Tuesday, November 21, 2017

Any Lessons for Nuclear Safety Culture from VW’s Initiative to Improve Its Compliance Culture?

VW Logo (Source: Wikipedia)
The Wall Street Journal (WSJ) recently published an interview* with the head of the new compliance department in Volkswagen’s U.S. subsidiary.  The new executive outlined the department’s goals and immediate actions related to improving VW’s compliance culture.  They will all look familiar to you, including a new organization (headed by a former consultant) reporting directly to the CEO and with independent access to the board; mandatory compliance training; a new code of conduct; and developing a questioning attitude among employees.  One additional attribute deserves a brief expansion.  VW aims to improve employees’ decision making skills.  We’re not exactly sure what that means but if it includes providing more information about corporate policies and legal, social and regulatory expectations (in other words, the context of decisions) then we approve.

Our Perspective 


These interventions could be from a first generation nuclear safety culture (NSC) handbook on efforts to demonstrate management interest and action when a weak culture is recognized.  Such activities are necessary but definitely not sufficient to strengthen culture.  Some specific shortcomings follow.

First, the lack of reflection.  When asked about the causes of VW’s compliance failures, the executive said “I can’t speculate on the failures . . .”  Well, she should have had something to say on the matter, even party line bromides.  We’re left with the impression she doesn’t know, or care, about the specific and systemic causes of VW’s “Dieselgate” problems that are costing the company tens of billions of dollars.  After all, this interview was in the WSJ, available to millions of critical readers, not some trade rag.

Second, the trust issue.  VW wants employees who can be trusted by the organization, presumably to do “the right thing” as they go about their business.  That’s OK but it’s even more important to have senior managers who can be trusted to do the right thing.  This is especially relevant for VW because it’s pretty clear the cheating problems were tolerated, if not explicitly promoted, by senior management; in other words, there was a top-down issue in addition to lower-level employee malfeasance.

Next, the local nature of the announced interventions.  The new compliance department is for VW-USA only.  The Volkswagen Group of America includes one assembly plant, sales and maintenance support functions, test centers and VW’s consumer finance entity.  It’s probably safe to say that VW’s most important decisions regarding corporate practices and product engineering are made in Wolfsburg, Lower Saxony and not Herndon, Virginia.

Finally, the elephant in the room.  There is no mention of VW’s employee reward and recognition system or the senior management compensation program.  We have long argued that employees focus on actions that will secure their jobs (and perhaps lead to promotions) while senior managers focus on what they’re being paid to accomplish.  For the latter group in the nuclear industry, that’s usually production with safety as a should-do but with little, if any, money attached.  We don’t believe VW is significantly different.

Bottom line: If this WSJ interview is representative of the auto industry’s understanding of culture, then once again nuclear industry thought leaders have a more sophisticated and complete grasp of cultural dynamics and nuances.

We have commented before on the VW imbroglio.  See our Dec. 20, 2015 and May 31, 2016 posts or click on the VW label.


*B. DiPietro, “Working to Change Compliance Culture at Volkswagen,” Wall Street Journal (Nov. 16, 2017).

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