Larry D. Thompson, the federal monitor for VW, issued an interim report on VW’s progress. Mr. Thompson’s April report indicated that VW had not taken sufficient action to hold executives accountable and reform its culture. Since that report, several executives have been charged in the German courts. The continuing problem? Despite the arrests, many of the same executives are still at VW and, they are, living in denial.
Cultures cannot change when those who were in charge when the illegal conduct occurred remain in charge. ‘Tis an interesting phenomenon in organizations, post-ethical lapses. When executives remain in place, they see themselves as victims of overzealous regulators. Their view is that they just need to survive the consent decree, the deferred prosecution agreement, the sanctions, and the monitor. They can then return to business as usual. They are never the problem. They are the victims.
With this management issue, VW has a long way to go. Mr. Thompson reached the same conclusion. As one VW board member put it, going “from “shock to shame to change” is one tough slog. Yes, yes it is.