The Wall Street Journal recently ran an article about the engine emission crisis at Volkswagon (VW). Senior executives of VW acknowledged that their firm had a “culture of tolerance for rule breaking” that lead to this “chain of mistakes”. Although the article did not name exactly who ordered their engineers to install the software to fool the tests, the article did state that it found no evidence that “VW executive or supervisory Boards were involved in the fraud”.
Yeh. Heard that one before. After British Petroleum (BP) had the disastrous oil spill in the Gulf, a top writer from Fortune magazine stated that BP’s long time focus on cost cutting versus safety goes back directly to the Board of Directors. The Gulf spill was proceeded by several major safety events including a huge explosion in Texas that killed a dozen workers. All organizations look for guidance or direction from the top and a Board is the ultimate top. It appears that maximizing profits through cost cutting was a top priority over safety for BP and its Board.
At my old firm, USG Corporation, every meeting, even the Board meetings, started with a review of safety. This goes back to when USG started as a gypsum mining firm. Major accidents, especially deaths, are reviewed in often grisly details. Senior people, including myself, would attend safety dinners when a plant reached an accident free milestone. Safety was a core value at USG Corporation.
Sadly in most of these disasters like BP and VW often a few, token senior people are fired but with huge severance packages. But a lot of staff or line engineers at these firms lose their job and often their livelihoods because of their presumed role.
At VW, the Board and the senior executives looked the other way or showed a tolerance for rule breaking or it would not have occurred. And German car companies are known for their excellence in their engineering and engines. That makes this all the more unbelievable to me.
In my view, senior executives and Board members must be held to higher standards than they are and at times, they need to bear the blame and responsibility for not focusing on what is right.
bradszootales 
Absolutely! It’s terrifying how callous and money-driven so many major companies are. It happens far too often that they do irreparable harm to their consumers just to pocket more money for themselves.
You wrote a great post on accountability. The comparison that you drew to the safety reviews at USG was particularly striking, since the levels of the VW emissions are expected to cause a number of premature deaths.
I researched the fraud a bit. The Volkswagen cars showed much higher emissions when driven in real-world conditions — 30 to 40 times higher. I was curious about how the software could distinguish between regular driving conditions and an emissions test, but since an emissions test is repeatable (i.e., controlled) in order to produce a consistent score, VW was able to program the car’s central computer to detect the emissions test conditions, and behave 30 to 40 times better during the test.
Why did VW do it? Experts speculated that the pollution controls probably had a negative impact on the car’s overall durability — the controls very likely made the engines run hotter, made the cars wear out faster, and caused the car to get worse gas mileage than it would have without the pollution controls.
Lastly, what’s it going to cost VW besides their reputation? The company could face fines of up to $37,500 for each vehicle that wasn’t in compliance with the Clean Air Act, which could amount to $18 billion. If Volkswagen’s total profit last year was about $12 billion, $18 billion in fines could be devastating for the company.
I appreciate your comment that the guidance and direction from the top sets the tone for the culture and drives the values of the entire organization. Thanks for your thought-provoking article.