Published by The Nashville Business Journal
Volkswagen is in the midst of one of the largest business scandals of all time. Surely there’s something leaders can learn from the brand’s disastrous mistake of trying to cover up emissions fraud in their cars. Whether you’re an international car manufacturer, a politician or a mom-and-pop shop, experience has shown that deceit never works in business. Truth and transparency is the only response that can help you win in the end.
The scandal
Recent investigations into diesel-powered Volkswagen models found that the vehicles tested for emissions each carried a “defeat device” that falsely showed emissions meeting standards. The testing covered 11 million cars manufactured and sold by Volkswagen worldwide, including 500,000 in the United States, over the last six years.
Unfortunately, rather than owning up to the error early on, the formerly trusted brand insisted that emissions results and subsequent investigations in more than two-dozen countries were only related to “technical issues” that Volkswagen could soon resolve.
The public saw through the ruse. In the last 10 days of September the company lost more than a third of the market value of its stock and continues to trade near its low point. Not long after the scandal came to light the CEO left the company. More recently, several engineers who supposedly did the dirty work of building the “defeat device” are being individually targeted and blamed for the gaffe. Sadly, one of the largest manufacturers in the world has been ripped part by an avoidable scandal.
The issue
By allowing its engineers to systematically cheat the emissions industry, one can only conclude that Volkswagen must have suffered a massive cultural breakdown at the top. But why did they think they could get away with it? What voice told them that it was just fine to continue to cheat? The obvious conclusion is a gross lack of integrity, which as in most massive companies rests squarely on the shoulders of the CEO, board of directors and senior leadership.
Integrity starts at the top where VW leaders have the responsibility to practice doing the right things in every circumstance—in other words modeling the right behavior. In addition to demonstrating integrity, it’s equally important for senior leaders throughout the organization to talk about and teach high standards at every opportunity.
The lessons
The first lesson we already know and would be naïve to ignore in the future: In business the bad guys all get caught. The second lesson is that integrity always starts at the top. It is the responsibility of senior leadership to both exemplify the right behavior and teach ethical standards. This is the key to total understanding and commitment in corporate culture.
If you are in a leadership role managing just a few people or even thousands you have an obligation to do the right thing and to encourage your people to do the same. It is essential to talk about standards of acceptable conduct regularly no matter how many times your team may have heard it before. Your goal is to ensure that everyone understands that there is no tolerance for a lack of ethics—ever—in your organization.
Let the Volkswagen scandal be a lesson in how not to act in business. Walk the high road.
