Blog: Dave LeggettQuestions on VW's corporate culture

Dave Leggett | 25 September 2015

It's been quite a week for Volkswagen. The unfolding diesel emissions scandal is one of those stories that, as journalists love to say, has legs. Not only does it have legs, but there are many layers and dimensions. Besides the immediate subject matter and corporate misbehaviour, there are questions raised about emissions testing regimes and the future of diesel, competitive marketplace implications and so on.

As VW Group gets ready to fire some senior people and put a new CEO in charge, I wonder what the new CEO will have to say about the culture at Volkswagen? Volkswagen, let's remind ourselves is a behemoth of a company part-owned by the state of Lower-Saxony. It's a venerable corporate institution with lots of history. It owns plenty of brands and is an industrial giant with plants all over the world (under Winterkorn, its global manufacturing footprint got even bigger). But there is a nagging question that the new CEO would do well to acknowledge. Has the company culture suffered as becoming the global number one became the over-arching objective? Has the drive for volume and scale meant, for example, that the company has overlooked structural reforms? The company employs a staggering 592,000 people according to the Fortune 500 listing. General Motors (2014 production 9.6m vs a comparable VW Group 9.8m vehicles)? 216,000. That's quite a difference.

Over the years there has been plenty of talk of increased productivity in Germany, but the suspicion is that there is still plenty of over-manning, that the cost base is still too high, as is the level of vertical integration. Dealing with that issue is easier said than done, of course. It might be doubly difficult when you consider that the local regional government owns a big stake and a supervisory board with union reps on it controls the company (I am a fan of Germany's industrial consensus model, but it's not perfect). Maybe that has even helped to foster a kind of hubris in the company culture (prostitutes in Brazil are springing to mind) and, in that context, perhaps we can see how the conditions for something like the current 'dieselgate' scandal are created. Grand old patriarch Piech may have also helped to build that culture, that sense that VW is different from other companies, over many years. If the new guy really wants a 'fresh start' he may want to talk openly about such things, the need to change the culture. Maybe it's a bit like a need for what happened at Ford under Alan Mulally with a new energy needed, a real break with what went before. If he doesn't, then maybe the culture will simply quietly carry on, business as usual, but slightly more bowed.

Sectors: Vehicle manufacturers

Companies: Volkswagen, VW


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