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Why VW's emissions scandal was a crisis waiting to happen

December 11, 2015 by Jonathan Hemus

Whilst I spend much of my professional life helping clients with their crisis management training and planning so that they do and say the right thing when a crisis occurs, my real objective is for them to prevent a crisis in the first case.

True, some incidents - natural disasters, some terrorist attacks and criminal acts for example - cannot be prevented. But with the right culture and communication channels, some of the most damaging crises can be averted before they ever see the light of day.

Crisis prevention is better than crisis cure

Take the VW emissions scandal. I was fascinated to read the recent National Franchised Dealer's Association dealer attitude survey results, published this autumn. It reveals the views of UK dealer networks about the manufacturer they represent.

Based on my previous perceptions of VW as an admired business and brand, I had expected Volkswagen to rank highly compared with their peers (remember, the research was conducted well before the emissions scandal broke). Imagine my surprise to find that VW ranks extremely poorly against many of the report's key metrics and especially those that relate to crisis prevention.

VW

For example:

  • How satisfied are you that the volume target aspirations of your manufacturer are realistic?
       VW comes rock bottom of the 28 franchise networks 
  • How satisfied are you that the performance measures used by your manufacturer on your business are fair and reasonable?
       VW comes 27th, with only sister company Skoda faring worse

These results reveal clear warning signs of a business that is ripe for a crisis, and here's why.  When commercial targets imposed by senior management are deemed to be unreasonably stretching yet unchallengeable, there is a danger that middle managers will feel forced to cut corners or engage in unethical practices to meet them

Crisis communication

Other answers further underline VW's vulnerabilty to crisis:

  • How satisfied are you that the management of your manufacturer actually takes dealers' views and opinions into account?
       VW comes 27th, with only sister company Skoda scoring worse
  • How satisfied are you with your manufacturer's response to your communication with them?
       VW comes 26th out of 28

These statistics clearly indicate a culture likely to act as a breeding ground for crises. Leaders of organisations who fail to listen to the views and concerns of those in the frontline are wilfully unaware of the first signals of potential crises and issues. This means they are unable to take the action required to prevent them growing and exploding into major crises.

There are many other questions which suggest an organisation which provided the perfect melting pot for an internally generated crisis.

Crisis management planning

We believe that crisis management planning begins with creating a crisis resistant culture (it was one of the principles which we outlined in our recent report "Crisis management: the acid test of leadership").

A crisis resistant culture displays the following attributes:

  • Empowering people in the front line to resolve problems before they become crises
  • Encouraging people in the front line to send word up the line if they are concerned that a crisis is developing
  • Senior management actively listening and responding to the concerns of people throughout the organisation
  • Acknowledgement at a senior level that however successful the organisation, it is not immune from crisis

The feedback of VW's dealers makes uncomfortable reading in this context, and makes the emissions scandal much less of a surprise than it first appeared.

Creating a crisis resistant culture

So, what does this mean for other organisations? In addition to creating the kind of crisis resistant culture we describe above, it also requires you to find ways of hearing the views of those in the frontline, and acting when their feedback indicates the potential for crisis.

Social media monitoring, online reviews, customer feedback and employee surveys are all ways in which views can be sought and considered.

Crisis management training and crisis management planning are both of essential importance in making you crisis ready. But you must also look out for warning signs that point to the potential for crisis or else risk suffering the catastrophic damage of a major incident.