“People who fail to regard the truth seriously in small matters
cannot be trusted in matters that are great.”
— Albert Einstein
The headline made the terse declaration: VW CEO RESIGNS. The Volkswagen emissions cheating scandal claimed its latest but certainly not its final victim. CEO Martin Winterkorn, despite maintaining that he had no knowledge of the wrongdoing, resigned in the wake of the massive corporate scandal.
Just two weeks ago Volkswagen was a well-respected and esteemed global brand that appealed to worldwide automotive buyers seeking German engineering at an affordable price. But that changed on September 18th when the EPA announced that Volkswagen had cheated on emission tests. It is alleged that since 2009 the world’s largest automaker has been installing elaborate software to skirt federal emission tests affecting some 11 million cars worldwide.
It is the latest example of yet another public scandal. News headlines regularly report the details of political, educational or corporate misconduct as fortunes, reputations, and investor and public confidence is shaken. When such massive management failures come to light, they present a cautionary tale. As Catherine Aird advised: “If you can’t be a good example, then you’ll just have to be a horrible warning.”
Here are some lessons in integrity that we can learn from Volkswagen’s debacle.
1. Integrity – whether it be Individual or Corporate – Requires Truth Telling
The plaque displayed at the entrance to the Vanderbilt University Student Center quotes Madison Sarratt: “Today I am going to give you two examinations, one in trigonometry and one in honesty. I hope you will pass them both, but if you must fail one, let it be trigonometry.” Winterkorn maintained in his resignation that he had no knowledge of the wrongdoing. That may be true, but certainly many in Volkswagen management did and as such they failed Honesty 101.
Journalist Edward R. Murrow prudently observed: “To be persuasive, we must be believable. To be believable, we must be credible. To be credible, we must be truthful.” Wise counsel for individuals as well as German automakers.
2. Corporate Integrity is an Extension of Personal Integrity
The dictionary defines integrity as being complete or undivided. So when a person (or an organization) possesses integrity, their actions match their words. Their conduct is not characterized by duplicity or hypocrisy, but by an authentic and unified character. As leaders, we cannot impart that which we do not possess and we cannot expect integrity from colleagues, subordinates, employees, friends or family members, if our own lives are not characterized by the very same quality. The industrialist Andrew Carnegie recognized this principle when he declared: “A great business is seldom if ever built up, except on the lines of strictest integrity.”
3. A Breakdown of Integrity has Far Reaching ramifications.
Analysts can only speculate as to the long term damage to the Volkswagen brand, the organization, employees, investors and others. Since last week’s announcement, Volkswagen stock has tumbled 35%. The scandal will directly cost VW billions and could tarnish the entire German auto industry. Nearly 600,000 people worldwide are employed by Volkswagen and more than a third of the 775,000 people who work in the auto industry in Germany. Whether it be in the form of lay-offs, reduced benefits, early retirement or in other financial areas, the entire VW family – as well as the German economy – will be impacted by this corporate indiscretion. Economist Carsten Brzeski remarked: “All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis.” It will take years to repair the damage that has been done and to rebuild the reputation of this once proud brand.
4. Integrity Kept is easier than Integrity Recovered
U.S. Army Capt. Andrew Entwistle observed: “Integrity is like virginity — once you lose it, it’s gone for good…. No officer should ever be in a position where he or she fears the truth.”
It takes years, even decades to build the trust, confidence and loyalty of employees, suppliers, customers and colleagues. A lifetime of character and integrity can be destroyed with a single transgression. Mistakes will be forgiven far faster than will falsehoods. With a careless blunder the process of restoration can be slow; with a deliberate indiscretion, the journey may be forever elusive.
5. Build a Culture of Integrity in Your Organization
It is astounding that the elaborate software ruse affecting 11 million vehicles continued undetected for five years! Certainly many in Volkswagen management, design or production were either cognizant, complicit, or culpable of the deception.
There’s no way a leader, CEO or CFO can possibly know every action every employee makes. But the culture of an organization needs to emphasize honesty and integrity over dishonest short term gains. Honesty and credibility are not the result of a position or a title. They’re not gained in a seminar or workshop. Honesty is a lifestyle; not a single event or a lone occurrence, but a pilgrimage over time. As such, there are no shortcuts to integrity. While image and reputation is what people think you are, credibility determines who you really are. And if we are not vigilant concerning this point, a lifetime of credibility can be lost in a moment with a careless word, an inappropriate action or an impetuous indiscretion.
Leadership – whether corporate or individual – isn’t a place of position as much as it is the positioning of character; and integrity is the distinguishing mark of character. This doesn’t mean perfection, but it does mean your behavior is the same whether someone (or some federal agency) is looking over your shoulder or not. For Volkswagen only as credibility drives corporate activity will trust be restored and consumer confidence regained.
Stay the Course,
Dr. Greg Morris
Dr. Greg Morris serves as the founder and president of Leadership Dynamics™, a non-profit corporation committed to the training and development of leaders and their organizations. He has authored In Pursuit of Leadership: Principles and Practices from the Life of Moses. For more information, visit LeadershipDynamics.org, Facebook.com/LeadershipDynamics or contact mail@LeadershipDynamics.org You can follow Greg on Twitter at @LdshpDynamics