By Keith Laing - 04/09/14 06:00 AM EDT
Step one in the crisis playbook: Apologize repeatedly and emphatically.
General Motors CEO Mary Barra checked that box last week, when she testified before Congress about an ignition switch problem that has been linked to more than a dozen deaths.
Now the company is beginning a long slog to repair its reputation after what lawmakers argue was a “cover up” of a problem in GM models from the mid-2000s.
Observers say GM needs to get out in front of the recall issue by following the lead of other companies that have taken a proactive approach.
To that end, the company has hired Kenneth Feinberg, the legal maestro who oversaw the payouts to victims of the 9/11 attacks and the Gulf Oil spill, to advise them on what could become a massive compensation program for people affected by the recalls.
Republican strategist John Feehery said GM’s early moves since the recall crisis began “all seem pretty standard.”
But Feehery, who is also a columnist for The Hill, said the Detroit-based automaker would have to do a lot more to mend fences, especially with Republican lawmakers who were already critical of the company for taking a $50 billion bailout in 2008 and 2009.
“Ken Feinberg seems to be the default,” Feehery said of GM’s decision to hire the Washington compensation fund manager.
“The problem for GM is that it was taken over by the government, and still none of these problems were fixed, so that complicates the story,” Feehery said.
GM has, thus far, characterized Feinberg solely as a “consultant” on its recall response.
Barra told lawmakers in the House last week that it “will take probably 30-60 days to evaluate” whether to compensate victims of accidents that have been related to the recalled cars.
Lawmakers suggested the company’s hiring of Feinberg meant it was already preparing to pay up, but Barra said it was too early to make any such determinations.
“We have not made any decisions,” Barra said. “We have just started this process with Mr. Feinberg.”
Barra hinted, however, that restitution would be coming for drivers who were involved in accidents that were tied to its faulty ignition switches.
“We will make the best decisions for our customers, recognizing that we have legal obligations and responsibilities, as well as moral obligations,” she said.
Barra has promised to do “all we can to repair our customers’ vehicles and rebuild their trust in GM,” but Joshua Schank, who is the president of Eno Center for Transportation, a nonpartisan think tank, said the company is facing an uphill climb.
“Everybody loves to beat up on large corporations that are seen as valuing profits over human life,” Schank said.
Schank said GM was likely to continue to face scrutiny as it moves to repair both the recalled cars and its standing in Washington.
If late-night TV is any indication, the GM brand has taken a major hit.
The popular NBC sketch comedy show “Saturday Night Live” opened its broadcast Saturday with a tough skit the mocked Barra’s testimony before the House.
“With all due respect congressman, that was the old GM,” a character playing Barra said in the sketch. “I can’t speak to how the old GM would handle an issue like this. I can only speak to how the new GM would handle it.”
When a character portraying Rep. Tim Murphy (R-Pa.) asked from the dais how the new GM would handle the recall situation, the Barra character responded: “We’re looking into that.”
Toyota was also the butt of jokes in the late 2000s, when an accelerator in its vehicles was blamed for a host of deaths. The company recently agreed to pay the government $1.2 billion to settle a criminal probe into the problem, and appears to have put the matter mostly behind it.
Other transportation companies haven’t fared as well.
“There have been examples of brands in transportation that were unable to recover,” Schank said, citing ValuJet Airlines after a 1996 plane crash in the Florida Everglades as an example.
Schank noted that ValuJet simply renamed itself AirTran Airways, and Southwest Airlines recently acquired the company in a multimillion-dollar deal.
GM is likely to avoid ValuJet’s fate because it is a strong brand with a long-standing history in the American auto industry, not an upstart like the discount airline was at the time of the Florida airplane crash, Schank said.
Still, Feehery said GM might need to take “dramatic action” to prove to people that it’s changing how it does business.
“A bunch of people need to be fired, and fired yesterday,” he said.