Chapter 12: Strategic Leadership 395
Strategic Focus
Trial by Fire: CEO Succession at General MotorsLate in 2013, Dan Akerson, the CEO of General Motors (GM)
during a time of intense scrutiny and criticism of the firm,
announced that he was accelerating his retirement. He had
planned to retire at the end of 2014, but he learned that his
wife had a severe illness, so he decided to retire early. To suc-
ceed Akerson, Mary Barra was chosen. She became the first
woman CEO of a major automaker in the world. Her selection
to become the new CEO for GM was a major celebration for
breaking the “glass ceiling” in a formerly male-dominated
industry. Her choice represented an inside succession, as she
had spent her entire career at GM.
Barra had her hands full trying to create change in an
archaic structure and corporate governance system.
For example, for years GM used three lead engineers for every
new product, requiring more time, extra coordination and
often significant inefficiencies. Barra announced changes that
resulted in only one lead engineer for every new vehicle.
As it turned out the inefficient structure was a minor problem
relative to what she soon encountered. She learned about a
substantial problem with an ignition switch on GM vehicles
that evidently caused wrecks, major injuries, and even death.
Worse, the company had known about the problem for years
but took no action to fix the problem or to acknowledge
it. When she learned of the problem, Barra acted swiftly
(although not quick enough for some). GM acknowledged
the problem and made compensation offers to families of
people who were killed in accidents because of the defective
ignition switch. Additionally, GM recalled almost 30 million
vehicles to fix the problem. But, this was a public relations
disaster, and she was called to testify before Congress about
the problem.
Beyond these actions, Barra is trying to change the culture at
the company so that such problems do not occur in the future.
Her “trial by fire” has been recognized by GM’s board of directors
because she earned $16.2 million in 2014, which is 80 percent
more than her predecessor received. Her challenges continue.
Barra is trying to increase capital spending by 20 percent to
improve existing product lines and to continue developing an
enhanced electric vehicle. However, she also has to deal with
declining profits in GM’s European and Latin American markets.Regardless, Barra paid blue collar workers a larger bonus
in 2015 than required by the union contract showing her
commitment to GM employees. She also announced plans
to distribute about $5 billion in dividends to shareholders by
the end of 2016. She also hopes to bolster GM’s stock price
by buying back about $5 billion in stock in the same time
period. Thus, Mary Barra made history being named as CEO of
GM. She came up through the ranks and knew the firm but
still faced substantial challenges during her first year in the
position. She has weathered the trial by fire and has a vision
for the future.Sources: G. Gardner, 2013, Dan Akerson leaves GM stronger than he found it,
Detroit Free Press, http://www.freep.com, December 10; J. Jusko, 2014, CEO Mary Barra
is driving culture change at General Motors, IndustryWeek, http://www.industryweek.
com; 2014, Mary Barra General Motors, European CEO, http://www.europeanceo.com,
November 27; B. Vlasic, 2015, General Motors chief pledges to move beyond
recalls, New York Times, http://www.nytimes.com, January 8; C. M. Portillo, 2015, Let’s
take a peek at Mary Barra’s 2015 to-do list at General Motors, bizwomen, http://www.
bizjournals.com/bizwomen, January 14; B. Vlasic, 2015, Despite recalls, GM pays
workers a big bonus, New York Times, http://www.nytimes.com, February 4; M. Lewis,
2015, GM’s Barra bets she can deliver where predecessors fell short, New York Times,
http://www.nytimes.com, March 9; R. Wright, 2015, GM disappoints as Europe and South
America reverse, Financial Times, http://www.ft.com, April 23; J. D. Stoll, 2015, GM chief
executive Mary Barra earned $16.2 million in 2014, Wall Street Journal, http://www.wsj.
com, April 24.JEWEL SAMAD/AFP/Getty Images
Mary Barra, CEO of General Motors, introduces
the new Chevrolet Volt.