General Motors chief executive officer Mary Barra on Tuesday and Wednesday will appear before Congress to explain why GM took more than a decade to issue a recall on a faulty ignition switch, which led to at least 13 deaths. The hearings will be a proving ground for Barra, who became CEO in December 2013, as well as for GM’s new chairman, Theodore “Tim” Solso, and the entire GM board.
Congress will question why Barra’s most recent predecessors didn’t catch the defective switch. A likely explanation is that the board and senior management were so focused on digging GM out of bankruptcy that they weren’t paying attention to what else may have been going amiss.
Of course, that excuse is insufficient, since the company needs to do both things simultaneously: avoid bankruptcy, while building safe cars. Barra, Solso and the board must convince Congress, the markets and consumers that they have identified why the faulty ignition switch went undiscovered for so long, and that they can be trusted to prevent a similar crisis from happening again.
At GM, the board and executive team must look back at the last decade and determine what went wrong — both within GM, and also in the relationship between the board and senior management. As a board director I can say this is not always a comfortable process, but it is vital that every board director understand the historical dynamic between the management and the board. Most of the current GM board members joined the board after 2009, but they can learn valuable lessons about why the recall did not occur earlier, what previous boards should have been doing and why the board is only now finding out about the recall.
The board must also make sure there will not be another situation where executives make a decision under the guise of protecting the company, but in the end puts GM in an untenable position, like the one it’s now in. In the case of the faulty switch, GM chose to create two small and isolated committees to handle recall cases, fashioned in such a way that senior executives were purposely kept in the dark. Board members have an obligation to challenge senior management’s thinking on these types of decisions and structures, which seem to make sense within in a bureaucracy, but in reality put the company at risk.