Analysis of the Critical Problems and Issues
Volkswagen Company is a car manufacturing group situated in Wolfsburg, Germany and was established in 1946 manufactures variety of cars including Audi, Porsche, Bugatti, Lamborghini, and Skoda. On September 2015, the Volkswagen Group was served a notice of violation of the emission levels by the United States Environmental Protection Agency. The violation was that approximately 500,000 VW and Audi cars sold in the United States between the year 2009 and year 2015 had a defeat software device that permitted the cars to attain the emission regulations levels while in the test box but emitting higher levels on the road. This is not a usual car manufacturing sector issue such as calibration error, safety flaw or the usual recall issue which can be associated with bad execution or bad luck. Volkswagen manipulation of the diesel test was an unethical action which caused an immeasurable lasting damaged on the environment and the society. This report seeks to discuss the critical problems that caused the VW diesel engine scandal and also provide analysis of the alternatives solutions and recommendations that the VW should develop strategies to improve their image and market. Social responsibility and sustainability culture failure within the company was the core cause of the problem. The report will, analyze the critical problems and issues, analyze possible alternatives to the VW diesel engine scandal and recommend strategies to be undertaken by the VW group.
The Volkswagen manipulation of emission levels case portrays a complete collapse of the corporate social responsibility which resulted in disastrous consequences for the environment and the society. The outcome also, negatively affected the company’s brand image as well as its market share in the car manufacturing sector. VW deliberately installed ‘cheat’ software device to mislead regulators as the cars displayed compliance with emission levels in the test box while emitting over 40 times the allowed levels while on the road. When this unethical practice was discovered, top senior managers and experts of the VW Group resigned. The resignations reflecting that senior management that includes CSR team of the company were aware of the scandal that showed as if VW were producing the most eco-friendly cars though in real sense posed the biggest threat to the environment through its top levels emissions. Every step of the process in the engine design and implementation and tests were recorded and documented. Corporate Social responsibility in any company is involved almost all the departments of the company (Koh, 2015). Therefore, it can be concluded that the CSR was fully aware of the practice and conspired with other departments to hide it or that they were sleeping on their jobs. Corporate social responsibility is an uphill task for managers of organizations since they have to face tradeoffs between the long-term environmental impacts of their operations and the annually benefits (Moir, 2001). In the case of VW, the CSR chose to tradeoff the long-term ecological effects of their engine emissions with their annual benefits and their strategy of overpowering the Toyota Motor Corporation as the leading at car manufacturer in the world. It is easy to conclude that the sole objective of the VW group was to make profits
Analysis of Alternatives and Options
There are three pillars associated with effective and efficient leadership: character, commitment, and competency. If any of the components are lacking, it will undermine other elements which then result in performance shortfalls of an organization and leadership (Yahaya & Ebrahim, 2016). The leadership of the VW group displayed no shortage of expertise, and they also had a strong desire and drive to succeed seen from their strategy to be the leading manufacturer of cars around the globe. In the case of VW, it is the shortfall of character and not competency nor commitment since the people in power were experts and showed great desire and drive to beat their competitors. According to Abdul and Ibrahim (2002), the most significant aspect influencing the attitude of an individual to support or oppose social responsibility is family nurturing (Abdul & Ibrahim, 2002). Character is associated with family upbringing and is related to corporate social responsibility since it a virtue that allows an individual to care about others and to care about the environment. Therefore, the character pillar of the VW leaders had deteriorated and surely undermined other pillars such competency which then resulted in the implementation of a cheat software device with a goal of attaining their internal objectives without caring about their environmental impacts and the societal effects. Therefore, lack of character in the part of VW leadership is one of the causes of the VW Group diesel scandal case.
Doh and Guay (2006) mentioned that the different institutional structures and political ideologies are vital in determining how a company practices CSR (Doh & Guay, 2006). The corporate culture of VW is compliance which makes the employees to adhere to the rules even if they oppose them (Mansouri, 2016). Compliance culture requires employees to attain demands and objectives of the company without caring they how they fulfill the specific tasks. Volkswagen practices a culture of avoidance of dissent or discussion in that individuals in management positions can inform employees to come up with a solution and if they cannot, they are replaceable. The employees are required to complete their tasks and meet the expectations of their superiors regardless of the outcome’s impact on the on human livelihoods as well as the environment. The company’s working culture did not emphasize on the vital importance of corporate social responsibility to their employees. VW engineers were the core cause of the scandal as they were the ones who deployed the cheat software device. Therefore, the culture and the working environment of the company will force the employees to act unethically to attain the set objectives of the company.
Volkswagen should implement corporate social responsibility practices that support the green environmental initiatives and perform corporate social reporting. Snider et al. (2003) elaborate Corporate social reporting is a process by which an organization reports its environmental and social of the company’s commercial operations to the stakeholders and society as a whole (Snider, Hill, & Martin, 2003). VW Group should liaise with federations that focus on sustainability practices and also partner with various institutions, universities, and suppliers to entrench corporate social responsibility in every sector of their organization. For instance, to compensate for the previous emissions caused by their cheat software device, their employees should travel in multiple numbers to reduce the number of cars being used. Also, employees’ unnecessary travels should be avoided. Furthermore, VW should make continuous statements mainly through social marketing that it cares for people’s health and welfare and the environment and will undertake various measures to correct their mistakes. Make investments in cleaner cars technology and implementing sustainability projects as well as manufacturing new car models which are eco-friendly and technologically superior.
Changes related to human values should be adopted in the company’s working custom to provide an open channel of communication between lower levels and higher levels employees. The channel will create an open structure where employees can raise their disputes or other issues with the immediate senior or other senior officials within the company. Monitoring and reporting requirements should be implemented in the company’s employee’s surrounding to allow for regularly monitoring and inspection of the actions taken by the employees to attain a specific task. Also, the top executives should integrate the company’s objectives and any other project’s objectives with corporate social responsibility (Tai & Chuang, 2014). The CSR team should maintain regular communication and discussion with the leadership and the supervisors in every level on social responsibility significance of and how to attain integration with the operations of the company.
Engineers have the professional duty to ensure safety even when less economical or less efficient. Engineers have the fiduciary responsibility of safety which in the Volkswagen case is environmental safety. The professional organization such as professional engineers’ bodies should actively get involved in their professionals’ undertakings and developments throughout their years of practice. VW Group should invite professional bodies into their company’s departments to get involved in their experts’ activities. The professional bodies should be conducted various seminars and training within the company to educate and remind their professionals of the need to adhere to professional ethics including social responsibility. Strategic CSR is valuable to an organization and the outside community at large (Lantos, 2001). Ethics and CSR education and training be integrated into professional courses as well as in the organizations working culture.
Corporations’ partnership with Non-Governmental Organizations and local community organizations is of beneficial value to the organization regarding corporate social responsibility (Nijhof, Bruijn, & Honders, 2008). Volkswagen Group should allow and Increase the involvement of independent verification agencies to conduct independent quality assurance and environmental certifications and compliance. The independent verification agency will then compare their outcome with the VW internal team assigned to examine the emission levels of their cars. Also, the company should work with local Non-Governmental Organizations in their area of operations to relay to the public about their complete care on sustainability and the society. Through this corporation, any tests will not be manipulated as well as a percentage of consumer trust in the VW products will be recovered which will further improve the overall image of the company.
Volkswagen Group should adopt cleaner cars technology and implement various sustainability projects as well as manufacturing new car models which are eco-friendly and technologically superior. Corporate social reporting in an organization has been found to have beneficial value to the organization’s image (García-Meca, Uribe-Bohórquez, & Cuadrado-Ballesteros, 2018). VW should make continuous statements mainly through social media marketing and other marketing models elaborating that they care for people’s health and welfare and the environment and are undertaking various measures to correct their previous mistakes. Integrating a company’s code of conduct with its social responsibility practices is an advisable method to attain the company’s objectives in social responsibility (Morland, 2006). Therefore, VW should adopt it’s the company’s CSR aims to the company’s code of conduct. The company’s CSR department should conduct regular training and discussion with those in top leadership and those in supervising positions on the value of social responsibility and how they contributes to social responsibility and sustainability which the company drives. Also, the company should liaise with Non-Governmental Organizations when undertaking various tests which are of vital importance car stages manufacturing. The cooperation will improve the public image of the company because they will be seen as open and not hiding anything.
Conclusion
Volkswagen committed an ethical crime by implementing a defeat software device in their engine system that allowed the cars to comply with emission regulations while on the test box but emitted higher levels while on the road. The cause of the VW diesel engine scandal case mainly lies in the leadership failures which traded environmental compliance with monetary benefits and market takeover. Also, the company’s corporate culture of employees’ compliance without any question also drove the engineers to implement the software device. VW can undertake various strategies to improve their image after the scandal including embedding corporate social responsibility practices in every sector of the corporation. Collaboration with professional institutions and with NGOs in various processes and practices will instill social responsibility and sustainability culture within the organization and also improve the public image of the VW Group. Therefore, to improve its public image, VW should adopt eco-friendly technologies in their manufacturing processes as well as release continuous updates on green culture to depict how they care for the environment and the society.
References
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