Goodbye Mr. Millikin: GM’s Continuing Culture Challenges
The GM debacle over its handling of the ignition switch defect continues. GM’s CEO Mary Barra and the rest of GM’s leadership just do not seem to be getting the message. It is not unusual for C-Suite executives to lead from an ivory tower.
In the face of a dramatic governance breakdown, GM has failed to take extraordinary steps to demonstrate that it understands the nature of the problem and intends to remedy it. Instead, GM continues to cling to its culture and try to overcome adversity with minimal changes.
The strategy was evident when the Valukas internal investigation results were released and numerous GM lawyers, managers and employees were fired. No one from senior management was let go. That was an inexcusable misstep and reflects the failure of GM’s board and CEO to respond to the crisis.
Perhaps the most significant failure to act was GM’s retention of General Counsel Michael Millikin. He presided over a legal department that sat on top of the ignition switch problem, settled cases, and failed to take affirmative steps to fix the problem. Millikin claimed that he was unaware of these circumstances. That claim is hard to accept as truthful.
No matter whether Millikin knew or not about the ignition switch problem he deserved to be fired as part of the initial round of firings after the release of the Valukas report. Whether he knew or not, Millikin should have known. He presided over perhaps the worst example of an in-house legal department lacking in ethics and professionalism. He was responsible for that culture and should have been held accountable.
After being grilled on Capitol Hill, GM finally realized that changes had to be made. Mr. Millikin announced last week that he was retiring. Goodbye Mr. Millikin, it is about time that you left.
GM still does not understand the significance of its governance failure. GM has no Chief Ethics and Compliance Officer, and has not announced any plans to create an Ethics and Compliance office. Moreover, GM’s senior management is otherwise intact.
GM’s failure to hold senior managers accountable is inexcusable. It sends an important and damaging message – when misconduct occurs in GM, senior management will never be held accountable. Mid-level managers and employees will be fired at the drop of a hat – senior managers and board members however, will be protected notwithstanding any significant governance failures.
CEO Mary Barra clings to the Valukas report as justification for clearing senior managers. According to the report, no senior manager was aware of the ignition switch problem. That is too narrow a question – the real inquiry is not just who knew but who should have known.
Under this standard, there were certainly senior managers how should have known about the ignition switch debacle. Dismissing these senior managers should have been a minimum requirement.
After those dismissals, GM should have taken dramatic and affirmative steps to create a new culture – resources and new initiatives should be launched to rid GM of its current culture and replace it with a new speak up culture. It is a daunting task in such a large company but it has to be done. Until GM wakes up, missteps and failures will continue.
Mike – You write that, “GM has no Chief Ethics and Compliance Officer, and has not announced any plans to create an Ethics and Compliance office.” I believe there may be some form of “Compliance” function at GM? In LinkedIn a Jacqueline (Jackie) Hourigan is noted to be the Chief Compliance Officer at General Motors since March 2013, and she held a prior compliance role at GM starting January 2010. If there is an Ethics and Compliance office at GM it is odd that it was not mentioned at all in the Valukas report indicating that it had no seat at the table or line of sight with respect to senior leadership activities—or perhaps subsumed within the Legal department. Jose