As the scandal at Volkswagen unfolded late in 2015, I wrote an article in January 2016, titled, "Volkswagen--What Might Have Caused the Emissions Scandal?" where I hypothesized as to what might have led to this major crisis. I quoted a New York Times article in December 2015 which reported: "that a former VW employee, Mr. Arndt Ellinghorst, who is now an automotive industry analyst at an investment advisory firm, decided not to stay at Volkswagen, partly due to its management style."
"VW had this special culture," he said. "It was like North Korea without labor camps," he added, quoting a famous description of the company published in Der Spiegel magazine. "You have to obey." Sadly, it turns out that Arndt's characterization was right on the money, and so was my hypotheses that the problem stemmed from poor leadership and a dysfunctional culture.
Last week, it was announced that German prosecutors are now investigating whether the current Chief Executive Officer and other executives may have known about or approved the program to falsify diesel emissions levels. This is after the company has already pleaded guilty to criminal charges, paid nearly $25 billion in fines, penalties, legal fees and compensation for customers. This matter is far from over and in addition to being very costly, has created serious employee, customer, and reputation risk problems.
What can we learn from this fiasco? How can leaders learn from Volkswagen's problems and ensure that this never happens in their companies? Here are four tips you can implement to avoid disaster:
Water Flows Down Stream
Gravity is what allows water to flow downstream and as its path narrows, the force accelerates. Companies are like water where the CEO sets the tone, culture, cadence and everything about what happens. As this information moves down in the organization, it gathers strength and force.
What you say, how you say it, how you behave in meetings, how you make decisions and literally everything you do as a leader is front page news for everyone in your company. Decide what type of leader you want to be to maximize your effectiveness and start taking steps to model those behaviors. Ask for feedback to make sure it's working. More than anything else, this will shape the culture and decision making within your company.
Excessive Pressure and Intimidation Leads to Dangerous, Unintended Outcomes
People will obey because they believe they have no alternative. Good folks wind up doing the wrong things for the wrong reasons, and it is often difficult for whistleblowers to be heard. The ends normally don't justify the means, especially as in the VW case, the end is the wrong goal.
Set aggressive, but reasonable goals and create an environment where every employee feels comfortable raising issues and problems. Problems always arise, but rather than having people cover them up, use cross-functional teams to solve problems, create involvement and commitment.
Lack of Engagement Results in Isolation and Insular Thinking
An insular command and control style, where leaders never escape the comfort of their office suites leaves them unaware of what their employees think and how their customers feel about them and their products.
Get out of your office, engage with your employees and customers. Find out what is working and what's not. Solicit input and ask questions. Successful outcomes rarely come from staying in your cocoon.
Lack of Transparency Creates Uncertainty and Problems
Hoarding information, operating in silos, keeping information secret that should be shared really impairs your organization's ability to execute well and on a timely basis.
Except for highly confidential information, let people know what is going on. Share as much information as you can and empower your teams to make the best decisions all the time. They are adults, so treat them that way.
Learn from the Volkswagen scandal, become more engaged, take a proactive view of your leadership style, keep your unforced errors to a minimum and enjoy the ride.