Is $15 Billion Enough to Repair Volkswagen's Broken Image?

After nearly a year of following this story, it’s good to see that Volkswagen will finally be paying some substantive money to rectify its disastrous emissions scandal. They’ll be paying a reported $10 billion to consumers, $5 billion to the EPA – about 20% of VW’s worth as a company. It’s the largest settlement deal in US automotive history, but I’m still not sure it’s enough – executives who were directly responsible for deceit and creating default devices should be prosecuted. You can read more on this at NPR. 

Image: Getty Images via NPR

We Still Need to Talk about Volkswagen

As seen in this article, the continual neglect by Volkswagen executives to consider their emissions cheating scandal a “real problem” in the months leading to the sudden announcement shows a fundamentally toxic corporate culture. It’s one thing to have cheating be a habitual aspect of your business, but it’s quite another to see cheating as so normal that it’s only worth setting 10 minutes aside in a meeting to discuss its possible financial and reputation-based ramifications. While some of the leadership of VW responsible for the scandal have left the company, VW still has a lot to prove in terms of repairing its image – both to customers and to current employees who may have been compelled to cooperate with the emissions cheating for fear of losing their job. Read more about their conduct at The New York Times.

Photo Credit: Justin Lane for European Pressphoto Agency, via NYT

How Surprising: Another Volkswagen Indiscretion

Volkswagen’s continual dishonesty is barely surprising anymore. Even after the emissions scandal, they have insisted on deleting data routinely despite Department of Justice requests for them to stop. They dismissed a whistleblower who tried to make VW’s consistent lack of cooperation with investigators public. You would think that diminishing trust and sales would encourage VW to attempt changing their culture of deceit, but it appears that it’s difficult to teach an old dog new tricks. Read more at Fortune Magazine.

Photo Information: Jens Meyer/Associated Press via Mashable

A Tale of Two Corporations

GM CEO & Chairwoman Mary Barra

GM’s CEO and Chairwoman, Mary Barra, provides a completely alternative way to handle scandal when compared to the recent VW emissions disgrace. When faced with a grave safety crisis that cost 124 lives, 2.6 million recalled vehicles, and over $900 billion, Barra focused on apologizing to the public, owning up to faults and rectifying cultural issues within GM that allowed the safety issues to go ignored. Contrastingly, VW has been doing everything it can to sweep details and news of their wrongdoing under the proverbial rug. Read more about Barra's appointment as GM chairwoman at The New York Times. 

Photo Credit: Bill Pugliano/Getty Images

Response to VW's Press Conference on 12/10

Some credit can be given to Volkswagen for admitting that their emissions cheating scandal was the result of “a chain of errors that were allowed to happen” by a “climate of fear” created by management. However, the focus should be on that culture of intimidation, rather than the notion that the cheating was allowed to happen due to poor organizational management between R&D and implementation of new technologies. While that is certainly a contributing factor, the heart of the scandal is why employees didn’t come forward and blow the whistle sooner, and what cultural elements existed at VW to encourage immoral behavior. VW still has a lot to answer for, and business leaders should be taking notice of the possible results of a psychologically unsafe workplace. See more on the press conference at the New York Times.

Cleaning Up After Volkswagen

Volkswagen is expected to update the world on its internal investigation the emissions-regulations scandal this week. However, as this article puts it, VW has been “responding to each new revelation [of misconduct] with denial, feigned ignorance and weak apologies.” It seems almost impossible that a company as large as VW with such a glaring moral and practical issue can shrug it off so nonchalantly. Such behavior is very typical of a harmful corporate culture that is hoping against hope that the scandal will simply ‘go away.’ What VW should focus on, in addition to keeping its internal investigation as objective as possible, is a cultural shift towards openness, transparency and accountability. See the New York Times for more.

Is Your Corporate Culture a Ticking Time Bomb?

Corporate cultures that discourage employees from reporting wrongdoing are ticking time bombs. Situations like the Volkswagen scandal should be keeping senior executives up at night – what if there are legal and ethical breaches in their organizations that they’re not aware of? What if the employees in the know are too afraid to bring issues to their attention for fear of retaliation? Questions like these prove that creating a psychologically healthy workplace isn’t just in the best interest of employees – it’s another form of risk-management for CEOs who want to avoid becoming the next VW. Whistle blowers will only feel comfortable coming forward with essential information if the workplace culture is based on trust and encouragement. Here are two great reads on the VW scandal: Volkswagen says Whistle-Blower Pushed It to Admit Broader Cheating and VW Lost its Moral Compass in the Quest for Growth.