Lessons from Other Industries: GM and why culture matters

Company culture is one of those things that can be easily dismissed as unimportant.

Many businesses don’t watch it the same way they track, say, service department efficiency or turn rate.

While often portrayed as a Google with Ping-Pong tables, culture is about way more than having fun.

Nothing brings that home more clearly than the recent report from General Motors on its failure to recall millions of vehicles due to a faulty ignition switch.

The problems with GM’s switch has been linked to more than 50 accidents and at least 13 deaths. Despite that, the company waited more than a decade to issue a recall.

In a report issued last week, the management at GM blamed the problem on the company’s culture. The investigation by former U.S. attorney Anton Valukas describes a corporate culture where one group after another at the company passed the problem on to someone else. In some cases, it was a failure to understand the mechanics of how the vehicles operated. In others, officials were deliberately misled by other employees.

It’s a stunning indictment of a lousy culture where no one wanted to be responsible for pointing out a problem. (You can read the full 325-page report here.)

Rather than finding a coverup, the investigation revealed an ingrained corporate culture in which employees failed to take responsibility for the ignition-switch problem or treat it with urgency. Investigators misdiagnosed it, and information that could have helped unravel the mystery remained trapped in GM’s bureaucratic silos, even as accidents and fatalities mounted.

It’s an extreme example of the tragic results of a poor culture, but certainly one we could see, in theory, in our industry if employees aren’t buying into the important of testing, for example, the safety of an engine.

The fallout’s not over yet from GM’s mishandling of the defect, but whatever the result it’s certainly not something any other company would want to replicate.