In 2015, Volkswagen admitted to installing “defeat devices” in millions of its diesel-powered vehicles. The company could detect when its vehicles were compliant with carbon emission rules, and the software was responsible for adjusting the engines enabling the cars to pass the emission tests (Laville, 2019). Due to the diesel scandal, the carmaker pleaded guilty to criminal charges in the US and compensated its consumers and the US government $4.3 billion in criminal and civil penalties (Laville, 2019). The scandal was the biggest the US government has ever levied against any carmaker.
Volkswagen Group’s corporate culture is based on its corporate values: reliability, pride, bravery, solidarity, honesty, diversity, and responsibility. Based on the core values, the organization’s corporate culture constantly strives to innovate (Volkswagen AG, 2022). Amid constant innovations, the company embraces various technical solutions and visions, which is why not only will its employees develop vehicles with it, but it will revolutionize future mobility (Volkswagen AG, 2022). In its quest to continuously innovate, the leadership allowed the development of the software responsible for the scandal. However, without a clear understanding of the consequences the software would bring, the leadership’s handling of its malfunction meant it was better solved quickly than analyzed, which was an issue attributed to the organization’s culture.
One weakness of the software was how the manufacturer deviated from the original purpose, which was to improve the unpleasant noise originating from the engine. With the changes in purpose, the leadership allowed its installation in the vehicles despite understanding the possible consequences that would befall the organization (Reuters, 2021). The other weakness of the emission tests and the scandal was the leadership’s poor decision-making, which led to the failed tests. Despite knowing the software had sparked the “Dieselgate” issue, Volkswagen’s leadership kept silent instead of handling the challenge at the production stage. Hanno Jelden, the engineer responsible for the production of the software, confirmed that despite letting his superiors know about the software’s malfunctioning, they pressured him to keep silent (Reuters, 2021). The weaknesses reveal challenges with corporation culture in that the leaders’ greed to benefit the organization altered the company’s responsibility to its shareholders and the inability to remain accountable. The organization not only betrayed its corporate governance but also breached its ethical culture due to greed among a few leaders.
The organizational practices that I would modify to deal with the “diesel gate” scandal and any future issues that might affect Volkswagen are to convert the firm’s values into action. Among the core values at Volkswagen is honesty, and I would ensure the company operates genuinely with every developed product. Moreover, under responsibility, every manufactured vehicle would have to meet ethical standards before they are released to the market. One way to achieve this would be to keep leaders and employees accountable for the company’s culture.
As a consultant, I would suggest the company hold board meetings between employees and executives before any decision is made about any developments during the production process. Such meetings will allow the active participation of every employee and executive member to contribute to the decision-making process, ensuring the leadership mistake made by the previous leaders are not repeated. Further, through these meetings, every possible angle with every developed component will have to be considered to ensure potential mistakes are handled before they occur.
References
Laville, S. (2019). Volkswagen emissions scandal: class action begins in UK.
Reuters. (2021). VW culture to blame for silence over emissions scandal, ex-manager says in atrial.
Volkswagen AG. (2022). Corporate culture | Volkswagen careers. Web.