GM BUSINESS CORPORATION 1
Corporate social responsibilityis an oversight, accountability and control of decisions as well asresources of an organization. It is incorporated by any organizationor corporation alongside ethics to avert any crisis that might occurat the workplace. General Motors, despite the presence of CRS faced amajor crisis in early 2014. This crisis that lasted for over tenyears was characterized by the fault in the ignition switches of itscars shutting off the engine when driving hence preventing airbagsfrom inflation. It caused a lot of accidents and deaths toindividuals owning or riding in their model cars. Such cars includesall 2005-7 ChevroletCobalts andPontiac G5s, 2003-7 Saturn Ions, 2006-7 Chevrolet HHRs, 2005-6Pontiac Pursuits sold in Canada, 2006-7 Pontiac Solstices and 2007Saturn Skys. As a result, in the first three months of 2014, it hadto recall all the cars which had faulty ignitions. Thus, it showsthat General Motors failed in corporate social responsibilities andbusiness ethics (Carns, 2014).
General Motors’ StakeholderRelationship
The faults could have beenavoided through stakeholders’ involvement. This is relevant forspecific issues, for instance, the fault ignition switches andprocess dealing with the relationship of these stakeholders. Itsmanagement has the power to incorporate different stakeholders andhence implement their strategic plans and the CSR initiatives(CBS/AP, 2014). Its reputation that had been building for many yearswas then destroyed overnight, since it didn’t handle this crisisand satisfy the various stakeholders. As a result, the General Motorshad to come up with means of managing this crisis. Initially, thiscrisis could have been controlled through monitoring ethicalmisconduct disaster since this is a crisis resulting from misconductof employees and unethical decisions threatening organization’sdisruption (Spangler, 2014).
Impacts of Legal, Regulatoryand Administrative Issues
The General Motors Corporation isaffected by legal, regulatory and administrative issues. GeneralMotors can be sued and held responsible for its crisis as well asinconvenience caused based on the existing laws. In this case, thelaw protects the General Motors managers and its shareholders onfaulty of ignition switches but also other employees are also heldresponsible concerning their conduct. As a result, the General Motorswas blamed for not conveying the information despite their knowledgethat could have led it to early recalls. There were claims that thecurrent CEO worked in the General Motors for over 33 years as anordinary employee before being elevated to the post of CEO in 2013but amazingly, she never heard of faulty switches for ignition(McWilliam et al., 2001).
General Motors failed to takeinto consideration the reasons behind the economics and competitionregulations of corporate social responsibilities. Such regulationsprotect the car users from unethical business practices, which couldhave been averted through implementation of corporate socialresponsibilities. Also, the economics and competition regulationhelps to eliminate the undesired consequence in the society, forexample, the deaths as a result of failure for the ignition switches(McWilliam et al., 2001). In addition, General Motors is influencedby political environment. Historically, the organization committeehas been scrutinized publicly and reducing the secrecy oflegislation. Therefore, any mismanagement by the management willcause public uproar (McWilliam et al., 2001).
Corporate Aspects influencingGeneral Motors
There are corporate governanceaspects, which are applicable to the General Motors. The managers ofGeneral Motors are fiduciaries to the shareholders and makes informeddecisions and avoid conflicts of interest from its operations, and ifimplemented, the ignition failure of switches would not be realizedagain (McWilliam et al., 2001). The board of directors performsfiduciary duties and need to ensure that the ethical culture andlegal compliance is adhered to. It will need to incorporate theFederal Sentencing Guidelines for organizations to fulfill itsresponsibilities (McWilliam et al, 2001).
After General Motors recognizedits failure on the development of failed ignition switches, it willneed to hire, fire and appraise the senior employees, assist givestrategic direction and be able to evaluate its performance to enableit get adequate control, oversight and accountability. In addition,the CEO needs to depend on the outside directors with great expertisein order to limit the conflict of interest. It will also need to addquality to the company through adding expertise (McWilliam et al.,2001).
Therefore, the General Motorsneeds to come up with means of managing risks as it is depicted thatit has not done so. It can do this through narrow and more generalview. Narrow view is through liability, financial decisions andinsurance of its operations to help avert any faults in their carsagain. In addition, it can do this through more comprehensive viewwhere it protects against misconduct undermining the reputation ofthe company. It also has to consider the business ethics by enforcingthese to its employees. The ethical values enable compliance of setprograms to manage the misconduct of the General Motors. Ethics ispart of corporate social responsibility and the board of directorsneeds to provide leadership in order to solve issues and support thecorporate culture ethically (McWilliam et al., 2001).
Recommendations and Conclusion
In order to be held responsibleand promote the ethical and legal culture, General Motors shouldinitiate a moral program to be followed through establishment,communication and monitoring the legal needs and moral values, whichfeatures the company’s operating culture and environment (McWilliamet al., 2001). In the promotion of business ethics and corporatesocial responsibility, General Motors need to seek the services of acode of conduct officer to manage its code of conduct program, totake care of authority delegation, ethics training and monitoring,auditing, revision, and enforce the standards of the program. Astrong ethics program includes a written code of conduct, an ethicsofficer to oversee the program, care in the delegation of authority,formal ethics training, as well as auditing, monitoring, enforcement,and revision of program standards. Its reputation has been destroyedbut it needs to manage this risk and come out of it by making repairson all the cars recalled. After that, General Motors can compensatethe affected individuals and assure all the users or those wishing tobuy General Motors’ cars that the situation has been controlled andall its models of cars are safe to be driven.
McWilliams,A. & Siegel, D. (2001). Corporate social responsibility: A theoryof the firm perspective. Academyof Management Review, 26:117- 127.
Spangler,Todd (30 March 2014). Delphitold GM ignition switch didn`t meet specs. DetroitFree Press.Retrieved From,http://www.usatoday.com/story/money/cars/2014/03/30/gm-ignition-switches-recall-congressional-report/7085919/
Carrns, Ann (4 April2014). UnderstandingParticulars of G.M.’s Safety Recall. NewYork Times. RetrievedFrom,http://www.nytimes.com/2014/04/05/your-money/understanding-gms-safety-recall.html?_r=1
CBS/AP(23 May 2014). GeneralMotors announces 30th recall of year. CBSNews.Retrieved From,http://www.cbsnews.com/news/general-motors-announces-30th-recall-of-year/