The Volkswagen debacle and the lack of good governance

With every day that passes we see a further unravelling of the disaster that’s affecting VW Group. It’s been interesting to see how this has affected their multitude of brands and how it will impact on new models, R&D and motorsport programmes.

A further development of the story was the amazing “transfer” of a Non-Executive Director from the Daimler AG Board to its ailing competitor. The reason being that Daimler  were worried that the saga was permanently damaging the image of  German manufacturing.

Christine Hohmann-Dennhardt will take up a Board position on 1st January to oversee “integrity and legal affairs”. She will be the first woman on the VW Board of Managers. One can’t help thinking that a lack of Board diversity led to some of their problems in the first place. Certainly an all-male culture probably wouldn’t have helped.

Unfortunately, by leaving the Daimler AG Board she will leave them with an all male Board unless she is replaced appropriately, so let’s hope that they act accordingly.

The global impact of this debacle is huge and in the UK alone the total number of cars affected is as follows

  • VW passenger cars – 508,276
  • Audi – 393,450
  • SEAT – 76,773
  • Skoda – 131,569
  • VW commercial vehicles – 79,838

That all adds up to 1,189,906!

The potential consequential costs to consumers and businesses could be huge and I’ll probably cover that in another post.

Interestingly I recently attended an excellent event at IoD Pall Mall, where the issue of Boardroom culture was discussed following a keynote speech by Baroness Neville-Rolfe the BIS Minister. A panel of experts agreed that greater diversity within a Board was a pre-requisite, one could say essential, when achieving good governance. An interesting outcome was a test  for any business to determine how they would define what business culture is and then describe the culture of their own business to a stranger. Thought provoking stuff!

Also there were some interesting “red flags” identified to identify a company with poor culture

  • A Board that was “too comfortable”
  • An excessively confident CEO
  • Lack of challenging on the Board
  • A feeling of perfection leading to complacency

I’m sure we’ve all seen one or two of those.

My latest article in Platinum Business magazine covers this topic and can be found here.

oct pb 2


The full magazine can be found here

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