BAFFLING OR NOT, LET’S LEARN THE LESSONS FROM VOLSWAGEN
James Meadows • April 24, 2017
I have been observing the Volkswagen diesel emissions fraud case and its aftermath over the past couple years. The magnitude of the scheme on so many levels and the questions it raises are enormously significant in our increasingly complex society. As is so often the case, the original understanding of the crime turned out to be just the proverbial scratch on the surface. The picture became gloomier as the investigators dug deeper.
US District Judge Sean Cox ordered Volkswagen to pay a criminal penalty of $2.8 billion. Meanwhile, separate from that tidy sum, Volkswagen is paying $1.5 billion to settle the civil litigation case filed by the environmental regulators. Oh, and by the way, the carmaker is also spending $11 billion to settle with John Q. Public by buying back cars or providing other compensation for the losses.
Criminal charges have been levied against seven employees, but five of those persons are in Germany and extradition is not probable. Nevertheless, Judge Cox has strongly encouraged the German government to prosecute those persons as criminals.
What follows are some observations and questions I ponder:
- Basic Is Best. Basic is best, especially when it comes to the honesty and integrity of doing business. The very basics of business, technology, group dynamics, public relations, and crime clearly communicate to us that hidden dark crimes of fraud will always find their way to the light of day. Private crime never remains private for long. What is private becomes public and then the penalties pound relentlessly. I realize we live in a complex world. Nevertheless, certain elements of navigation within that world will always remain basic. It is tragic and equally baffling when a major corporation such as Volkswagen displays a complete ignorance of the fact that basic is best.
- Counting Coins Correctly. Volkswagen did what it did to save money. Although the chief purveyors of the emissions scheme may have been counting coins, they sure weren’t counting coins correctly. $13.3 billion later, I’m sure Volkswagen would agree it could find much better ways to spend those coins. Unfortunately, it won’t get the chance to do so.
- Whatever Happened To Ethics? Absolute laws will supersede and override relativistic laws. I have always been as much of a realist as I am an idealist. It is both spheres of thought that lead me to ask the question whatever happened to ethics? Whether a realist or an idealist, ethics holds an intrinsic presence and power throughout our world that can never be silenced. Granted, many people try, but in the end they are the losers, and when you lose on ethics, the penalties can be painful and permanent.
As the case and its consequences continue to unfold, it is my hope that we as individuals, businesspersons, leaders, and organizations are paying attention. We can learn as much from a tragedy as we can a triumph.
[If you are interested, here is the original analysis article I first published September 23, 2015.]—–
GETTING BACK ON THE ROAD: HOW VOLKSWAGEN RECOVERS
Last week the Environmental Protection Agency accused Volkswagen of integrating a defeat device into nearly half a million cars’ software to fool emissions testers. The software programming allegedly affects numerous diesel models such as the 2009–15 Jetta, the 2009–15 Beetle, the 2009–15 Golf, the 2014–15 Passat, and the 2009–15 Audi A3. Please note that this involves seven consecutive model years.
Jack Ewing reports on exactly what the software does (The New York Times in The Kansas City Star . “Scandal Weights on Volkswagen.” September 22, 2015, pp. A6–A7):
“ The software measured factors such as the position of the steering wheel, the vehicle’s speed and even barometric pressure to sense when the car was being subjected to testing, the EPA said. The car then configured itself to reduce emissions of nitrogen oxide, a gas that is a major contributor to smog and is linked to an array of respiratory ailments including asthma, emphysema and bronchitis, the EPA said Friday. ” (p. A7)
Volkswagen executives have already admitted to the deception. The investigation, of course, is ongoing. A couple days ago, I identified four major ethical concerns connected to this situation:
- Ethically Indefensible Corporate Decisions. It would appear that Volkswagen made a major technical decision that may have created a certain consumer benefit—improved motor vehicle performance. However, intrinsic to that decision is the perpetration of fraud against the government, the consumer, and society. It is fraud against the government because the implication and expectation of the passed emissions test is that the vehicle is meeting specific technical parameters of exactly how much it is polluting the atmosphere. It is fraud against the consumer and against society because individually and collectively, consumers believe that their vehicles are satisfying antipollution standards. Ethically, this is an indefensible position for Volkswagen.
- Personal Integrity Violations. Regardless of how large the corporation, it remains comprised of individual people who make individual decisions. That means that at multiple steps over several years, specific persons knew that something bad was happening and they actively supported it or they chose to look the other way. In terms of personal integrity, this is a clear constellation of multiple failures.
- When The Short Term Only Works In The Short Term. When it comes to corporate success, personal success, and ethical standards, if the short term only works in the short term, then we have a problem. You want the short term to work in the long term too. This translates to corporate success, personal success, and ethical efficacy.
- When Public Relations Ignores Future Outcomes. I remain baffled when cases like this arise in which it is so obvious that people are not thinking about eventual public relations difficulties. First, with all our capabilities in technology and communications, it is foolish to believe even for a moment that poor ethical decisions will never see the light of day. After due time, they always hit the headlines. Second, once that happens, the public relations damage to the organization is always immense and irrevocable. Sometimes it is unrepairable. For a very long time, anyone considering doing business with Volkswagen will directly or indirectly ask the question do I want to do business with a company that intentionally tried to deceive? How do I know that this company will not try to deceive me?
In the wake of this corporate debacle, it will be most interesting to observe Volkswagen’s response. There is a right way and a wrong way to do this. If Volkswagen wants to do it the right way, then we should see a response that involves a convincing combination of these essential elements:
- A Serious Apology. Consumers have a right to be frustrated and angry. Those emotions only intensify when the company demonstrates no remorse. On the other hand, consumers can be very forgiving when they perceive that a company is moving in the right direction. The opportunity to win in the marketplace is huge. But that is not the fundamental reason for the apology. The fundamental reason for the apology is that it is the right thing to do, and that is enough reason. Marketplace wins are incidental at this point.
- Personnel Housecleaning. As quickly yet sensitively as possible, a company must investigate the misdeeds, determine who was responsible, and exercise its internal disciplinary process. Depending on the nature and severity of the circumstances, that will of course mean job terminations. With authority comes responsibility, with responsibility comes accountability, and with accountability comes consequences.
- Technical Housecleaning. With the personnel housecleaning, a technical housecleaning must occur. All appropriate technical, procedural, process, product, and inventory changes that are needed to repair the damages must be executed immediately.
- Corporate Culture Revision. Corporate culture can be difficult to change. Nevertheless, if the company is serious about permanent solutions instead of Band-Aid fixes, then it will do the difficult work. From the top leadership to the bench level, the company must ruthlessly evaluate all aspects of its being that enabled it to step down to such a level of inappropriate behavior and ethical compromise.
- A Study Of Lessons Learned. As painful as the process might be, the company must invest the resources to engage every employee on the introspective journey of lessons learned. Only by studying the past can the company avoid the same errors in its future.
Volkswagen presents us with a textbook case study of a tragically common corporate disaster. Let’s hope we are all satisfied with how it responds.
The earliest days of this series present fundamentally significant leadership content.
We explore the overuse or inappropriate use of the words "honest," "honesty," and "honestly." Much of the overuse or inappropriate use of these words is in contexts that intrinsically message the audience that the speaker is not trustworthy. I call the overuse or inappropriate use of these words in this context HONESTY VALIDATORS because the speaker believes they validate the truth being spoken. We need a solution to this problem. My solution is to replace these honesty validators with CLARITY VALIDATORS. Instead of trying to be honest, try to be clear. Replacing "honest," "honesty," and "honestly," with "clear," "clarity," and "clearly," produces significantly more benefit to the speaker and to the audience.
What the Boeing 737 Max crashes teach us about training, corporate culture, and communication.
Although anyone can and will criticize higher education, millennials are evidently smart enough to know its value. In spite of the horror stories about student loan debt, academic disasters, and wrong career turns, millennials have boasted one of the highest graduation rates of any generation to date. Generation Z may soon surpass them too as Laura A. Scione, managing editor of eCampus News reports : “ Despite growing questions around the value of college and return on investment in tuition, just 25 percent of Generation Z students say they believe they can have a rewarding career without going to college, compared to 40 percent of millennials. Eighty percent of Generation Z respondents and 74 percent of millennials agree that college either has a fair amount of value, is a good value, or is an excellent value. Only 20 percent of Generation Z students and 26 percent of millennials said college has ‘little value’ or ‘no value at all.’ ” Good for them! The statistics remain on their side—and the side of anyone who pursues higher education. Anthony P. Carnevale is the director of the Georgetown University Center on Education and the Workforce. Based on his research, that trend will only continue (Gillian B. White “Those Savvy Millennials” The Atlantic , May 2015, p. 38): " In 1973, 32% of jobs did not even require a high school diploma, 9% required a bachelor’s degree, and 7% required a master’s degree or higher. It is projected that by 2020, 12% of jobs will not require a high school diploma, 24% will require a bachelor’s degree, and 11% will require a master’s degree or higher. " Derek Newton wrote an article entitled “Please Stop Asking Whether College Is Worth It” in which his opening declaration gets right to the point: “ Colleges and universities are still the best, most direct path to a good career that pays well. ” In addition to those insights, the unemployment figures consistently reveal the enduring value of higher education. The seasonally adjusted July 2019 unemployment rate for persons not having a high school diploma is 5.1% ( Bureau of Labor Statistics ). Having a high school diploma drops that rate to 3.6% and some college or a two-year degree drops it further to 3.2%. Pretty good trending, would you agree? Finally, if we look at people having a four-year degree, a graduate degree, or a doctoral degree, the unemployment rate is a low 2.2%. Higher education’s edge is especially clear when you consider the range of these numbers over the education level. Look at the two ends of the spectrum: less-than-high school (5.1%) versus a four-year degree or higher (2.2%). Consistently, regardless of the measured time, the unemployment rate for a less-than-high-school-educated worker is two to four times larger than for the college-degreed worker. This is why, when people seek my counsel about career planning, higher education remains one of my most significant emphases. Education pays. Degrees still rock. Regardless of how good or bad the economy is, regardless of how many individual academic and career disasters can be cited, and regardless of how loudly the antidegree crowd howls, you are still in a better position having a degree than not having a degree. The good news for the millennials and Generation Z is that they have arrived at the same conclusion and now they will enjoy the benefits.
A few months ago, US News reported on the academic admissions scandal, Operation Varsity Blues : " The case—the largest college admission scam ever prosecuted by the Department of Justice—exposes a long-running racketeering scheme dating back to 2011, in which parents paid an admissions consultant a combined $25 million to help students cheat on college entrance exams and to get them into elite colleges and universities as recruited athletes when in reality they were not athletes. ” This was a profoundly disappointing situation that displays the worst of our human failure on many levels. In addition to its magnitude, this particular scam especially grabbed my attention due to its higher-education context. It occurs within the confluence of many deeply significant factors: Mentoring developing young adults. Student life transitions including high school to college, and college to the professional world. Parental ethics and leadership. Student accountability and fairness. Respect for the processes and institutions of higher education. The responsibilities that are intrinsic to power and privilege. Personal character and integrity. Student character and integrity. Parental character and integrity. Professional character and integrity. Societal and academic implications. These are weighty matters that should give us all cause for concern. Specifically, they should remind us of six essential ethical realities: 1—Power and privilege do not equal immunity. Whether in the Spider-Man world (“with great power comes great responsibility”) or in sacred writings (“to whom much is given, much is required”), we understand that large influence travels with commensurate accountability. Just because a parent might hold a position of influence, have a prominent name, or possess significant fiscal assets does not mean the law of the land and academic admissions policies do not apply. Many benefits come with position, name, and assets—immunity from the law and organizational policies should not be among them. 2—Bad outcomes can manifest from an apparent good heart. A pure heart never guarantees a noble outcome. That is because all of us are subject to change and sometimes that change equals corruption. A parent of a one-month-old child might begin with a pure heart that leads to noble outcomes. However, fast forward that same parent 17 years and now vicariously experiencing that child’s college admissions stress. Do we have an outcome guarantee? Of course, it depends on the parent. Many noble outcomes ensue, but many does not equal all. Some parents in their quest to provide the best for their child will succumb to the temptation to step outside proper boundaries. Doing so is seemingly justified by that apparent good heart: “ I’m doing this because I want to give my child the best. ” Although we can all to some extent understand this sentiment, it in no way excuses or justifies the unethical actions and outcomes. If anything, it reinforces how vulnerable we all are. Therein lies the need for a constant ethical scrutiny over ourselves and our communities. 3—Unethical practices to gain entry into an ethical institution fundamentally disqualify the candidate. On the most basic sensible and philosophical level, by definition any ethical institution must deny any candidate entry when that entry attempt was unethically based. Any other action makes a mockery of the ethical institution and its entry process. Our academic institutions are among the tallest pillars of our humanity. The fundamental preservation of their purity must remain a constant commitment by every human being directly or indirectly connected to them. 4—Falsifying your child's profile only immerses that child into a universe that is fundamentally and unfairly built on false pretenses. When we enter into a new universe by virtue of truth and integrity, we do the best service to ourselves and others. To enter into a new universe not arrived at via truth and integrity will degrade and undermine all aspects of that new universe both for ourselves and others. Going into a new universe is something that the student should want to do by being his or her authentic best person. You cannot be your authentic best person without first being that person. In being that person, you then genuinely display that person. Therefore, no one can be that best person without truth and integrity. 5—Secretly shielding your child from the consequences of that child's behavior, aptitudes, and performance vehemently disrespects that child's personhood, and this is an abuse of your parenthood. Parenthood is an extremely personal, overwhelming, grave, complicated, rewarding, painful, amazing, and beautiful role. However, none of those adjectives imply that the parent owns that child. Nothing could be further from the truth. Indeed, the child is “on loan” to the parent for a limited time, during which the parent has a stewardship responsibility. An intrinsic stewardship component of parenthood is releasing that child from your tutelage. That releasing process begins the moment the child is born and slowly continues for nearly two decades (in most cases). Although parents may struggle to varying degrees with the releasing process, each parent generally embraces the releasing process out of a respect for the child’s personhood. Fundamentally, the best action a parent can take is to respect the child’s personhood; the worst action a parent can take is to disrespect the child’s personhood. When you send your child out into the real world, anything that you directly or indirectly do to disrespect that child’s personhood does that child no favors. Rather, it does that child an inexcusable disfavor. 6—The university should be the grooming and proving ground for the professional world. From the student’s first connection to the college, the grooming and proving ground springs into action. If the student takes this opportunity seriously, then the stage is set for an ongoing personal and professional growth experience hosted by that college. It is an extremely significant academic development opportunity while simultaneously presenting somewhat of a preface to the yet-to-come extremely significant professional development opportunity that more fully continues postgraduation. Lifelong patterns embed themselves into how that student executes personal and professional growth. That total process deserves and demands nothing less than a student’s pure authentic personal and professional investment. Polluting any aspect of that process by deceptive practices is reprehensible. CONCLUSION Navigating higher education was never intended to be a walk in the park. Young people and their parents must understand this. However, by embracing these six ethical realities, we will navigate higher education with virtue, class, and character—and those are the inner assets of the soul that no academic credential can provide.
In an unprecedented breakthrough decision today, over 177,000 crash test dummies were given final approval by federal labor regulators to form the Crash Test Dummies of America labor union (CTDA). The CTDA plans to fight for crash test dummies’ working conditions and fair treatment. According to the CTDA union organizers, Anita Karr, Moe Mentum, and Cole Lijjun, their top priorities are: Limiting the quantity and types of crash tests per week. Strengthening torso, limb, and head replacement parts entitlements. Adopting a more compassionate approach to crash test dummy recycling. Improving the pay scale by replacing Monopoly money with real cash. The PETCTD (People for the Ethical Treatment of Crash Test Dummies) has endorsed the new labor union. PETCTD president Banng M. Hardar commented: “Being a crash test dummy is not an easy job. Most people could not handle the working conditions. We are very gratified that crash test dummies have taken a major step forward to receive the same wages, benefits, and equal treatment under the law that human workers take for granted.” The CTDA is in negotiations with various networks to launch a reality TV series to draw attention to the longstanding difficulties of being a crash test dummy. The title of the pending series is “Crashing Bad.” The CTDA plans additional kickoff events later this year. The union has already created its slogan: “When it comes to workers’ rights, we are not dummies!”
Ethical questions are often easy to address. However, sometimes ethical quandaries can be overwhelming. In some situations, no easy answers exist and you are forced to select the best possible option from among several poor options. Regardless of the depth of the ethical quandary, I have found that certain guiding questions can help to elucidate the decision process. While I make no claims at being an expert, I humbly offer these for your consideration. When I face a tough ethical decision, these are the questions that have helped me the most: Will my decision create any ethical dilemmas, and if so, have I arrived at the best option among several less-than-ideal options? Is there any opportunity to renegotiate with involved parties to resolve the ethical difficulties? Is there a creative decision that I have not yet identified that would shed new light on the situation, thereby resolving the ethical dilemma? Is there a way to reframe the problem so that the ethical concerns are satisfied while moving all parties forward? Will my decision enhance my organization’s brand and reputation? Will my decision enhance my brand and reputation? Will my decision allow me to preserve my spiritual or religious convictions? How would I view my decision 20 years from today? How would others view my decision 20 years from today? How would my significant other or my children view my decision 20 years from today? Will my decision allow me to preserve my personal integrity? Will my decision allow me to preserve my professional integrity? Will my decision allow me to preserve my prior commitments to people and organizations? Will my decision respect the rights, privileges, and preferences of the people involved? Will my decision create the highest probability to do the most good for the most people over the long run?