Throughout the aftermath of the revelations that Volkswagen cheated emissions standards for 11 million diesel vehicles, the VW Board has maintained a position of innocence.
“The unlawful behavior of engineers and technicians…shocked Volkswagen just as much as it shocked the public,” stated the board. Former CEO Martin Winterkorn also claimed in his resignation speech to be “shocked” and “stunned.” However, the leadership’s response savors – just a bit – of the character of Captain Renault in Casablanca: “I’m shocked, shocked to find that gambling is going on in here,” he says to Humphrey Bogart’s Rick Blaine, just as a nightclub host hands Renault a stack of bills: “Your winnings, sir.” Renault's hypocrisy is exposed.
In his resignation Winterkorn also said, “I am not aware of any wrongdoing on my part.” This may turn out to be true; German prosecutors have just begun an investigation into Winterkorn’s role. But the company’s continued plea of ignorance is hard to believe. In any case, the board is in a bind. If they knew about the deception, they would have a major ethical (and legal) problem. For now, they get to appear merely incompetent.
It would be easy for Volkswagen to focus only on rebuilding its financial value; the scandal erased a third of its market cap. But VW’s other kinds of value – not least their company values – also need rebuilding. Trust is at the top of the list. Betrayal of trust turned an issue into an outrage.
Regardless of who knew what when, the company’s leadership was responsible for a culture where violating laws and the consumer’s trust was tacitly or explicitly condoned. Rebuilding trust has to be a priority as VW moves forward, and it seems the new CEO will make it one. Matthias Müller has promised that under his leadership VW “will learn from our mistakes,” and provide “maximum transparency.” If his actions echo his words, it will be a good start. Though VW will be kept busy with the scandal’s fallout in the months and years to come, they also need to soundly demonstrate that they are committed to re-earning the public’s trust. Otherwise, they really will be out of business.
So what should the leaders do to rebuild trust? We don’t have all the answers, of course, but we do have the experience to suggest a few things:
- Consistent Communication with the public is crucial during this period of investigation and remediation. VW needs to demonstrate their commitment to transparency from here on out by keeping the public constantly informed.
- Accountability: VW’s leaders need to reassure the public that they are responsible for their mistakes, and are putting concrete safeguards in place to ensure that it cannot happen again. The company has made initial moves towards restructuring, but will likely need to continue the process as the investigation progresses. As CEO of VW USA Michael Horn put it so succinctly before Congress: “This company has to bloody learn and use this process to get its act together. 600,000 people worldwide need to be managed in a different way.”
- Mitigation: VW needs a strategy for the long term as well as for the more immediate recall. They should heavily publicize their recall resources in order to demonstrate that they are apologetic and available to customers. Meaningful community-building actions and charitable (especially environmental) contributions would not go amiss either. Though financial contributions aren’t viable, they could go a long way towards rehabilitating their image by promoting eco-volunteerism at the company – and starting at the top.