The Volkswagen emissions-testing scandal continues to provide some of the greatest lessons to be learned for the compliance and ethics practitioner that have been recently seen in any corporate scandal.
If you compare the conduct and language of VW senior executives of those from Walmart or even General Motors you will see no greater contrast. Their words and actions may also show us whether VW will or even wants to change its corporate culture.
At a recent press conference, VW Chief Executive Matthias Müller, when asked how he would behave on his first trip to the U.S. after the scandal broke said, “I don’t think I will get down on my knees, I will be self-confident. Of course, I will apologize for things that have occurred.” Later added that that “The future at VW belongs to the brave.”
But Müller did not stop there. As reported in the Financial Times, he “also took an axe to some symbolic elements of luxury: he will sell VW’s Airbus”.
If now you’re scratching your head about how the sale of a corporate jet can actually facilitate a change in the ethics and compliance culture in the company, consider that the FT article went on to quote Arndt Ellignhorst, an analysis at Evercore ISI for the following insight into the corporate mindset at VW:
Cutting corporate jets and fancy cars show galas might not sound like much to the outsight world, but in means a lot in terms of culture and attitude.
So there you have it: getting rid of a corporate jet is a sign that culture has improved at VW.
If that is a sign of improvement, it gives some serious insight into not only how the problems first arose but also the difficulty the company will have moving forward from this scandal.
Not only do the internal controls and processes need to be overhauled but it would seem the attitude of entitlement should also be addressed. Simply getting rid of the corporate jet had nothing to do with the corporate governance, management, or even the need for a “systemic culture review” at the company.
I guess Müller will be flying to America with the rest of us travelers, although he will probably fly up front in First Class, not in Coach with the masses. Just maybe his rubbing elbows with non-executive people, who do not live and work in Wolfsburg, could give him some insight into how he might go about changing the culture of VW so a 10-year running scandal does not occur again.
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Thomas Fox is a contributing editor of the FCPA Blog and a Compliance Week columnist. He’s the founder of the Houston-based boutique law firm tomfoxlaw.com. A popular speaker on compliance and risk-management topics, Fox is also the creator and writer of the widely followed FCPA Compliance Report. His book Lessons Learned on Compliance and Ethics topped Amazon’s bestseller list for international law. He can be contacted here.
3 Comments
Having counseled European companies through major (and public) scandals over many years, I see this as within a known pattern. Right now, VW is still unable to imagine either (a) that their traditional approach to (much smaller and localized) crises will not quell this one and (b) how deep the bottom truly is. As often as I've seen this, never have I seen a company willing to learn from the mistakes (and ultimate successes) of predecessors (think Siemens) having traveled the same road. Only one thing is sure given what is known of their initial reaction – they will learn, but it will apparently be the hard way.
Changing corporate culture, fostering a culture of ethically sound practices and restoring trust does require long-term effort and a meaningful set of confidential reporting devices that span the entire Volkswagen universe. Removing top symbols of decadence, visibly and effectively, may help to gain much required attention, certainly in the short term, and send some sort of signal across the ranks.
But the pressure to win the race against competitors, to not do what's best (aka legal and ethically sound) but what results in short-term profits may take over yet again. I hope we will be seeing some more comprehensive, meaningful and thoughtful acts of trust restoration and genuine attempts to embed behavioral change across the corporation. No easy task, and none that could be accomplished by textbook exercises alone.
Lessons (much can be learned from setbacks elsewhere) from beyond the confines of the automobile industry could be drawn upon. The question is, are the efforts and political will going to go beyond window-dressing?
Blaming others and finding a way out is a typical defense trend when caught red-handed.
Too little too late. They are done.
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