines, processes all worked to
create this culture in which safety came last.
Had the leadership of General Motors taken this course and applied what they learned,
they could have adjusted their approach to change management to one which involves team
members more. They would have created a clear vision for the organization, so the employees
knew which direction they were heading, and ensuring that it was understood. They would have
created excitement for change, since that assists with change being successful.
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