Erika Hayes James
  • Search results for GM recall
  • Mary Barra and the GM Recall Crisis, Part II

    In Part I of this blog series, we talked about the importance of early verbal responses to a crisis as an acknowledgement. When the leader recognizes the situation and even apologizes for the negative impact on stakeholders, stakeholders perceive it as a firm’s willingness to take corrective action and is correlated with a leader and his or her organization taking on a learning orientation.

    Framing the issue as a threat vs. opportunity
    How a crisis is framed by leaders also matters to the subsequent handling of the crisis.  Crises are negative events that evoke an emotional response.  According to psychological research, events that are perceived negatively are interpreted as threats, and in turn spark negative emotions (e.g., anger, anxiety, and despair) and negative behavior (defensiveness, deception, paralysis).  Under these circumstances it is difficult for leaders to recognize the potential opportunities for positive change that can manifest from crisis.  In fact, there is evidence to suggest that in response to situations interpreted as threats, leaders become more restricted in how they process information and less generative and creative in identifying solutions.

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  • Mary Barra and the GM Crisis, Part I

    A few years ago a colleague and I conducted research that disturbingly revealed that the announcement of the appointment of a female CEO provokes significantly more negative investor reaction relative to the announcement of the appointment of a male CEO.  At the time, we argued that the status differences accorded to men and women, and the infrequency with which women are named to executive positions, made the appointments feel more risky to investors.  Risk translates into reduced confidence, and reduced confidence yields reduced investment, thereby negatively affecting the stock price upon news of the new executive appointment.

    Although in recent years, we have seen ostensible growth in women holding top leadership jobs (think Ursula Burns at Zerox, Ginny Rometty at IBM, and Indra Nooyi at Pepsi), the scrutiny of women in these positions tends to outpace that directed to their male counterparts.  Imagine, therefore, the pressure for recently appointed General Motors (GM) CEO Mary Barra.  The first female CEO to lead one of the big three U.S. auto manufacturers is now also facing a highly publicized crisis – something else that tends to draw scrutiny and invite reduced confidence in leadership and firm performance.

    GM is embattled in a significant recall for millions of cars with ignition and other defects dating back more than a decade.  The recall is both financially costly and damaging to the beleaguered automaker’s reputation.  For Barra, investors and other stakeholders are voyeurs peering into her crisis handling, prepared to comment (and criticize) at every turn.  Below the surface her gender may make this an even more intriguing case than your average corporate crisis.

    There are some things Barra can do to mitigate the threat associated with the recall, and potentially stave off some of the risk associated with the crisis.  Read More