A new union deal in Germany covering some 120,000 Volkswagen workers will give some of them the option of swapping some of their pay for additional time off, CNN Money reports:
Volkswagen said the workers will get a 4.3% pay rise starting in May, and from 2019 an extra 2.3% bonus and more pension benefits. Night shift workers, and those caring for children and elderly relatives, can swap the new bonus for six extra days off. If they do, they’ll be entitled to about 45 paid days off each year, including public holidays.
Volkswagen Group — which also owns the Audi and Porsche brands — employs about 286,000 workers in Germany and 350,000 in other countries. German workers are taking advantage of low unemployment and strong economic growth to flex their muscles at the negotiating table.
The deal between Volkswagen and the IG Metall labor union comes after the first strikes the company had seen since 2004, Reuters adds, and represents a compromise between the union’s demands for a 6 percent raise and the company’s initial offer of 3.5 percent initially and a further 2 percent over 30 months. It also includes a significant boost in the amount of money Volkswagen contributes to employees’ pensions, from 27 euros a month to 90, and then to 98 euros starting in 2020. In exchange for these concessions, Volkswagen secured the right to ask five to ten percent of the workers covered in the agreement to temporarily increase their working hours from 35 to 40 a week.
Volkswagen has been undergoing a massive process of cultural change since the 2015 emissions cheating scandal that cost the German automaker billions of dollars and severely damaged its reputation. Changing the culture of a huge company is no small feat, of course, and CEO Matthias Müller has spoken candidly about the challenges the company has faced in that process. In a recent interview with the Wall Street Journal’s William Boston, Müller touches on how the change is going.
The company now holds its board responsible for legal compliance and integrity, he tells the Journal, and has changed many of its processes. New board members are subject to compliance checks to ensure they are above suspicion, and the leadership is to engage more people in dialogue to build trust throughout the organization. Some of the changes involved in Volkswagen’s transformation have included replacing German with English as the language of business at large-scale management conferences and increasing the number of women in leadership positions.
A key challenge is repairing Volkswagen’s reputation, Müller explains, as parts of the company did indeed engage in criminal behavior, which casts a pall over the entire organization. That kind of damage can’t be repaired overnight. Large enterprises like his also have a tendency to move slowly, he acknowledges, but he would like to accelerate the pace of change as much as possible.
Volkswagen’s experience at carrying out a major culture overhaul in response to a crisis carries some lessons for other organizations, which overlap with some of the insights we at CEB (now Gartner) have uncovered in our research into the multifaceted challenge of culture change.
Since 2015, when Volkswagen’s emissions cheating scandal cost it billions of dollars and severely damaged its reputation, the German automaker has taken some major steps to clean house and reform its corporate culture, including several rounds of management shakeups and the resignation of its head of US operations. Late last year, VW revealed that it was making some other changes like speaking English instead of German at management conferences and creating more opportunities for women to advance to leadership roles, in an effort to bring more diversity and international perspective to its leadership.
Shifting cultural paradigms at large, legacy companies is never easy, however, and Volkswagen is no exception. In particular, the company has had a hard time convincing managers of the need to change, CEO Matthias Mueller, who took the helm in the aftermath of “dieselgate,” said on Monday. Reuters reports:
“There are definitely people who are longing for the old centralistic leadership,” Mueller said during a discussion with business representatives late on Monday. “I don’t know whether you can imagine how difficult it is to change the mindset.” Before “dieselgate”, there was an extreme deference to authority at VW and a closed-off corporate culture that some critics say may have been a factor in the cheating.
The emissions cheating scandal that rocked Volkswagen last year was attributed to major culture problems at the company, and led to several rounds of management shakeups, including the resignation of its head of US operations, in an effort to detoxify its culture—though lawsuits filed earlier this year claimed the toxicity went all the way to the top. The shakeup at the German automaker is still ongoing; this week, the company announced several steps it was taking to change the way it does business in the hope of preventing the ethical lapses that led to the costly and embarrassing scandal, the Associated Press reported:
Volkswagen says it’s going to speak more English and help more women reach for top positions as it shakes up its corporate culture in the wake of a diesel emissions scandal. Personnel chief Karlheinz Blessing says that diversity and international experience would help build a culture of “discussion” and “entrepreneurial thinking.” He said in a statement Wednesday that “in the future, English is to be the group language.”
The company says that means English would replace German at management conferences with dozens of people by 2021 — not in informal management conversations or among workers on the assembly line. … The company said Thursday it is changing how it develops managers, putting more emphasis on foreign assignments and knowledge gained in different areas and brands. Female managers are to get the experience they need for appointment to upper management positions later in their careers.
It’s encouraging to see Volkswagen commit to advancing more women into leadership roles as a means of achieving better business outcomes, especially as research has shown a correlation between women’s representation in senior management and an organization’s reputation.
Three state attorneys general are suing Volkswagen over last year’s emissions cheating scandal, the New York Times reports, alleging that top managers at the auto manufacturer were in on the fraud:
The accusations, leveled in lawsuits by New York, Maryland and Massachusetts, contradict Volkswagen’s portrayal of the deception, representing a new threat to the carmaker’s finances, reputation and management. For the first time, the suits connected Volkswagen’s chief executive, Matthias Müller, to the scandal, saying he was aware of a 2006 decision to not outfit Audi vehicles with equipment needed to meet American clean-air standards.
Volkswagen, which admitted late last year to equipping 11 million vehicles worldwide with software to cheat emissions tests, has maintained that the deception was limited to a small group of people. The company has said top management was not aware of the cheating software, known as a defeat device. But the New York civil complaint, drawing on internal Volkswagen documents, emails and witness statements, depicts a corporate culture that allowed a “willful and systematic scheme of cheating.” The evidence paints the most detailed picture yet about how the deception unfolded and who was responsible. … The suits stopped short of accusing Mr. Müller of having specific knowledge of the devices.
The suit does name other names, however, accusing several major figures in Volkswagen’s leadership of wrongdoing and also taking aim at the company’s board:
Michael Horn, the president and CEO of Volkswagen’s US operations, abruptly resigned on Wednesday after two years in the post, the New York Times‘ Jad Mouawad reports. Hinrich J. Woebcken, recently appointed head of the North American region and chairman of Volkswagen Group of America, will take his place. Horn’s departure, on which the auto maker did not comment except to say that it was decided by “mutual agreement,” comes after months-long series of resignations and reorganizations in the wake of an emissions cheating scandal that has already cost the company billions.
The Times report notes that Horn had played a key role in managing Volkswagen’s relations with its American dealerships amid declining sales and increasing frustration with the company’s leadership in Germany. As Mouawad describes, his absence is already making dealers nervous:
The German automaker’s quality assurance chief Frank Tuch is resigning, the Wall Street Journal reports, becoming the latest casualty of last year’s emissions scandal:
Mr. Tuch was among a group of Volkswagen executives who were suspended when Volkswagen launched its investigation of the emissions-cheating affair last year, according to people familiar with the matter, but he hasn’t been charged with any wrongdoing. Volkswagen said he resigned to pursue other interests.
Tuch’s resignation comes less than two months after CEO Matthias Müller radically reorganized VW’s senior management team, reflecting a realization that a dysfunctional management culture played a major role in allowing the scandal, which is costing the company billions of euros, to happen. The labor chief at Audi, a Volkswagen property, announced late last week that he was also pushing for changes in his organization’s leadership culture in response to the scandal, according to Reuters: