OL342 Final Project (1)

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1 Final Project: GM Case Study Organizational Analysis Full Name Southern New Hampshire University OL342 Organizational Behavior Professor Earnest Duffie December 10, 2023

2 I. Introduction This paper revolves around a case study of General Motors (GM), titled “The GM Culture Crisis: what leaders must learn from this case study” by Tim Kuppler. (2014). This shows the perspective of Kuppler after a 325-page investigation Volukas Report and GM CEO MAry Barra’s response was made regarding the GM ignition crisis that led to 13 people losing their lives. Main investigation findings include a history of failures due to the ignition switch problem being known amongst employees for over 11 years without any demonstrated sense of urgency to address the problem. A few senior managers were aware of the problem, but no one took ownership of the problem or took any action to resolve it. Besides this, the report also noted lack of written documents regarding meeting minutes of various committees that had been aware of the problem and conflicting messages from top management regarding addressing problems like the ignition switch, with one engineer citing that leadership emphasis on cost control at GM ``permeates the fabric of the whole culture.” While CEO Mary Barra’s initial response seemed to show genuine care and respect towards the victims and want to “do the right thing,” her reaction to addressing the obvious culture issues left much to be desired. Mary explained that 15 employees were released from the company due to misconduct or incompetence, a President of Safety was named, 35 safety investigators were added, a Speak Up for Safety program and a new Global Product Integrity organization was established, and the safety decision-making process was restructured to place senior management at the center of it. While an appropriate response was shown to the public eye, this action plan failed to truly address the “culture crisis” at GM. “It was a perfect time for leadership to take ownership for allowing this culture to persist and to begin building trust and transparency needed to unite the workforce in support of their culture.” (Kuppler, 2014).

3 II. Organizational Modeling The current organizational behavioral model that appeared to be present at GM most closely exhibits an autocratic model. At GM, leadership had all the power and told employees what to do, making all decisions, expecting employees to basically be quiet and obey. While the ignition switch problem was noted by many low-level and even a few senior managers, nobody ever escalated to the organization’s top leader. Since employees in this model are not encouraged to share ideas or have decision-making influence in an autocratic model, it was not escalated, and therefore not acted on. Traditionally, GM and other companies in the automotive industry used autocratic models, prominent in the 1800 and 1900s. (Madari, 2023). Over time, organizational behavior models both in the same industry and of those external to it have come to be identified as an autocratic model, custodial model, supportive model, collegial model, or system model. While the autocratic model often leaves employees feeling frustrated towards their bosses, the custodial model aims to create employee loyalty to the company and offer economic and non-economic benefits to employees. (Madari, 2023). The supportive model, collegial model, and system model take on more modern approaches. These models aim to much better meet employee psychological needs as well as economic/physiological needs for employees to better contribute to company success. When employees’ needs are met, job satisfaction increases, and so can also improve retention and recruitment. While an autocratic model was traditionally used in automotive companies to separate job functions and the production line, since organizational behavior models have grown and evolved as more generations enter the workforce and have different perspectives, behavior, and needs over time, other models are being used today by automotive companies and other companies to best suit employees’ needs and align with

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4 company mission, vision, and values. Using these more modern models empowers employees and gives them more freedom, flexibility, and challenges that an autocratic or custodial model doesn't support. Autocratic models are not unique to the automotive industry, and are also used in the fast-food industry where there are set rules and repetitive tasks. Because of these repetitive tasks and nature of production in these industries, the organizational structure is commonly a functional structure to group together specific functions or tasks to maximize company efficiency. (Usmani, 2022). This organizational structure has traditionally been used and is still used today to maximize efficiency, and affects the organizational behavior model. In an automotive production company like GM, the functional structure gives way for an autocratic organizational model, where employees have their set tasks they are expected to follow to earn their pay and benefits. The autocratic model sets power with the boss, leaving employees to obey and be insecure or afraid to speak up, as the GM case study demonstrated when many employees were aware of an issue, yet did not speak up and ensure that was told to the top boss who had all the power. While an autocratic model is traditionally used in these automotive and fast-food industries due to their organizational structure and makes it easy for leadership to use, today the autocratic model is not as commonly found to be used because today the workforce is more educated, organized, and less tolerant. (Kashyap, 2015). Because of these changes over time in today’s workforce, including the presence of several generations’ various perspectives, values, and wants, organizational behavior models have also changed over time. The more modern models aforementioned are used in all types of industries and companies today to better suit the various needs of the workforce so that companies can be successful. For example, even other companies within the same automotive industry such as Ford, for example, have shifted to more supportive models where employees are

5 empowered and encouraged to collaborate, be creative, and feel more enthusiastic and motivated to contribute to the company’s success. Because of this shift in organizational behavioral models, motivational models have also shifted. More companies today understand the research and importance of organizational collective motivation (OCM). OCM enables leaders to address both individual and collective motivational aspects of motivating employees across an organization. These motivational models are researched and have shifted to be more psychologically-based to meet psychological needs of employees. OCM framework provides individual and collective motivating elements together to create an overall motivated organization to perform well as a whole. It’s generally an accepted concept that motivated employees will perform well because they are motivated personally and collectively for an organization to succeed. “The workforce will engage at all levels because their needs are being met.” (Hitchcock & Stavros, 2017, p. 33). Societal culture and workplace culture is interrelated with organizational behavioral models used now and in the past, and can arguably impact each other. The current culture calls for companies to meet employees' intrinsic and extrinsic needs, calling for more models to be used to satisfy employees' needs. When employees’ needs are met, employee job satisfaction improves, along with their behavior and performance, which directly contributes to a company’s success. Today, companies across all industries are more aware of this and apply this to their workplace practice and culture to maintain success. Ford is an example of another company within GM’s industry that has applied this and shifted its organizational behavioral model and motivational models alike to strategically achieve success. Ford recognizes the key role that its workforce plays in the success of its company and promotes ongoing skills development and empowerment opportunities at every level of the business to create a culture of professional and personal growth. (Ford Media Center,

6 2020). The trend is companies catering more to their employees for organizational success, and it’s up to company leaders to implement. “Creating a safe, diverse and positive working environment engenders innovation, teamwork and the development of talent to cultivate future leaders,” says Ockert Berry, VP Operations at Ford Motor Company of Southern Africa. (Ford Media Center, 2020). While most companies in and out of the automotive industry today realize this, it is not a “one size fits all” –a mix of motivational models are needed that best suit an organization's employees and mission and vision, and thus need to align with each other for optimal organizational success. Company leaders really set the tone and lead these kinds of changes and culture in a company, as said by Bill Ford, Executive Chairman, Ford Motor Company, “The purpose of any company should be to make people's lives better. Otherwise, it shouldn't exist.” (Ford Media Center, 2020). III. Evaluating Leadership Theory Leadership styles often go hand-in-hand with organizational behavior models discussed. Just as there are shifts in behavior and organizational models and culture over time, there are also shifts in leadership. Similar to the initial autocratic behavioral organizational model present at GM, the leadership style initially seen in the GM case study was also unfavorable. “In their study of leadership behaviour, Blake and Mouton (1964) developed a managerial grid which described two extremes of leadership concern – for production, and for people. The stereotypical leadership styles thus identified were ‘impoverished’, ‘country club’, ‘middle of the road’, ‘authoritarian’ and ‘team’.” (Perkins & Arvinen-Muondo, 2013, p. 134). As mentioned, an autocratic model gives all the power and authority to the boss or top leaders, and employees are meant to obey and basically be quiet and do their job tasks. This can be interpreted as a transactional leadership style, in which a managerial leadership establishes roles and

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7 responsibilities for each employee, emphasizes structure, and is more concerned with efficiently following established routines and procedures. (IMD, 2023). This is what was seen in the GM case study, demonstrated by the problem being well-known throughout lower level employees and management throughout the company but a lack of escalation to the top leader. Furthermore, the general employee consensus was that there was a general reluctance to raise concerns and conflicting messages from management, leaving employees insecure and leaving the problem to continue for several years before it was known by CEO Mary Barra or led to any real leadership change. From an organizational behavior perspective, there is a general consensus that leadership by top management is one of the most significant factors affecting organizational health. (Perkins & Arvinen-Muondo, 2013). Both the behavioral organizational model and leadership style at GM played significant roles in this case study. Just as organizational structures and behaviors change over time, so do leadership styles. When GM CEO Mary Barra became aware of the ignition crisis in 2014, the leadership style shifted to address the situation at hand. The production company’s autocratic presence shifted from a mostly transactional leadership style to a situational leadership style when GM CEO Mary Barra needed to address the public safety situation of the ignition switch problem crisis which had led to 13 human deaths. Hersey and Blanchard’s (1988) ‘situational leadership’ framework is still widely used in organizations today, which takes into account what followers need from leaders at any given time, and also leaders’ ability to respond appropriately to these needs. (Perkins & Arvinen-Muondo, 2013). Effective leaders are able to appropriately respond to situations that arise such as the ignition switch crisis at GM in the case study. GM CEO Mary Barra did just that and appeared to shift to a transformational leadership style. Transformational leaders, as the name would suggest, focus on change and the future, looking to inspire followers

8 and make significant change or transformations to reach organizational goals. (IMD, 2023). Mary Barra took control, made some changes to address the situation, and communicated a vision for GM’s future when she publicly addressed the crisis and what she would do as a leader to make needed changes to make the situation (and the company) better. While the CEO public address of the issue seemed to convey that the company was taking responsibility for the crisis and announced changes to improve the company’s safety and performance to avoid a similar situation from occurring again, ultimately an autocratic model and transactional leadership style remained. Keeping power with the boss of an autocratic model, the CEO made some structural changes keeping efficiency in mind, and kept in line with a transactional leadership because the CEO at least partially relied on punishment, which can be seen as the firing 15 employees as a result of the investigation into the ignition switch problem and culture crisis. Instead of taking direct responsibility for the situation becoming a crisis and resulting in actual deaths, the blame was placed by the CEO onto other employees when the CEO announced that 15 employees were removed from the company due to misconduct, incompetence, and lack of taking accountability for the problem. (Kuppler, 2014). There was also no mention of seriously addressing the identified and obvious problem of the culture at GM by the CEO, which was largely a result of the organizational behavior model and leadership style at GM in the first place. Leaders of organizations are supposed to be responsible for leading positive culture and culture changes. Instead of taking on a true transformational leadership style to make meaningful, positive cultural changes at GM, the CEO in this case maintained authoritative control about what changes were made and what exactly was said in the public address about the situation, leaving others outside of decision-making processes. This ultimately gave the public and government agencies satisfaction with the safety programs put in place and

9 changes in processes on paper, but actually did nothing to seriously address the culture problems at GM to make meaningful change, leaving it to seemingly continue. Mary Barra’s decision- making was her own, and being that only she gave the public address, she had ultimate control. This was an external influence on the decision-making process, but only she chose to highlight what would look good in the public’s eye to improve the company’s reputation, and nothing was mentioned by Mary Barra regarding major cultural issues documented in the Valukas report. Ultimately, authority remained a theme in this GM case study. IV. Assessing Organizational Culture The internal organizational culture is often thought about as ‘the way we do things around here’ –accepted behaviors and norms shared by those within an organization. (Perkins & Arvinen-Muondo, 2013). Some of the major findings in the Valukas report reflect patterns and overall accepted “ways of doing things'' at GM, or the state of the internal culture. This includes some witnesses saying there was reluctance to raise concerns in GM culture, ‘The GM Salute’ of the phenomenon of avoiding responsibility and putting it towards others, and also ‘The GM Nod’ phenomena described by Mary Barra where many people will agree to take action about a concern but then no one actually does take action. (Kuppler, 2014). Reflective of an autocratic model, the power is with the boss, and the expectation is that employees obey and do their job, which can make employees feel insecure and hesitant to raise concerns as was the case shown here in the GM case study. The ‘GM Salute’ also shows that accountability did not play a significant role amongst leaders or employees at GM. Leadership affects a company’s culture, so a lack of leadership went hand-in-hand with the lack of responsibility, giving way to other troubling internal culture findings. It was further identified in Kuppler’s findings (2014) that there was a culture of no sense of urgency behavior exhibited by staff members, and that the

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10 issue was raised and passed through numerous committees, but no one owned decisions or responsibility, including a lack of written communication about issues or committee minutes. So, even when employees do feel confident to raise concerns, a lack of responsibility taken by anyone for these concerns is still a major theme of GM’s internal culture. Another finding that is intertwined with this is that there were conflicting messages received from top management: “1) “When safety is at issue, cost is irrelevant” and 2) “Cost is everything.” (Kuppler, 2014). Conflicting messages like this from top management also demonstrates lack of responsibility amongst leaders in the company, which doesn’t show strong leadership to its employees and leaves its employees confused and insecure since they are expected to follow leaders’ instructions. This can also give a poor perception of leadership to employees and not motivate employees to be active participants of organizational goals and can leave employees unsatisfied and unproductive, which manifested as no one having any sense of urgency or taking any action into investigation or correction of the well-known ignition switch problem. “One engineer said that the emphasis on cost control at GM “permeates the fabric of the whole culture.” (Kuppler, 2014). All of these findings together paint a picture of a poor internal culture at GM across the organization, including leadership. The internal culture at GM represented the organizational behavior, the hierarchical organizational structure, and poor leadership that contributed to the problem going on for years before any action was taken. V. Insights and Conclusions All of the findings and insights from the GM case study shows how intertwined the company culture and leadership style can be. While what was present in this case came to an unfavorable outcome, they did complement each other. The transactional leadership style and the poor internal culture featuring lack of responsibility and simply going along with the shared

11 perception of how things were done in the company went hand-in- hand and influenced each other. The leadership style influenced employees’ behavior. This in addition to the organizational hierarchical structure of a production company such as GM in this case created an environment where leaders had the power and employees were expected to do their jobs and do what they were told, which was shared amongst employees across the organization that this was the company norm, and thus employees had little say or power. In addition to that, the cited conflicting messages from top management, employees were encouraged to raise identified safety concerns, but were also told that cost control is of utmost importance which seemed to be embedded in the company culture. As mentioned, the safety issue information was known by many committees and employees across the organization, but no one took responsibility or action to properly address it, which is a result of the conflicting messages from top management as well as the leadership style. These cultural issues and leadership style present at GM unfortunately led the problem to remain for several years before any action was taken to constitute an attempt at organizational change to use the unfortunate situation as an opportunity to make impactful cultural changes that could have been led by a new, more sensitive and collaborative leadership style. Employee behavior reflected leadership style in messages from leadership and perceived employee expectation to follow that authority. This organizational behavior and leadership then reflects the internal culture and company’s “way of doing things.” These factors influenced and completed one another which allowed it to continue for several years and wasn’t changed until an outside, independent report by the U.S. Attorney Anton R. Valukas was made after it was known that 13 human deaths occurred as a result of the ignition switch problem. This proves that the organizational culture of a company is a powerful source of a company’s success. Employee perceptions influence their behavior in the workplace, which influences their action and

12 productivity in a workplace, which can have a significant impact on an organization’s overall success, whether it be positive or negative. Workplace culture is a result of leadership and organizational behavior. Leadership is responsible for running a company, and today, this involves several aspects and factors which include leadership styles, organizational structure, organizational behavior models, motivational models, and trends in the workforce and changes in society. It should also be noted that, while unfortunate given the outcomes of human deaths in this case, that negative consequences can lead to learning to positively influence safety practices and improve safety measures and prevent repeated consequences in the future by making meaningful changes. Improving organizational culture is complex and largely relies on leadership to lead the way and maintain as a part of an organization’s strategic planning for organizational success.

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13 References Ford Media Center. (2020, May 28). Ford Motor Company Promotes Employee Development and Growth | South Africa | Ford Media Center . Media.ford.com; Ford Motor Company. https://media.ford.com/content/fordmedia/img/za/en/news/2020/05/28/ ford-motor-company-promotes-employee-development-and-growth.html Hitchcock, J., & Stavros, J. (2017). Organizational Collective Motivation: A New Framework for Motivating Employees in Organizations. OD Practitioner, 49(4), 28-35. https://eds-s-ebscohost-com.ezproxy.snhu.edu/eds/pdfviewer/pdfviewer? vid=1&sid=0f148999-3d2c-4006-abea-6def4617aac8%40redis International Institute for Management Development. (IMD). (2023, January). The 6 Most Common Leadership Styles & How to Find Yours. IMD; International Institute for Management Development. https://www.imd.org/reflections/leadership-styles/ Kashyap, D. (2015, September 30). Top 5 Models of Organizational Behavior – Explained! Your Article Library. https://www.yourarticlelibrary.com/organization/organizational-behaviour/top-5-models- of-organizational-behavior-explained/63749/ Kuppler, T. (2014, June 8). The GM Culture Crisis: what leaders must learn from this culture case study . Switch & Shift. https://web.archive.org/web/20161013135112/http:/switchandshift.com/the-gm-culture- crisis Madari, S. (2023, September 30). Organizational behavior model . EDUCBA. https://www.educba.com/organizational-behavior-model/

14 Perkins, S., & Arvinen-Muondo, R. (2013). Organizational Behaviour : People, Process, Work and Human Resource Management . Kogan Page. Usmani, F. (2022, September 9). 8 Types of Organizational Structure . PM Study Circle. https://pmstudycircle.com/types-of-organizational-structure/

OL342 Final Project (1)

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