by Tom Hinton
Volkswagen, which has admitted to installing software to cheat emissions tests on 11 million diesel vehicles, is the latest example of a company tarnished by a culture of deceit and heavy-handed leadership that placed unreasonable demands on its people. As a result, the giant auto company is facing criminal investigations around the world and an internal crisis that threatens its future stability and marketplace dominance.
Their CEO is out. Martin Winterkorn, who oversaw VW for several years, apparently was an overbearing and unreasonably demanding boss who didn't like failure and put undo pressure on his managers to succeed. In turn, they resorted to cheating the system and breaking all the rules of fair play. It will cost VW dearly.
There's an old Russian axiom, "A fish stinks from the head down." With Volkswagen, it appears the company's culture of deceit and deception ran all the way to the top. Several former managers in the VW group - whose brands also include Audi, Porsche, SEAT and Skoda - have stated few executives dared approach Winterkorn. He was bull-headed, unreasonable and uncompromising. These are traits of an insecure leader and a recipe for disaster -- which is exactly what VW has on its hands!
According to news reports, Volkswagen has declined to comment on whether the firm's culture or the management style of Winterkorn, who resigned last month, had been a factor in the emissions cheating scandal. But, Winterkorn's ouster presents a unique opportunity for Volkswagen to polish its image and refine its once-proud culture -- a culture based on integrity, fairness and open communication with senior management.
It seems some senior executives at Volkswagen get this message. The question is: Will they act and do the right thing to restore Volkswagen's brand and reputation?
Bernd Osterloh, a member of VW's supervisory board, told employees in an open letter: "This company has to bloody learn and use this opportunity in order to get their act together, and 600,000 people worldwide have to be managed in a different way," he said. "This is very, very clear. We need in future a climate in which problems aren't hidden but can be openly communicated to superiors,"
So what steps can Volkswagen take to restore its reputation?
1. Clean out the senior management (including many of the board members) that represents a corrupt culture and replace them with capable managers who are fair, just and will not tolerate deceit and deception.
2. Give greater power to the company's two boards. All German companies have two boards: the management board, led by the chief executive, runs the business day-to-day. The second board is the supervisory board, to which the CEO reports. The supervisory board can hire and fire management board members and must sign-off on major strategic decisions.
3. Make Amends. As a company, Volkswagen has lost the trust of thousands of car owners and millions of potential car buyers. Why trust a company that cheats and lies? So, VW must make amends. Changing its leadership is one step. But, offering compensation and fair deals to any customer who wants to trade in their diesel vehicle for a different one must be part of the equation. VW must also establish some kind of institute within its company that fosters education and training for all employees and suppliers on key subjects including open communication, leadership and the values and principles that made VW a once-great company.
About the Author: Tom Hinton is the co-author of the forthcoming book, The Heart & Soul of Culture: How to Align Your Culture to Your Brand. He can be reached at: tom@tomhinton.com
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