The news that the German carmaker Volkswagen fudged lab tests for emissions in the US, by using hidden technology, has shocked the business world. Not to mention, the millions of VW owners around the globe who can no longer vouch for the carbon cleanliness or value of their vehicle. What’s most concerning is that this exam cheating wasn’t just a one-off event; it went on for several years.
The cloud that has descended during this debacle doesn’t just relate to the fumes that come from your car. It reveals a classic problem that can arise when a board lacks diversity.
The car firm with international presence on our roads has almost 600,000 employees, but its management board is staffed entirely by men.
When leadership culture is firmly closed to external influences the organisational health can become stale and stagnant. It’s one of the many reasons that most European countries are seeking greater diversity for their top companies’ boards.
In the UK, following the economic crisis, Lord Davies and Vince Cable established a 25% target for getting more women on boards. And it has been proved many times over that a balanced board is better for business with Grant Thornton publishing the latest research in late September.
Perhaps the sudden, recent shake up of the board can help us understand why diversity is sorely lacking in the top tiers of VW. Sure, the chief executive resigned almost immediately after the problem came to light, but he remains at the heart of the VW empire. No big deal in corporate life you may think, until you realise that the boards and supervisory boards at VW are largely filled with identikit executives, intertwined, as Winterkorn is, in similar industry roles.
That’s not to say VW doesn’t recognise the value of a diverse range of expertise and opinion. If you look at the sustainability and responsibility section on its website, it offers the following:
“The different cultural circumstances within global markets and burgeoning economic dynamism challenge modern companies to become more flexible.”
It’s a nod to the idea that people from different backgrounds are needed to help run the company. It’s vague and clearly not very effective.
The insular nature of VW’s board culture will undoubtedly be difficult to shift, and it will take a whole organisation approach to bring about positive change. This will be made doubly hard when the country’s culture means just six percent of management-board roles and 22 percent of supervisory-board seats are held by women, at companies on the DAX Index, according to the Economy Ministry.
VW has an opportunity right now to take a different style in driving the organisation forward, to offer greater transparency of course when it comes to emissions, but to open up to newcomers who have a global, and different, perspective for the future of the company.