The Ford Pinto and corporate culture

At the turn of the 1970s, the top brass at Ford set out to come up with a car that weighed less than 2,000 pounds and cost less than $2,000. Their answer turned out to be the Pinto, a sporty little thing with just one problem: in rear-end collisions, its gas tank had an unfortunate habit of exploding.

That fault would eventually make the Pinto one of the most notorious cars in history but no-one at the time dared report it to the company’s formidable CEO. “Hell, no” claimed one Ford engineer. “That person would have been fired.” As the cigar chomping boss Lee Iacocca was fond of declaring: “Safety doesn’t sell.”

Rather than repair the flaw, at the likely cost of about $11 a vehicle and probable heap of damning publicity, executives reportedly decided it would be cheaper simply to pay off any lawsuits. But in time, 27 people died in Pinto fires and by 1978 Ford had recalled 1.5m cars.

Think of the ingredients that went into the Pinto debacle. Fearsome management. A workforce who, it is claimed, understood that safety took lower priority. Among Ford’s managers, lawyers, designers and engineers there might have been some rotten people. But for this completely avoidable disaster to have reached such huge dimensions, there had to be more: a blinkered corporate culture that apparently encouraged staff to behave unethically and to turn a blind eye to the tragic consequences.

The cases involving the explosion of Ford Pintos due to a defective fuel system design led to the debate of many issues, most centring around the use by Ford of a cost-benefit analysis and the ethics surrounding its decision not to upgrade the fuel system based on this analysis.

Should a risk/benefit analysis be used in situations where a defect in design or manufacturing could lead to death or seriously bodily harm, such as in the Ford Pinto situation?

Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, at a cost of $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths. The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit.

Based on the numbers Ford used, the cost would have been $137 million versus the $49.5million price tag put on the deaths, injuries, and car damages, and thus Ford felt justified not implementing the design change.

There are several reasons why such a strictly economic theory should not be used. Simple public relations examples such as Perrier and Toyota have demonstrated the damage of not responding quickly. Eventually, Ford suffered significantly from negative publicity and the judgements and settlements resulting from the lawsuits

More importantly, it seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it. Secondly, such analysis does not take into all the consequences. Also, some things just can’t be measured in terms of dollars, and that includes human life.

In a new book called “Blind Spots”, authors Max Bazerman and Ann Tenbrunsel look at how businesses from Ford to Enron to subprime mortgages can end up in ethical disaster.

They describe a process of “ethical fading” in businesses where maximising returns is encouraged over fairness to fellow employees and customers. The result is that right and wrong go out of the window.

How does this come about and how can it be prevented?

Leadership is a key responsibility of the board of directors, and also senior management. They set the standards by their own behaviour.

First thing is to adopt and promote a set of values; next to interpret them into behaviours and ensure that good behaviours are supported and bad ones are discouraged.

I tell my clients that a values statement is not worthwhile unless it is, or at least could be, used against management.

Values statements should be so ingrained that when an instruction or a decision appears to be inconsistent with the promulgated values, an employee should feel able to challenge it.

Next, is needed a formal and accepted complaints or whistle blowing system. So often, we hear of whistle blowers who are not only hounded out of their organisation but often also blacklisted within their industry.

And yet, they should be the safety valve that protects an organisation from internal rot. In a healthy culture whistle blowing would be welcomed, and would then become unnecessary. A means of ensuring this is to have a formal system by which individuals can contact a senior officer in confidence and independent of their line management structure.

What is the role of a coach in this context?

When coaching directors or senior executives, to challenge them on their attitude to corporate values and individuals who challenge them. When coaching individuals who are concerned about inappropriate behaviour, to coach them in assertiveness and to help them to consider their options and risks; then to develop a strategy.

Corporate rot starts with small actions that are tolerated, and like any other form of rot, clearing it up once it has become established is more expensive than attacking it immediately. It is in everybody’s interests to ensure that organisations have processes for both prevention and early action..

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