Organizational Leadership Failure of Volkswagen: A Case Study

Organizational Leadership Failure of Volkswagen: A Case Study
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Table of Contents
Introduction3
Background3
Issues4
Poor Leadership4
Faulty Organizational Culture4
Analysis5
Poor Leadership5
Faulty Organizational Culture6
Recommendations6
Evaluation8
Conclusion8
References9
Appendices10
Introduction
Volkswagen is a German company that caters to the automobile needs of several millions of customers worldwide. This company goes together with Toyota and BMW as part of the roster of leading automobile companies in the world. However, the company has faced a severe scandal that has negatively affected consumers. The Environmental Protection Agency requires car manufacturers to abide by its established standards. The standard that applies to this case study involves carbon emission. Reports show that Volkswagen has falsified its results for the carbon emission test. The company claimed to comply with the given regulations, which, according to reports, is false. Because of this falsification, the company withdrew its products from the market. This paper aims to determine the issues revolving around the Volkswagen Emission Scandal. The author of this paper will also present the analysis of these issues, particularly on their implications.
Background
This paper involves the case of Volkswagen, who has provided false information in its carbon emission requirements. This issue has destroyed its reputation for not following the regulations set forth by the authorities. The incorporation of the so-called “cheat devices” to deceive the regulatory board for pollution standards started in the year 2005. Then, the company decides to push through with the marketing strategies for “clean diesel” in the year 2008. It was in the year 2014 when the personnel of the company gave false information to the regulators. The Environmental Protection Agency ensures that automobile manufacturers are complying with the standards. It was in the year 2015 when EPA issued a violation notice against the company for not complying with its regulatory rules. According to EPA, Volkswagen made some significant alterations in the levels of the toxic chemicals their products emit. This act is to increase its profitability. Martin Winterkorn, the CEO of the company at that time, mentioned that he was not aware of any faults on his part. He even claimed that the issue was due to the mistakes of a few employees. However, he resigned in the year 2015 because of this issue. In the year 2016, the government concludes that the company has made serious violations with the Clean Air Act. The company then took all the responsibility of covering all the damages to both consumers and the government (McCormick, 2018, p. 1-22).
Issues
There are two significant reasons why the company has faced such a scandal. These factors include poor leadership and a faulty culture within the organization. It was the fault of the executives why the company has faced such a shameful situation. It is because they failed to imbibe moral and ethical standards within the working environment. It should have been the responsibility of the leaders to integrate values to direct the company into a more ethically-operating organization (Grojean et al., 2004, p. 226).
Poor Leadership
The weak leadership of the executives is the reason why the company was non-compliant with the laws governing the good manufacturing practices. Ethical subordinates originate from ethical leaders (Brown & Treviño, 2006, p. 596). However, the previous statement is not part of the culture of Volkswagen since the leaders went to do unethical acts to increase the profit. In a specific sense, CEO Winterkorn was an authoritarian ruler. He practiced a toxic working environment where all employees should strive for excellence (McCormick, 2018, p. 4). Although aiming for excellence is not a bad thing, the problem with the company under his leadership is the fact that he does not allow anyone to fail. To further support the premise, the employees characterize their working environment as “North Korea” without any concentration or labor camps within the company (McCormick, 2018, p. 4).
Faulty Organizational Culture
This unpleasant culture roots from the dictatorial rule of the executives that lead the company. Even though the leaders are already pushing the employees to commit unethical moves, there is still a lack of opposition. Lutz describes the company culture of Volkswagen as something with the “you get it done, or it is off with your head” mindset (McCormick, 2018, p. 5). This testimony is a clear representation of how oppressive and authoritative the executives were in handling their employees.
Analysis
Poor Leadership
Ethical thinking is the behavior that bases all actions on moral standards. A leader with a sound ethical mind is capable of determining whether a particular decision is within the scope of the ethical framework of the company (Grojean et al., 2004, 226-230). Leaders are capable of providing judgments if a specific action is right or wrong. They live up to the principles that are vital for them and the whole organization. They are humble, honest, straightforward, just, respectful, empowering, and courageous to stand for what is morally correct. Additional to the descriptors, an ethical leader is most likely concerned for things that will benefit the majority (Mihelic et al., 2010, p. 35-36). However, these descriptions are not an application to this case. As mentioned previously, the leadership of Volkswagen is inadequate because of a lack of ethical standards. The more that the leaders are engaged in moral principles, the better outcomes they can influence. Concerning being unethical leaders of the company, these executives personalized their powers that points out as a violation of the McClelland’s Theory of Motivation. This theory explains that the driving factors to keep employees motivates are: (1) the ability of the leaders to influence others; (2) the strength of the leaders to aim for better and more efficient outcomes; and (3) the ability of the leaders to promote a positive relationship with the employees. However, as with this theory, the power vested upon the executives must be more socialized and not for self-aggrandizement (Brown & Treviño, 2006, p. 603-604)
With the previous theory that the leaders of Volkswagen violated, they have also overlooked on the Social Learning Theory. This theory states that followers view their leaders as ethical individuals if they have a sense of attractiveness and credibility. In general, leaders should be attractive based on their power and status. However, care and concern are other qualifying factors for a leader to become attractive in the eyes of his followers. On the other hand, these executives are credible in the eyes of their employees if they are trustworthy, and if they “practice what they preach.” (Brown & Treviño, 2006, p. 597-598). However, these qualities are lacking for the executive board of Volkswagen. With these deficienc...