VOLKSWAGEN SCANDAL 1

  • Category:
    Management
  • Document type:
    Research Paper
  • Level:
    Masters
  • Page:
    5
  • Words:
    3152

ANALYSIS OF VOLKSWAGEN ORGANIZATION LEADERSHIP

ANALYSIS OF VOLKSWAGEN SCANDAL ON ORGANIZATION LEADERSHIP

http://www.bbc.com/news/business-34324772

Introduction

Leadership is a role or position taken up by an individual or a group whether they are mandated to guide and assist others through good decision making, motivation and commitment to promoting change. Leaders whether in business or the society are considered as the backbone fostering success either in the organizations, business or the society. Leadership is claimed to be the essential «secret» towards the achievement of success in today’s societal demanding roles. Leadership is, therefore, a contemporary issue in both the business environment and the society at large. This paper, therefore, seeks to highlight issues concerning Volkswagens leadership as it tries to bring out the relevance of importance of organization leadership.

Brief summary of the scandal

The shocking news of Volkswagen being accused of rigging its diesel engines with the goal of falsifying their emissions tests came as a surprise to everyone. It seemed as though the extent of this misconduct seemed unimaginable. In addition, it was claimed that the company’s then chief executive, Martin Winterkorn was aware of this misconduct a year before and chose to remain quiet and deceive the company’s, customers, shareholders and the public which had a high respect for the company. Despite the fact that business leaders might at sometimes not get it right the extent in which Volkswagens the leaders got it so wrong was baffling (Eichler et al., 2014).

The then company’s Chief Executive Mangers denied the claims of getting a memo informing him that it was notable that the Volkswagen vehicles had more than 35% Nitrogen oxide emotion level in real life, but when tests were carried out on this vehicle’s engine, they revealed a significantly lower level of Nitrogen oxide. Despite the claims that the company’s leadership was informed prior concerning this malpractice they remained silent which drew questions on whether the company leadership was the orchestra of this corporate malpractice that cost the company its huge global reputation and sales (Hadler et al., 2008).

When the scandal blew up, and the public was aware of it, the investigation revealed that the company had installed “defeat software” which had enabled Volkswagen to cheat on emissions tests for an unknown number of years. After the blow up of this scandal, the company’s reputation and sales drastically decreases as it was evident in the company’s share price which dropped by a third. Volkswagens leadership was accused of not embracing the “triple bottom line” paradigm (Hotten, R. 2016). It acted in deceit towards the public and customers by falsifying the company’s vehicles Nitrogen oxide emissions in order to make a kill on the vehicles sales at the expense of the public’s health risk and environmental pollution risk.

Destructive leadership theory

Destructive leadership theory is portrayed in Volkswagens scandal. Destructive leadership theory, in this case, is referred to negative consequences which are results of confluence destructive leaders, conducive environment, and susceptible followers. All these three key factors which indicate destructive leadership are evident in Volkswagens case study. There are claims that lack of transparency and the dubious communication practices are what steered the company to failure. However, all this draws back to the company’s leadership since these practices were driven by the company’s leaders; which includes the company’s culture instilled by the leaders and ethical practices (Zachariadis, T. 2016). The destructive leadership revealed by the company’s leader Martin Winterkorn was evident with his choice to remain quite on a matter that risked the company future at the expense of the public trust of the company.

The company’s leadership is claimed to focus on the engineer-driven culture which led to them disregarding the set regulation concerning emissions. In this case, the company leadership is claimed to put its dire need of attaining global prestige; becoming the largest automaker ahead of its ethical obligation of transparency and honesty towards its customers. The company leaders use their power to ensure that the company workers conform to their self-interest rather that their required responsibilities. In this case, the company workers were made to create software which would tamper with the emission results fooling the public in order for the company to make a kill on the spiking vehicles sales (Whiteman, G. & Hoster, H. 2015). The deceit by the company leaders was also revealed in the company’s public pronouncement where it called itself “change agent” and a “thought leader” despite its underground action of snookering the government on the emission being emitted by their vehicles.

The authoritarian leadership which in this case is related to destructive leadership is attributed to the Volkswagen scandal. Martin Winterkorn being a character who did not embrace failure at any cost is claimed to use all way possible to ensure that the company would not experience any failure during his tenure. He is claimed to put extreme pressure on the company’s employee even making them break the law at the expense of preventing the company from experiencing any sort of failure. Martin Winterkorn destructive leadership during his leadership tenure in the company is further revealed when he implemented a poor culture in the company which resulted in the embarrassing scandal. Martin Winterkorn created the perception that everything was right as long as one was preventing the company from experiencing any failure even if the action was taken to prevent these failures were against the law.

On the other hand destructive leadership is also evident by the type of communication implemented by Martin Winterkorn. In this case, he implemented a type of communication where the leader’s decision and changes implemented by them could not be questioned by the junior employees. The intimidation which also came with Martin Winterkorn fostered this type of communication in the company.

How organization leaders interact and shape host of factors leading to the issue at hand

The events that led to the Volkswagen Company scandal have been chronicled in both books and articles with every author trying to bring out their thoughts on the issues that triggered such a poor decision by the company leadership. The scandal of this company is also documented as one of the biggest organization leadership failure in the world of business. Reviews of this company’s scandal all come to a common ground by agreeing that it was triggered by poor leadership decision and poor culture instilled by the company’s then leadership (VW called to government meeting on emission scandal. (2015).

Initially, the company was on a good run showing trends of transforming and being a pacesetter in the vehicle manufacturing industry. This was attributed due to the stewardship of the company leaders. However, it is claimed that it is during the tenure of Martin Winterkorn that the company operation and stability to a turn. The company’s then Chief Executive Officer Mr, Martin Winterkorn was portrayed as a demanding leader who was vehemently against any failure. The former company’s executives described Winterkorn leadership style as that which steered intimidation and an authoritarian style of management which focused on at fostering a climate of fear (Schiermeier, Q. 2015). Winterkorn was also portrayed and a visionary and ambitious character. He often set ambitious goals for the company’s employees regarding the company’s public growth. He was often heard emphasizing the phrase that the company would become the world’s largest carmaker to his employees. He aimed to achieve this goal by breaking into the U.S. market: this goal was partially met since in the first two quarters in the year 2015 the company had sold a total of 5.04 million vehicles to the U.S market (Ryakhovskaya, A. 2014).

Winterkorn is said to implement an unquestioning culture it was inappropriate for anyone to challenge decisions or actions carried out by the company’s leaders. During his leadership tenure, he is claimed to foster a fear factor in the company leadership which lead to the unquestionable actions and decisions. The company employees confirmed these claims by further saying that Winterkorn acted in a dictatorial manner during his tenure as the company’s CEO. It is also claimed that the culture instilled by him in the company where people no longer felt like they were in a position to choose ‘what they will work on’, or ‘what isn’t right for them’, was the key factor that contributed to the company scandal (Margonelli, L. 2016).

Due to this implemented company culture by the Volkswagen leadership, the leadership lost track of the company operations. It is claimed that the company’s leadership was not aware of the intricacies since it rarely followed up on the company’s operation or carrying out inspections. On the other hand challenging the company’s leadership way of doing things was out of contention. Volkswagen prevailing leadership style limited the aspect of equality, quality of debate and flow of information within firms (Rhodes, C. 2016).

The company’s culture instilled by Winterkorn, which limits checks and balances and discourages open dialogue often prompts to fraud and cheating. Failure in the corporate world also embraces as part of the growing curve to achieve success. However for Volkswagens culture instilled by Winterkorn it had no room for any failure. This explains why the company leadership decided to take measures which it well knew were against the law and the company’s ethical responsibility by tampering with the vehicles toxic gas emission tests in order to deceive the government and the public (Prosecutors open investigation into Volkswagen’s emissions scandal. 2016).

Before the Winterkorn leadership tenure, Volkswagen Company was closely attached to its company statement: responsibility and sustainability. However during the leadership of Winterkorn, the company increasingly started to be detached with this company values statement. The magnitude and focus of this value statement were ignored by the company leadership regarding their misconduct practices which focused more profits ahead of any other company ethical responsibility (Margonelli, L. 2016). This was perfectly evident when Volkswagens leaders emphasized in a less open mode communication within the company. On the other hand, it did not apply the same emphasis in the company value statement. This shows how company leadership avoided any resistance and opposition messages in the way of leadership as it tried to enforce its power in the company.

On the other hand, the code of conduct for the company was manipulated during Winterkorn. This code of conduct claimed that the company employees and management were supposed to report anything that was not according to the company standards. However, during Winterkorn leadership, this code of conduct was not observed. It was evident that the company during this period were using a cheat application to manipulate the emissions test carried out on the company’s vehicles (Le Page, M. (2015).

The responsibility and sustainability company values as mentioned were not patterned by Volkswagens leaders; on the other hand, they were not incorporated into the company operations during this period. This is also blamed for the company scandal. In case appropriate leadership practices could be observed in the company the occurring problems would have to be resolved through a better war both legally and ethically as opposed to that used by the company. However, lack of responsibility in the company leadership in encouraged the company’s operations and processes towards the hugely popularized scandal (Hotten, R. 2016). The company leadership ignored the company’s code of conduct and values and opted for values and code of conducts associated to quick business success and profitability and quick fix to problems.

Volkswagen leadership also revealed deceit by manipulating the company toxic gas emission results to protect their own interest and deceive the public where they claimed not to be aware of the company’s dubious use of a cheat application. The Senate Permanent Subcommittee on Investigation further reveals the extent of the Volkswagens company deceit. It claimed that the company leadership compelled the company’s employees to carryout malicious activities by fitting a cheat application in the vehicle in order to manipulate the emission test carried out on the vehicles in order to deceive the public and government on the quality of the cars they manufacture.

The company’s leadership uncouth practices were also revealed by the gross inconsistent relationship with the company employees and outsiders. In this case, the company’s leadership forced the employees to carry out these unlawful and unethical practices by installing cheat application in the car the car it manufactures therefore tampering with emission test results carried out on these cars. Volkswagens leadership manipulation of power was revealed by this act.

The company leadership took advantage of the public’s trust placed on it by the public and government by installing a cheat application behind their back to deceive them on the company’s vehicle toxic gas emission. In this case, the company put the health of the public at risk and that of the environment at risk of pollution. In this instance, the company tried to solve the problem of its vehicle toxic emission by opting for a quick fix which put both the public and the environment at risk. Instead of looking for ways to fix the company’s vehicle engine problem the company opted to develop a cheat application which it would use to deceive the public on the level of toxic emission emitted by the vehicles.

This explains Volkswagens leadership extreme practices which might have led to the company’s scandal since its leaders were aware that they would do anything the please without any questioning from the employees. This shows the invisibility the Volkswagens leader had taken up during the leadership tenure of Winterkorn.

Personal reflection

Volkswagen’s scandal offers a number of important insights concerning corporate leadership. The most significant issue highlighted by Volkswagen scandal is the fundamental role of top management leadership in fostering proper running of the company’s operations and organizational culture. The footprints of the company’s then Chief Executive Officer Mr, Martin Winterkorn are conspicuous in the significant accounts that led to Volkswagen’s scandal. These highlights have challenged my perception of the organization and corporate leadership always being right (Burki, T. 2015).

I now understand how delicate this position is in an organization and how easily it can cause organizations failure as revealed in Volkswagen’s scandal. I also learned that the organization can pose a threat to the vulnerable company culture, morals and norm if the organization is in the stewardship of poor leaders (Geoffrey Smith, 2016). Learning that the organization leadership can be the steering force for an organization failure, this challenged my earlier perception enabling me to appreciate that the values that the organization leadership instils in the organization’s employees are what determines the organization failure or success (Topham, et al., 2016). It is evident that the then Chief Executive Officer Mr, Martin Winterkorn played a significant role in the company failure during their leadership tenure where they created poor company’s values and culture that led to the company downfall (Margonelli, 2016).

The second lesson learned from Volkswagen’s scandal is the impact of organization leadership even in management control systems that are quite sophisticated. I earlier had the perception that the success of a company is dependent on the company’s performance and ability to expand. However, Volkswagen’s scandal has challenged this perception by clearly revealing the importance of organization leadership. On the other hand, the scandal shows that organization leadership is an understatement success of any organization is dependent on good organization leadership (Hotten, 2016). The practices took by the organization leadership where they portrayed a picture that they were invincible shows poor organization leadership and in this case it is attributed to Volkswagen’s emission scandal. Regarding this lesson, I hand the perception that organization culture and organization leadership are two different (Hadler et al., 2008). However, Volkswagen’s scandal has revealed to me that these are two interrelating concepts in an organization. I noted through Volkswagen’s scandal that the organization leadership enforces the organization culture. Therefore, the organization culture is chosen and administered by the organization leadership. This draws the close link between organization culture and organization leadership (Atan, 2014).

On the other hand, this lesson has taught me the fundamental role of the organization culture, which is an important attribute for organization leadership. On the other hand, I learned the importance of an organization creating its organization culture on the basis of professional integrity. This ensures that the culture developed ensures the wellbeing of the organization.

Conclusion

Evidently poor leadership was the main aspect which drove Volkswagen’s Company to its popularized company scandal. The reviewed managerial strategies taken up by the company leaders were clearly detrimental to the company operation. On the other hand, poor leadership also led to spread the aspect of deceit in the company with the employees borrowing this from their leaders. The then Chief Executive Officer Mr, Martin Winterkorn leadership tenure is therefore blamed for the sudden collapse of company, this shows how, organization leadership is the backbone of any organization. Volkswagens scandal is therefore the best case study that offered organization leadership lessons as revealed from the company’s leadership practices and strategies

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