THE Leadership Lesson from VW

Just a couple of weeks ago I was covering off the subject of business/leadership ethics in my foundations of leadership class at Concordia University of Edmonton.  In doing so I was referencing some very classic examples of ethical misdeeds (e.g., Enron) and examples more local to Alberta (e.g. health care expense claims, TransAlta electricity rates).   Unfortunately, just by scanning my local paper, I was able to come up with more than a few examples of recent misdeeds that could help illustrate the conflicted motives of leaders and organizational cultures that made headlines for all the wrong reasons.  In some cases, it was interesting to see some of the explanations and justifications for past or current actions.  One of the more interesting of these made note of the fact that the letter of the law had not been violated. Spirit of the law??

Unfortunately I was able to come back to my students with an even more recent and powerful example of violation of ethical - and legal - guidelines with dramatic consequences for key executives, a historically well-respected company, and millions of customers worldwide.  On September 23, 2015, one day after acknowledging that 11 million Volkswagen-made cars possessed software that duped official emissions tests, Volkswagen CEO Martin Winterkorn resigned from his post.  The consequences seem clear for Mr. Winterkron.  Loss of a respected and highly paid executive role.

The consequences for Volkswagen continue to evolve - investors punishing its stock (e.g., $15 billion hit on one day alone) to the chance that the U.S. government will levy billions of dollars in fines, to class action lawsuits (already filed in Canada).

In his statement of resignation, Winterkorn said "I am shocked by the events of the past few days," and "Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group."  All that being said, he accepted responsibility for irregularities that were found and, like a warrior of old, fell on his proverbial sword.  He went further in expressing a perspective that "I am doing this in the interests of the company even though I am not aware of any wrong doing on my part." (italics my emphasis)

So let's assume that Mr. Winterkorn is forthright and truthful in his assertion that he was not culpable or aware of a manufacturing issues that allowed upwards of 11 million VW's to roll off its assembly lines that emit up to 40 times more pollution than allowed by US standards.  It's a hard assumption for me to swallow but lets go with that for now.

Presuming that this is all true I believe there is a much more challenging conclusion and leadership lesson that Mr. Winterkorn experience provides for all of us.  In the process of his admission he appears to acknowledge to me that either he had no influence or presence as CEO in establishing or sustaining the culture of VW or that by his leadership style and actions he helped to foster a culture that suggested it was quite acceptable to defraud customers, shareholders, the general public and government/ regulatory agencies in the service of the bottom line.  Either way not a very pretty picture of leadership.

Again presuming that Mr. Winterkorn was truly not aware of the massive fraud committed by VW under his watch, I tend to believe that more than just a failure of ethics this represents a unbelievably massive failure in leadership.  In my estimation, THE Leader is responsible for setting the tone for the quality of the organization's culture.  THE Leader defines the desired outcomes to be pursued, the balance to be maintained between competing objectives (e.g., profit versus environmental stewardship), and what the acceptable means by which these objectives are or not to be pursued.  What makes this example all the more egregious is the extent to which VW placed itself on a pedestal of its own making with claims of being environmentally friendly.

So aside from the legal and ethical implications that will get a lot more play by a variety of experts and pundits in the coming days and weeks, I challenge all of us to consider and consider again the impact you as a leader have on the culture and actions of all of your followers.  By your words and actions, even by what you don't do or say, you are setting the standards and expectations for your entire company.

At the end of the day if you are left to state that you "...are not aware of any wrong doing on my part..." as the epitaph on your leadership role it should be seen as a stunning admission that you weren't really leading at all.  And at the end, It's About Leadership.
_________________________________________________________

Greg Hadubiak, MHSA, FACHE, CEC, PCC
Director - WMC
TEC Canada Chair/Executive Coach/Senior Consultant
hadubiak@wmc.ca

Helping leaders realize their strengths and enabling organizations to achieve their potential through the application of my leadership experience and coaching skills. I act as a point of leverage for my clients. I AM their Force Multiplier.