Massive recalls, legal battles, and a government investigation have put General Motors in the media spotlight for several months. While the automaker has made progress rebuilding its reputation, crisis communications experts say it needs to focus on safety and empathy for a full recovery.
GM’s crisis began in February when it faced public outcry over a decade-long delay in recalling Chevrolet Cobalts with faulty ignition switches, an issue that has been linked to 13 deaths. As a result, the company paid a $35 million civil penalty to the National Highway Traffic Safety Administration. According to various reports, it has recalled more cars this year than it has sold since filing for bankruptcy in June 2009.
GM's crisis response
December 2013: Incoming CEO Mary Barra leans about the ignition switch issue (Source: AP)
January 28: Barra is a guest at the State of the Union address, praised by President Barack Obama as the "daughter of a factory worker" who rose to the top of her company.
March 11: GM shares fell as multiple investigations into why the company took a decade to recall Chevrolet Cobalts with faulty ignition switches were reported. The company said at the time it was focusing on the peace of mind of its customers.
March 18: Barra tells staffers in a video, "something went wrong with our process in this instance, and terrible things happened." The number of GM vehicles recalled reaches 3.3 million.
April 1: The House Oversight and Investigations Subcommittee quizzes Barra about the recall process. Saturday Night Live mocks her tight-lipped responses that week. GM taps lawyer Kenneth Feinberg to oversee victim compensation. Early April: Former Clinton White House strategist Jeff Eller leaves his role as EVP at Hill+Knowlton Strategies to help GM with its response.
April 14: Communications leader Selim Bingol steps down from his role. The automaker says it’s to pursue other interests. IR chief Randy Arickx takes over on an interim basis.
May 8: GM brings back former PR leader Steve Harris to serve as its chief spokesman for a limited time, focused on the recall crisis.
May 16: The automaker agrees to pay a record $35 million fine to the National Highway Traffic Safety Administration.
May 19: Tony Cervone, then serving as EVP of group communications for Volkswagen Group of America, comes back to GM as SVP of global communications. He reports directly to Barra.
June 5: The internal report on the recall delay, more commonly known as "the Valukas report" after lead investigator and former US Attorney Anton Valukas, is released. Barra calls it "extremely thorough, brutally tough, and deeply troubling."
-- by Frank Washkuch
GM has acted correctly to educate the public and act transparently, but the path ahead is still lined with obstacles, including congressional hearings, lawsuits, and oversight of vehicle repairs, explains Mike Fernandez, corporate VP of corporate affairs at Cargill. Fernandez’s CV includes working on crises throughout his career, including on environmental regulations for Eastman Kodak in the 1990s, reputation management for State Farm after Hurricane Katrina, and product recalls for ConAgra Foods and Cargill.
"[GM] has a lot to navigate, but they’ve turned a corner in some ways by going back to the future and hiring [former PR leader] Steve Harris back as a consultant and Tony Cervone, who used to work there and worked for [Harris]," says Fernandez, who taught a reputation management course at New York University this spring.
Cervone rejoined GM in May as SVP of global communications, reporting to CEO Mary Barra. He succeeded Selim Bingol, who had the title of SVP of global communications and public policy and left the company in April.
Fernandez believes GM’s outreach to dealers and customers in recent weeks has been "quite good," and it should continue to focus on empathy.
"This is about caring. You need to have that in the back of your mind as you slog through a crisis," he explains. "People were impacted by this event, devastatingly so. Therefore, it’s important that [GM] keeps in mind the human factors in all of this."
Stories about the awful effects of the malfunctioning ignition switches are also bound to prompt an emotional response from consumers. Over the weekend, The New York Times published a story about victims who are eligible for compensation, describing their injuries and the circumstances of their accidents in detail. Fernandez explains that as more reports like this one are published, GM has to show understanding and resolve to fix long-term problems.
Cervone says GM has made it clear that anyone who was affected by the ignition-switch issue through either a fatality in their family or a serious injury will be eligible for compensation under the supervision of Washington-based lawyer Kenneth Feinberg, who was hired by GM in March.
"Clearly there are a lot of emotions running, and we sympathize and empathize with that emotion, so we have to handle these things one at a time," Cervone explains.
Feinberg’s compensation plan, which should be in place in the coming weeks, will "begin to answer all of the doubt that’s out there," says Cervone. He adds that even though the first news about the recall is several months old, it’s important for the company to "keep it front and center in a way."
He adds that GM is committed to learning from the crisis and using that information to change its culture.
Chief executive as point person
GM CEO Mary Barra, who took the helm at the automaker at the end of last year, is also using public appearances to describe the ways the company has changed course. Appearing on Capitol Hill last week, she answered questions from lawmakers about emails that show GM executives ignored warnings in 2005 about ignition-switch problems on various models. After a similar testimony in early April, during which she was tight-lipped about her company’s response to the crisis, she was mocked in Saturday Night Live’s cold open a few nights later.
Last week, Barra defended the company’s cultural changes, including the termination of 15 staffers who it determined had acted inappropriately in response to the issue. She also emphasized that she is encouraging employees to speak up if they see a problem or believe an issue is being handled incorrectly.
The culture shift is a definite step in the right direction, but GM has to provide evidence of how its processes are better than they were in the past, says Timothy Coombs, professor at the Nicholson School of Communication at the University of Central Florida.
Coombs, who has written a number of books on crisis communications and reputation management, says the GM situation is "probably the worst possible crisis you could have in terms of breaking trust with your stakeholders."
He adds that GM has "hit the bottom of the crisis," and recent statements have helped it claw back. Despite its uphill battle, Coombs says only one resource will help the automaker: time.
"In time, emotions are going to calm down a little bit, giving GM a chance to rebuild trust by proving their changes are making a difference in their polices," he explains. "Unfortunately, that’s not the answer you want to hear as a corporation, but sometimes that’s all you have."
On Thursday, one day after GM issued another recall of 33,000 Chevrolet Cruze sedans for potentially defective air bags, Barra told NBC News that additional recalls are possible as the company continues to review data. On Thursday evening, The Wall Street Journal reported that federal prosecutors have issued grand jury subpoenas to find out what employees were at fault for the long delay in recalling malfunctioning Cobalts.
Cervone says the most recent recalls are part of the company’s plan to earn back the trust of customers.
"We need to do these things in a way that is extremely diligent and with a discipline and rigor that we frankly never had in the history of the company," he explains. "We’ve done the most aggressive evaluation of our safety out of any time in the history of the company that any of us can remember."
Communications experts say GM must quickly disclose any negative information it finds to avoid another crisis. Solomon McCown president Ashley McCown advises that "if there is more bad news, get it out there now" before the company loses any more credibility.
Another major component of a GM turnaround is its dealer network, which is managing a slew of repairs and questions from customers, she says. McCown adds that the automaker has to ensure dealers are updated on all recent information so they can answer inquiries with confidence.
Coombs agrees, saying, "Your dealers can be a great asset, and you have to be talking very closely with them."
In addition to dealer outreach, GM should continue to emphasize Barra’s role as the face of the company, especially in light of recent recalls, adds McCown.
The auto industry generally expects CEOs to be communicative to all stakeholders, explains Cervone, which is why Barra will continue to be the point person for talking to media, policymakers, employees, and customers.
"[Barra’s] also very interested in driving the kinds of changes that she’s highlighted," he says, "and she feels ownership for that."
On the legal side, GM’s communications team must make sure it speaks out more often than plaintiffs’ lawyers do, says Stu Loeser, who served as press secretary for former New York City Mayor Michael Bloomberg from 2006 to 2012. Since Bloomberg left office, Loeser has founded his own reputation management consultancy.
He adds that a situation like this is challenging because the automaker is going up against experienced legal counsel. However, it should still help consumers understand how it is fixing the situation, particularly in a "candid, less filtered" way.
The company should find places for executives to speak to the public aside from the business sections of newspapers, such as live TV interviews or talk shows, which will help GM establish a better reputation for transparency and regain trust, adds Loeser.
"You’re not going to lawyer your way out of it, and you’re going to have to show some risk," he explains. "Through a tough live or relatively live interview, you can communicate both in what you say and beyond your words, and you’re not going to be able to do that simply from a legal perspective."
This story was updated on June 27 with information about the federal government issuing grand jury subpoenas about the recall.