There is no shortage today of ethical violations in organizations worldwide. Turn on the nightly news, and you’ll see at least one story during the broadcast about a company in crisis from poor ethical decision making.

Many times these unethical actions just seem like obvious bonehead moves. Other times, executives come off as cold and calculating business people unfazed by the plights of the common worker.

Rarely, though, does an organization move from one extreme of the ethical spectrum to the other in recovery. We see many companies enact crisis communications plans to fix the issues, even learning ways to improve moving forward, but it’s not as typical to see a company change its entire corporate culture to allow for more ethical reasoning. In one such case study in ethics, however, that’s exactly what’s happening.

A case study in ethics: The GM Recall

Mary Barra made waves this year when she became the first female CEO of a major automaker in January. She then subsequently laid the company open for inspection and dragged it kicking and screaming into an era of unprecedented transparency.

For more than a decade, General Motors knew there was a defect in the ignition switch for several of its models, ultimately turning the car off and preventing the deployment of air bags while in motion. Though investigations into the problem were conducted in 2007 by both GM and government officials, nothing was done to fix the problem due to inconclusive evidence.

By the end of 2013, after 31 crashes and 13 deaths from such crashes, GM finally concluded that the faulty ignition switch was to blame. After taking the reigns in January 2014, Barra made the decision to issue a recall for thousands of vehicles in February. By the next month, the company recalled more than 2 million vehicles.

In Barra’s transformation of GM’s corporate culture to a more transparent one, many stakeholders were infuriated to learn how long the company knew about the problem and the none-to-little effort it took in correcting the mistake. Congress called a hearing in April where Barra showed complete remorse at the company’s actions before her time in leadership and made a vow to make things right.

After firing 15 employees (engineers and product managers) for their part in not reporting nor fixing the defects, GM was slapped with a $35 million civil penalty by the National Highway Traffic Safety Administration in May. The next month, a report from the internal investigation of the company conducted by a former federal prosecutor was released, citing the many failures of employees to make corrections despite mounting evidence that put consumers at risk.

Today, Barra and her team plow forward with the shakeup of GM and its corporate culture. There has been nearly $4 billion set aside to cover government and private investigations and civil lawsuits brought by the families of the victims killed in car crashes caused by the defect. As this transformation continues, we have already begun to see the ethical changes being made in the company.

GM goes from wrong to right

In many ways, GM failed to implement an ethical decision making process when it choose to make the business decision to ignore defects and not enact safety recalls for more than 10 years. Under new leadership and moving in a more ethical direction now, the company is on the path to correcting its mistakes and rebuilding trust.

1. The issue

Then – In 2001 when GM first detected an issue with the ignition, it failed to ask itself if it would be ethical to release a product that was not 100 percent safe for consumers. Instead, it ignored the potential harm that could result from inaction. It continued with this mentality until 2014.

Now – When Barra was informed of the ignition issue at the end of her first month in her new role, she did ask herself the ethical question. Could the company go on producing vehicles that were unsafe? With courage and ethical commitment, she made the hard decision to bring the company forward and correct the mistakes of the past.

2. The factors

Then – GM was negligent when it didn’t consider external or internal factors. It ignored social, legal and political stipulations, such as what was safest for consumers, what was legal in reporting to the NHTSA, and what would provide the most brand value, when deciding whether to issue a recall or halt product releases based on a 57-cent piece that would have corrected the defect.

Now – Faced with multiple crashes, injuries and deaths, Barra and her team had to take into consideration several factors, including the financial troubles the company would face so shortly after recovering from the government bailout, the mounting damage to the brand, and the legal fallout from such long-standing inaction.

3. The key values

Then – GM ignored its own company values of safety and quality when deciding to move forward with releasing vehicles that showed evidence of malfunctioning. By dismissing its own stated principles, the company fell further into mismanagement and endangering consumers.

Now – Barra and her team have constructed the “new GM” that focuses not only on past values, such as safety and quality, but also on making a “positive difference” in the company infrastructure and communities where it operates. The implementation of the internal Speak Up for Safety Program where employees can raise safety concerns to supervisors without fear of repercussion and even be awarded for their actions is one way the company is moving in the right direction.

4. The audiences

Then – In deciding to forgo complete safety analyses, GM only served the interest of its shareholders, ignoring other stakeholder audiences. The company only fulfilled its obligation of making a profit to one segment of its entire population. In doing so, it failed to produce a safe product for consumers, provide a conducive work environment for its employees, and left government regulators in the dark.

Now – Recognizing the many other segments of its overall audience, the new GM leadership is making strides to communicate openly with all audience segments. Barra even met with the families of victims the evening before her Congressional hearing, listening to the concerns and apologizing to the people who had lost loved ones due to the company’s former oversight, probably a move that was strongly discouraged by her legal council.

5. The ethical principles

Then – GM leaders ignored just about all ethical principles from any moral code, such as honesty and fairness, when they continued to act incompetently and without responsibility. Their negligence of the problem led to severe repercussions

Now – When first approaching this problem, Barra accepted full responsibility, even though she wasn’t at the helm while the issue was ongoing. As the CEO, she promised to fix the problems that led to the crashes and make sure they don’t happen again. Her apology to the victims in June after the internal report was released sums up her guiding ethical principles.

“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.” 

6. The decision

Then – For more than a decade, GM stuck to its decision to do nothing. It continued to make vehicles with subpar safety standards and allowed consumers to continually be harmed. Today, the company has recalled more than 29 million vehicles and stands to lose billions of dollars resulting from the ethical crisis.

Now – Bara has taken the new GM into an era of transparency, and she’s justifying her actions from the transgressions of the past. To rebuild trust in the brand and get the company back on track, she has installed a new safety director and continues to nurture a more open corporate culture. As the crisis winds down, the company has work to do to restore itself to its former glory. Though it has lost market share, GM has seen a recent increase in profits.

How would you handle a case study in ethics?

There is a lot of what not to do and what to do in the GM case study in ethics. Don’t take more than a decade to admit your mistakes. Do take responsibility as soon as you are notified of a problem. Don’t ignore your own values. Do let your ethical principles guide you.

How would you have handled the GM issue? What other case study in ethics have you reviewed?