THE ROLE OF GM’S STRUCTURE IN A PRODUCT RECALL
Organizations exist in order to allow people to accomplish goals and missions that
would far outstrip what could ever be done by a single person working alone. Large, complex missions have to be broken down into smaller parts that can be executed by individuals whose contributions can then be integrated together. Unfortunately, when the structure created by this process is ineffective, this means that organizations can also do more harm than could ever be done by a single person working alone. Nowhere was this more evident than in the 2014 recall of 2.7 million General Motor (GM) vehicles in response to failures in the ignition system that resulted in the death or injury of over 500 customers, in addition to financial losses of over $400 million.
Two specific problems associated with the structure of GM contributed to the ignition
system disaster. First, the structure created functional silos in which people who worked on one aspect of the cars rarely spoke to people who worked in other functional areas. For example, the switch problem was, in part, a result of a single engineer who redesigned a faulty part but failed to renumber it. Since it was not renumbered, when the part moved through other divisions down through the line, those divisions all thought they were working on the original part. Then, when reports of cars stalling began rolling in, this was treated as a customer satisfaction problem, not a safety issue or a design flaw. Thus, the personnel who were monitoring customer satisfaction never talked to the personnel in design, who were not
even aware of the problem until it was too late.
A second problem with GM’s structure was that it was not at all clear who had
decision-making authority for different decisions, and people at lower levels of the
organization were reluctant to take responsibility for problems or pass bad news up the organizational chart. An external investigation of the incident conducted by the U.S. Attorney General’s Office revealed that many people were aware of the problem as far back as 2001, but these individuals either said nothing or pointed the finger of blame at other units, and so no one actually did anything to solve the problem. In fact, when the Attorney General’s Office asked one worker who knew about the problem if “fixing the problem was part of your job description,” the person simply answered no. The report from the Attorney General’s Office specifically noted that “no single person owned any decision related to the ignition switch problem.”
The ignition switch problem was one of the first to fall on the desk of GM’s new
CEO, Mary Barra, who vowed to fix the structural problems that contributed to this costly incident. Barra noted that “we used to have an organizational structure built around parts—the body, the interior, the electrical structure, and unfortunately, that created a situation in which people were expert in this or that without recognizing people don’t buy this or that—they buy a car and we’ve got to pull it together, and people have to talk.” She also noted that GM would be “restructuring operations to prioritize safety.” This was accomplished by creating a system of “czars” who had specific decision-making authority that cut across functional units and who all reported to a single new vice president of global safety.

Question: In this case, GM employed a traditional centralized structure with strong functional silos. The vignette that opened this chapter suggested that many organizations are now employing team-based structures that cut across functions. How might this approach have helped prevent some of the problems illustrated in this case?