CEOs Must Take On The Issues Facing Their Brands

It’s interesting to see how CEOs handle pressure and problems facing their companies, particularly when everyone is watching.

It’s interesting to see how CEOs handle pressure and problems facing their companies, particularly when everyone is watching. It’s especially interesting since, being the head of a company, they are the top spokesperson and arguably part of the brand themselves. When they do wrong, it generally reflects on the company. When they do right, the same theory applies.

Take for instance the relatively recent problems of the world’s two largest automakers, Toyota and GM.

To remind you, Toyota’s reputation started to tarnish in October 2009 after a California Highway Patrol officer and several family members were killed in a fiery crash involving a Lexus model. It soon spread that floor mats in a number of Toyota models had the potential to inadvertently come loose and jam the accelerator pedal. The floor mat problem turned into more problems with the vehicles, like sticking accelerators and a defect in hybrid anti-lock software.

Needless to say, a media circus ensued, the company took a hit and public opinion waned. While Toyota’s CEO, Akio Toyoda, did apologize he is mostly absent from the public’s mind. Now, years later, the Toyota recall is finally coming to rest as the company settles with the U.S. government to the tune of $1.2 billion. Some people think Toyota is getting off easy and that the settlement doesn’t address the bigger issue of deterring companies from these problems in the first place. Especially ones that can afford fines of that size.

An AP story today talks about how hard it is to prosecute company executives. After issuing the penalty on Toyota, the Justice Department brought no criminal charges against individual executives, creating an unsatisfying resolution for consumer activists who say prison is the best deterrent for corporate malfeasance. The problem though is that prosecutors say they had little choice in the matter, partly because of evidence constraints and the challenge of gathering testimony and information from witnesses outside the U.S.

While Toyota is closing the chapter on a horrible recall problem, GM is in the middle of one. Toyota’s experience could be a glimpse into GM’s future, but it may be too soon to tell. For one thing, GM’s recently appointed CEO, Mary Barra is taking a different approach to her company’s recall debacle. She had called on the company to review its recall procedures and appointed a safety leader. And like Toyota’s CEO, Barra has apologized, but unlike Toyoda she is taking ownership of a problem that began long before she took the reins of the company. Maybe that will be her defining moment. Maybe that will make GM’s situation different. What do you think? Is Barra right to take ownership of her company's problems?


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