General Motors Company Needs to Change, Right Now

GM's strategy for handling the recall debacle isn't working. What's needed: Real leadership from CEO Mary Barra, right now.

Apr 6, 2014 at 10:01AM

Barra Before Senate

General Motors CEO Mary Barra faced a rough grilling before a U.S. Senate Commerce, Science and Transportation Subcommittee on Wednesday. Source: General Motors Co.

General Motors (NYSE:GM) CEO Mary Barra appeared before two Congressional panels this past week to answer questions about the much-delayed recall of ignition switches that are being blamed for thirteen deaths. 

I thought she did pretty well before the House of Representatives panel on Tuesday. She was calm and contrite and seemed well on top of things.

But Wednesday, before a Senate panel, was a different story. Barra came across as evasive. She didn't have the answers Senators were demanding.

She didn't look like a leader who was doing a good job of managing a crisis. In fact, to some extent, she looked like part of the problem.

That's not good. Here's what needs to change for GM, starting right now.

Saying one thing and doing another = bad plan
GM's legal department, working with outside attorneys, is conducting an extensive investigation of what exactly happened with these ignition switches, and why.

It's a complicated task. Many of the key decisions were made over a decade ago, before a wrenching bankruptcy and reorganization that changed many parts of the company. Key people involved in the decision may no longer work at GM.

It's going to take time for that investigation to yield a proper report. That's understandable. But it still looked really bad when Barra repeatedly used the ongoing investigation as a way to dodge the tough questions that senators were firing at her on Wednesday. 

It looked as if she wasn't in complete command of the situation. That's bad. But worse: It looked as if she had -- as if GM had -- something to hide. 

Barra has been telling us all along that New GM -- post-bankruptcy GM -- is a very different company from Old GM. She has been promising full transparency, full disclosure.

She couldn't deliver on that promise in a very public forum on Thursday.  That makes New GM look too much like Old GM. (It doesn't help that Barra spent most of her career at Old GM.)

That's one thing that has to change.

A change in strategy has to start right now
It's clear Barra realizes a change in strategy is needed. 

GM released a statement late on Wednesday quoting Barra's promise to the Senate to "rebuild customers' trust."

On Thursday, it made a more concrete move: GM added crisis expert Jeff Eller to its team of advisors. Eller, who advised Firestone during its own recall crisis in 2000 (remember the Ford Explorers that kept rolling over?), prefers to keep well out of the limelight -- but is well-regarded as an expert in corporate crisis management.

Eller joins Kenneth Feinberg, the attorney who managed the large settlement funds for victims of the 9/11 attacks and the Boston Marathon bombings, and Anton Valukas, a former U.S. Attorney who is leading GM's internal investigation, on Barra's team of advisors.

Here's what I hope they're telling Barra: Forget this "investigation is ongoing" stuff -- right now. You need to be bold. You need to be decisive. You need to be fully in command of the facts. And you need to do the right thing here -- even if it's expensive, even if you think it'll hurt GM.

And you need to do it now.

It's time for Barra to step up and fix this thing. Show us how GM has changed. 

I know she can do it. I hope -- for the sake of GM and for the sake of the victims here -- that she starts doing it right away.

What do you think? Can GM recover from this, and if so how? Scroll down to leave a comment with your thoughts.

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John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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