Week 3: Need to manage uncertainty

1. Briefly discuss the need to focus on managing uncertainty. Why is it important?

2. Of the lessons identified in Chapter 5 on managing uncertainty, which one(Organizations need to prepare for uncertainty through simulations and training)do you think would be the easiest of a company to adjust to and "fix" and which one(Crises challenge the way organizations think about and conduct their business)would be the hardest? Why? Give examples to support both.

3.Week:Case study discussion

Pick one of the case studies in Chapter 6 and discuss the application of at least two of the lessons from Chapter 5. Why were those critical lessons for that case study? Going forward, what do you think that an organization should do to address those lessons? Please offer examples to support your case. You may need to due additional research on that crisis to support your position.

Case Study: GENERAL MOTORS AND MARY BARRA Early in 2014, General Motors (GM) initiated a recall on ignition switches for numerous vehicles, which eventually included almost 30 million cars worldwide. Faulty ignition switches had been associated with 124 deaths, and the company was facing major lawsuits, congressional investigations, and loss of consumer confidence. The defect was discovered in 2004 when GM was replacing the Chevrolet Cavalier with the Cobalt, but the company did not properly fix the problem because of costs and time. Even after a 16-year-old driver died because of an alleged faulty ignition switch, GM did not issue a recall. Instead, the company issued a service bulletin. The National Highway Traffic Safety Administration (NHTSA) and other safety regulators did not conduct an investigation or a probe, despite several other complaints, field reports, and deaths associated with the ignition switches.

In June 2009, GM filed for Chapter 11 bankruptcy, and in July 2009, the US government purchased the company's assets. In June 2013, an engineer who had worked on the Chevrolet Cobalt spoke out and reported the decision not to fix the defective switches. In December 2013, the US government sold its share of GM. The company later determined that the faulty ignition switches were associated with at least 31 vehicle crashes and 13 deaths. Just weeks later, on January 14, 2014, Mary Barra became CEO of GM.

Barra was the first female CEO of a major automaker. She was given the monumental task of both managing the company's financial recovery and managing a major product crisis. Once Barra learned the details of the faulty ignition switches, GM officially contacted NHTSA in early February 2014 to declare that a defect existed in over 600,000 cars (Basu, 2014). Within a week, GM recalled 2005-2007 Chevrolet Cobalts and 2007 Pontiac G5s. Over the next month, GM hired two law firms to investigate the recall and added additional vehicles to the recall. An attorney who specializes in corporate payouts, Kenneth Feinberg, was hired to guide the company's response to victims and their families affected by the recall. The US House Energy and Commerce Committee scheduled a hearing about the recall and asked Barra to testify. She remained open, honest, and empathetic in her responses. Perhaps more importantly, Barra used the crisis as an opportunity to evaluate company policies, learn from their mistakes, and demonstrate GM's commitment to safety and their customers.

Honesty, Candor, and Openness While speaking to employees soon after the onset of the crisis, Barra said, "Something went wrong with our process in this instance, and terrible things happened. We will be better because of this tragic situation if we seize the opportunity" (Vlasic & Jensen, 2014). She kept this same demeanor when testifying before the US House subcommittee. She openly stated, "Sitting here today, I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out" (McEachern, 2014). Rather than deflect or deny responsibility, Barra openly acknowledged mistakes that GM had made and promised to work to correct them. In this way, she pledged to identify the mistakes and learn from them in a way that moved the company toward renewal.

Communicate With Compassion, Concern, and Empathy A very important part of Barra's message involved communicating compassion, concern, and empathy for those harmed by the defects and recalls. During her congressional testimony, she said, "my sincere apologies to everyone who has been affected by this recall, especially to the families and friends of those who lost their lives or were injured. I am deeply sorry" (McEachern, 2014). Leaders often avoid making direct apologies like this, because they are afraid of increasing legal liability. Barra chose to be open about the company's customer safety failures. She even posted an apology video and various video updates on GM's YouTube page (General Motors, 2014).

Mary Barra communicated with the public in a way that displayed empathy and devotion to fixing the problem. She acknowledged mistakes the company had made and repeatedly apologized for what had happened. For example, in a June 2014 town hall meeting Barra stated the following:

I realize there are no words of mine that can ease their grief and pain. But as I lead GM through this crisis, I want everyone to know that I am guided by two clear principles: First that we do the right thing for those who were harmed; and, second, that we accept responsibility for our mistakes and commit to doing everything within our power to prevent this problem from ever happening again. (Text, video of GM, 2014)

These repeated statements reduced uncertainty about blame, plans to correct the problems, and GM's commitment.

ocess Approaches and Policy Development Barra also described in detail GM's plans to increase safety and improve its products. In the same employee town hall meeting, she described her plans. "I never want to put this behind us. I want to keep this painful experience permanently in our collective memories. I don't want to forget what happened because I know you never want this to happen again" (Text, video of GM, 2014). To ensure a capacity for identifying defective products, GM's "Speak up for Safety" campaign was launched in April 2014. The campaign encouraged workers to "speak up" when they identified a safety issue that could affect the quality of GM products and potentially customers' safety. This was part of Barra's commitment to learn from the crisis and creaate a better, more responsive company. These actions helped reduce uncertainty about GM's future and provided the public with a visible commitment to learn from this crisis.

Summary Barra inherited a serious crisis that demanded notable action. She took steps to correct the errors of the past and did so in a forthright manner. Her ultimate goal, however, was far greater than the crisis at hand. She accepted the bigger challenge of transforming a GM culture that had allowed the crisis to occur in the first place. Doing so required her to simultaneously focus on the past and the present. Ideally, the past mistakes serve as reminders of the importance of speaking up for safety.

You Make the Call After examining this case, it is time for you to determine if GM's ignition switch crisis was handled effectively by CEO Mary Barra. Did her communication help reduce uncertainty? Was honest and empathic communication practiced? First, take a moment to refresh your mind on the lessons established in Chapter 5 for managing crisis uncertainty. These lessons should guide you in evaluating the strengths and weaknesses of Barra's communication.

Lessons on Managing Crisis Uncertainty Lesson 1: Organization members must accept that a crisis can start quickly and unexpectedly.

Was GM's crisis unexpected? Did GM's crisis start quickly? Lesson 2: Organizations should not respond to crises with routine solutions.

What responses by Barra would you characterize as nonroutine? Lesson 3: Threat is perceptual.

Were different perceptions of threat present within GM's crisis? Lesson 4: Crisis communicators must communicate early and often following a crisis regardless of whether they have critical information about the crisis.

How did Barra's frequent communication shape the way GM's crisis unfolded? Lesson 5: Organizations should not purposely heighten the ambiguity of a crisis to deceive or distract the public.

Were there issues that were uncertain or ambiguous for the public during GM's crisis? What aspects of GM's crisis were communicated in an honest manner by Barra? Lesson 6: Be prepared to defend your interpretation of the evidence surrounding a crisis.

What was Barra's interpretation of the evidence surrounding the GM crisis? How was this evident in her communication with publics? Lesson 7: Without good intentions prior to a crisis, recovery is difficult or impossible.

Did the events prior to the onset of GM's crisis impact how it unfolded? Did publics have a positive view of GM prior to this crisis? Lesson 8: If you believe you are not responsible for a crisis, you need to build a case for who is responsible and why.

Was there a need to build a case regarding responsibility during this crisis? Lesson 9: Organizations need to prepare for uncertainty through simulations and training.

Was preparedness demonstrated by Barra? Lesson 10: Crises challenge the way organizations think about and conduct their business.

How did GM's crisis challenge the company's business conduct? How did Barra use the crisis as an opportunity for organizational learning and growth?

Ulmer, Robert, R. et al. Effective Crisis Communication. Available from: Pageburstls, (5th Edition). SAGE Publications, Inc. (US), 2022.