Unless you have been living in isolation for the past several months, you have heard that General Motors made a tragic mistake that will likely cost them millions of dollars in lawsuits. Worse than that, it cost 13 car owners and passengers their lives. The prolific car company could have prevented this disaster by recalling tiny ignition switches (costing only $.57 each!) on nearly 2.6 million vehicles. The question remains, why didn’t they?
General Motors suffered from information inefficiencies and communication dysfunction, proving that even small communication bottlenecks can have enormous consequences. For many companies of this size and stature, it’s quite challenging to connect all the dots from the front lines to C-suite.
The GM debacle highlights the need for company cultures which encourage employees to share critical information with managers and executives, even in the form of bad news. But valuing honesty or transparency is not enough. Employee feedback system and processes must be in place to allow information to travel up the chain of command quickly and efficiently.
Reports indicate that employees at General Motors first noticed the problem in 2001, but hundreds of thousands of faulty ignition switches were still installed on cars as late as 2011 models.The failing part resulted in 32 crashes where engines suddenly shut off, disabling the vehicles’ power steering, power brakes, seat-belts and airbags.
According to Reuters, it is not clear why GM approved the defective switches over a decade ago, and why years went by before this safety defect made it to light. In her testimony before member of Congress on April 1st, CEO Mary Barra admitted that employees in the organization are often siloed. Meaning that information does not easily pass between departments or between employees and management. What is unclear is whether or not the defect was communicated to executives, who could have made a timely decision that may have saved lives.
On April 3rd, Adam Auriemma wrote a Wall Street Journal article entitled Chiefs at Big Firms Are Often Last to Get Bad News. “What is clear at GM is that information didn’t go up the chain as quickly as it should have…no one wants to tell their boss bad news.” wrote Auriemma.
Auriemma continued by stating that executives must create a culture where bad news is welcome, and tells the famous story of Ford CEO Alan Mulally. During a high level meeting, an executive informed Mulally that a vehicle-line launch had a problem and had to be delayed. Everyone in the boardroom sat silent with baited breath until the CEO finally clapped his hands.
Mulally’s actions seemingly demonstrate a company culture that literally applauds candor instead of creating an environment that instills fear in employees. Instead of being fired, the brave executive who spoke up was later promoted to COO.
This example shows how establishing a culture of trust and open communication encourages employees to tell their managers the truth, and even volunteer undesirable information. No one wants to hear bad news, but without it managers cannot make informed decisions and avoid future problems of much greater magnitude.
When I worked in litigation support, I was charged with adequately briefing attorneys on the intricacies of the law before trial. If the judge corrected my employer in the courtroom, that would not bode well for me or for the client who stood to lose his property or freedom. It was my job to say to attorneys, “you are wrong and here’s why”. But I would not have been so bold unless I was directly asked for my assessment.
My experience at a small law firm is a stark contrast to that of employees at many large corporations, where the door is not always open and employees are usually too timid to knock. In his WSJ article, Auriemma wrote, “The larger an organization gets, the less likely it is that bad news will travel smoothly up the chain. At big corporations, say organizational experts and former auto-industry executives, the mantra is ‘go along to get along’, and doing the right thing—which can mean stopping work on products vital to the bottom line—is often incompatible with pleasing the boss.”
Many successful executives who use our employee feedback tool with their teams report that asking employees questions is what opens the door for honesty and candor. A good manager needs to ask their front-line experts questions to get the responses that they need to make good decisions. Feedback is about visibility, insight, and the ability to address issues before they become problems or in this case, tragedies.
JC Duarte, an entrepreneur who advises companies on how to increase profits, employee engagement, and productivity, recently spoke with our team. He highlighted the GM catastrophe, offering that there are commonly two reasons for information getting filtered on it’s way up; poor company culture and the absence of communication tools. CEO’s must take direct ownership and action to create a safe and efficient environment where bad news is welcome, encouraged and easily shared.
What Allen Mulally did is an example of transparency as an organizational and cultural value. Duarte wants to know, “was that a one-off limited to the VP audience, or did he mandate that behavior through his organization by taking serious steps like implementing a 15Five-like process?”
The other side of the coin is that management has to listen and be keenly receptive to the news that bubbles up through feedback channels, and be prepared to act. Even if problems have been fixed, managers need a weekly summary of high impact problems that were solved. That’s how you make sure that the process is working. You can’t just assume that there is no pressing bad news because there is silence.
Without communication across departments and between levels, you can end up with a silo effect similar to what happened at GM — years can go by while tragedy lies waiting. The lesson for other companies is to elicit employee feedback and to create a culture that invites people to share everything from triumphs to challenges. That is how you grow the organization and prevent costly mistakes.
David Mizne, Content Manager at 15Five interviews some of the most brilliant minds in business and reports on topics ranging from entrepreneurship to employee engagement. 15Five creates an internal communication process that allows the most important information to flow seamlessly throughout an organization, to surface issues before they become problems, to celebrate wins, discover great ideas and stay tuned in to the morale of the team.
Have you ever told a manager or executive bad news? Heard it from an employee? Tell us the story in the comments below.
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