Before recalls, product safety was low in the GM hierarchy

Associated Press

DETROIT

To understand how General Motors allowed a problem with a small part to balloon into a crisis, look at the organization chart.

As of early last year, the director of vehicle safety was four rungs down the ladder from the CEO, according to a copy of the chart obtained by The Associated Press. Finance, sales and public relations had a direct path to the top.

“What’s a higher priority than product safety?” asks Yale University management and law professor Jonathan Macey, author of a book on corporate governance. “The organization chart does obviously reflect a company’s priorities.”

That structure — as well as what new CEO Mary Barra has called a culture that valued cost savings over safety — is likely to be a prime target in a report expected this week from former U.S. Attorney Anton Valukas. He was hired by GM to investigate why the company took more than a decade to recall millions of cars with a defective ignition switch that has now been linked to at least 13 deaths.

Ford and Chrysler, GM’s main Detroit competitors, have safety directors higher on their charts than GM does.

Management experts interviewed by the AP say safety ranks higher at other companies as well, especially food, drug and chemical makers. At some, the safety chief has direct access to the CEO.

It’s unclear if the report will discuss the role of top managers in the crisis. Up to now, no evidence has emerged to suggest that top GM executives knew about the switch problem before late last year.

Internal investigations typically blame the bureaucracy, not the bureaucrats, says Erik Gordon, a business and law professor at the University of Michigan.

“Generally they come up with something that looks good enough to the outside world without damaging top management,” Gordon says.

Valukas is expected to recommend streamlining the bureaucracy so employees can more easily report problems to top officials. Barra has already taken steps in that direction. Among them:

She moved the safety chief up one level and gave the job to Jeff Boyer, a longtime GM engineer. Boyer says he has been provided access to Barra and one of her top lieutenants.

Instead of a series of committees, one five-person body makes recall decisions.

Barra started a campaign to encourage workers to speak up when they see safety problems that aren’t being addressed.

The old structure showed workers that safety wasn’t of top importance to management, says Kathryn Harrigan, professor of business leadership at Columbia University.

Harrigan suggests that GM’s board form a safety committee to review issues, as is the practice at some food and chemical companies. She says that chemical maker DuPont, for example, is so well-regarded for its safety culture that other businesses turn to it for guidance.

At GM, safety was under Barra for nearly three years in her old job as head of product development, although the head of safety didn’t report directly to her. Barra has said she didn’t know details of the switch problem until Jan. 31 of this year. Harrigan says that’s possible because of the way GM was structured.

GM documents released by Congress show that its engineering staff knew as early as 2001 of a problem with the ignition switch: It can be jostled out of the “run” position while a car is moving. The problem bounced around lower levels of the company, even after engineers and lawyers learned of fatal crashes involving cars with the switch. One set of solutions was rejected as too costly and time-consuming. Two company investigations last decade were closed without a recall.

According to the documents, the highest the problem reached in the company before last year was James Federico, executive director of vehicle performance, safety and test labs.