How Mary Barra led GM through its 2014 recall scandal and changed the company's culture

'What you do every day sets your culture,' GM CEO says

Mary T. Barra had only just become the new CEO of General Motors in January 2014 when the company faced a huge crisis.

For years, GM had been making some of its cars with a defective ignition switch, and in 2014 the problem finally caught up to the company.

In a 2018 interview at the Wharton People Analytics Conference, Barra told Wharton professor Adam Grant that the first thing she did was create a team that met every day to figure out how GM would deal with the crisis.

"Some days we met for two hours and some days we met for 20 minutes," she said. "Because ... when you are in a crisis, it’s not like you have perfect information on day one. I mean, in our situation specifically, we learned we had an issue and we acted. But then there was a lot to unfold."

"As we met every day, we quickly defined guiding principles based on our values and so the first was, we're going to do everything possible for the customer, we're going to be transparent and we're going to make sure we do everything in our power to make sure this never happens again," she added. "And that literally guided us every step of the way."

Mary Barra, Chairwoman and CEO of General Motors Company is pictured in July 2019. (REUTERS/Mike Blake/File Photo)

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She told Grant that staying focused, understanding the situation and being transparent were important for her as she led GM, but following her gut was also key.

"You get advice from everyone and it conflicts," she said. But ultimately, she decided that the company would apologize for what happened, it would have an independent investigation done and it would release the results, she told Grant.

"If you have values and the teams align ... as you go through the twists and turns of what you learn, as you go through the crisis, you just keep going back to that and it guides you on what to do."

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According to a 2017 report from the Detroit Free Press, at least 124 people died and 275 people were injured because of the faulty ignition switches. It also eventually came out that GM knew about the defective part as early as 2003, Vox reported in 2015.

Ultimately, Barra fired 15 employees, including eight executives, for not responding quickly to the switches, the Detroit Free Press reported. She also appeared before Congress numerous times to answer for how the company had handled the situation.

Meanwhile, GM recalled a total of 30.1 million cars in 2014 alone -- though not all of the recalls were directly related to the defective ignition switches, according to Vox.

Barra also set up a victims' compensation fund with few limits, the Detroit Free Press reported in 2014. At the end of 2015, GM had offered almost $595 million to victims and their families, the Free Press reported at the time.

In 2017, GM also paid $120 million to settle claims from states regarding the faulty ignitions, according to the Free Press.

Barra was praised for how she handled the whole crisis and was even named “crisis manager of the year,” by Fortune in 2014.

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In the middle of the crisis, Barra also worked to change the culture at GM. An investigation found that GM's toxic environment prevented the company from fixing the ignition switches.

To figure out how to change that, Barra met with the company’s top leaders early on in her tenure as CEO to discuss the changes they wanted to see.

Barra told Grant she couldn’t necessarily change the culture immediately, but she could change her own behavior. And as she and other top executives did, she said there was an almost-immediate shift.

“I fully, strongly believe behaviors set your culture and you can’t fake, you know, what you do every day sets your culture,” she said. “You can’t pretend to have a culture that’s different than what you’re really doing.”

General Motors CEO Mary Barra speaks to reporters in Washington, D.C., in 2018. (AP Photo/J. Scott Applewhite)

Since the crisis, Barra said she’s proud to know the company has focused on doing “the right thing even when it’s hard.”

“When you have values, it's really easy to live your values when everything’s going well,” Barra told Grant. “It’s really hard when, you know, everyone’s looking at you and it’s dramatically impacting your financial results. But if the company knows and they see you do it and that every employee knows you’re going to do the right thing, even when it’s hard, that, to me, is so important for me to trust that we’re doing the right thing at every level every day.”

Aside from the culture change, Barra said one of her biggest takeaways from the crisis is that she wants solutions much faster now.

“I’m much more impatient than I used to be,” she told Grant. “If there’s a problem or there’s an issue, we’ve got to fix it.”

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Barra started at the company in 1980 as a co-op student and graduated from General Motors Institute -- which is now Kettering University -- in 1985.

She moved up through the ranks of GM within various departments, including engineering, human resources and product development.

Ticker Security Last Change Change %
GM GENERAL MOTORS CO. 57.77 -0.64 -1.10%

When she took on the role of CEO, she was the company’s first female top executive. In 2016, she was elected to be the chairman of the board for GM.

According to a May report from the Associated Press, Barra was the third-highest paid female CEO in the S&P 500 index in 2019, making $21.3 million.

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