Over the past week, the new CEO of General Motors, Mary Barra, has been in Congress. Unlike most occasions on which a CEO goes to Congress, she is not there to lobby for lighter regulations or to ask for a bail out because of the financial crisis. Instead, she is having to explain to Representatives and Senators why the company did not recall a large number of cars that have since been show to have potentially fatal safety faults. Barra (and it should be noted that she was not in charge when these events occurred) has not really had an answer beyond trying to deflect the blame away from any individual person. Essentially, her argument is that the right information never made its way up to the C-suite, and therefore the executives at GM could not be expected to act.
As the American website Gawker has argued, this seems to be a direct blow against the ‘myth of the CEO’ – the idea that corporate executives are supernaturally talented people whose work fully merits the multi-million dollar salaries they receive. CEOs are supposedly paid all of this money because of their leadership and their ability to make tough and correct decision. As the Barra testimony shows, they’re mostly leading in the dark and making decisions without the correct information.
This isn’t necessarily to say that CEOs are bad at leadership – it’s something they have been trained in, and have probably shown some talent for at lower levels. But today’s corporations are a totally different proposition from most management roles. They are behemoths, enormous entities with turnovers the size of many nation states’ GDPs. They are incredibly complicated logistical operations, with branches across the globe, hundreds if not thousands of lower managerial roles, an equally large number of chains of command through which information must travel, and hundreds of millions of variables, any one of which could go wrong at any time and create a situation like the one Barra now faces. Basically, the modern corporation is too big to assume that any small group of directors can effectively lead it – even if they are being paid millions.
Although there is a general trend towards ‘bigness’ in the corporate world, we would actually very much benefit from having smaller companies rather than larger ones. A smaller company that was more focused on its core business would have noticed the flaws in their cars sooner, and would have been able to communicate the problem more quickly. But smaller businesses are often better for us in other ways too – they are likely to be more concerned with ensuring jobs stay in the local community, to be more environmentally friendly, to be fairer to their workers and to provide better pay and benefits. Generally speaking, they are less likely to see profit as the only benchmark of success, as the companies of corporate America do. A company with this ‘small is beautiful’ mindset would be less likely to see worker deaths and injuries, less likely to send out faulty cars, and less likely to encourage the inequality of wealth that America currently suffers from.
To this end, it might be time to start arguing for new corporation laws and regulations to limit the overall size of businesses and to encourage the rise of medium- and small-scale businesses that can better bring some humanity back to the world of work and make things fairer for employees. Legislation that encourages worker-owned cooperatives would be even better – as such businesses inevitably have the interests of the poorer workers at their heart – although it may be some time until we see such a thing in the US. Either way, as the case of GM shows, it’s time for the corporate giants that have dominated America for so long to be brought down in favor of a new model of business.
corporate giants, General motors, Marry Barra, financial crisis, C-suite, GDP, management roles, logistical operations, environmentally friendly