• Building resilience through risk culture.

  • Empowering our clients to improve performance.

Volkswagen & Risk Culture

Let’s reflect for a minute on whether a weak Risk Culture might be the ultimate cause of why Volkswagen has fallen off the precipice.

 

Only Rogue Software Engineers involved in VW “defeat” software???

Harvard Business Review has reported that the CEO of Volkswagen USA, Michael Horn, has testified to the US Congress that senior management was not involved in the software to defeat environmental regulations “This was not a corporate decision. No board meeting or supervisory meeting has authorized this,” Horn declared. “This was a couple of rogue software engineers who put this in for whatever reason.”

I can accept that those in the C suite might not have had specific knowledge of this “defeat” software but it beggars belief to accept that the software was installed in millions of vehicles globally through the actions of a couple of rogue software engineers, acting alone.

 

Breaches of Organisational Values

When we run Risk Culture Assessments for our large corporate clients it’s not at all unusual to find units or departments where the Values set by senior executives are not followed and where middle managers’ actions are completely contrary to those values. A simple example is where Respect might be a core Value but in some departments the managers act without respect. This can set a pattern of behaviour in that department where little respect is exhibited by anyone.

These breaches of Values are normally down to one of two causes –

  1. C suite executives do not personally live the Values so everyone knows these are paper tigers, no matter what HR might say
  2. middle managers are under performance pressures that lead them to ignore the Values and cut corners

 

VW Breaches of Organisational Values

Volkswagen Group on its current website maintains that Sustainability is a core Value and states –

“…we conduct our business activities on a responsible and long-term basis and do not seek short-term success at the expense of others. Our intention is that everyone should profit from our growth – our customers and investors, society and, of course, our employees. In this way, good jobs and careful treatment of resources and the environment form the basis for generating lasting values.”

Until all the enquiries have been completed we won’t know whether cause 1 or 2 was the dominant reason for Volkswagen departing so dramatically from their declared Values.

 

Risk Culture Chain

This Chain shows how the Values lived by Leaders drive Practices at the operational level and these set the norms for the workplace Behaviours or Culture – “how things get done around here”.  Unless this Culture side of the Chain is fully aligned with the Risk Management Strategy then Culture wins and the intended Risk Management Procedures and Systems fail.

Risk Culture Chain

Maybe this is what influenced the failure at Volkswagen.

 

RMIA National Conference

If you’re coming to the RMIA National Conference in November I’d love to discuss this with you, when I speak about Key Issues in Building a Positive Risk Culture, or give me your thoughts now.

 

Please feel free to share this because sharing ideas helps all of us to improve performance.

 

John Dawson

John Dawson

John P Dawson is Managing Partner at Dawson McDonald Consulting and co-author of the book BUILD Your Business; From Ordinary to Extraordinary: 5 Steps to High Performance

www.riskculture.com.au

 Tags:  Risk Culture | Organisational Leadership | Culture Change | Risk Management

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