Restoring integrity: ethics and compliance transformation post-scandal"

Client: Automotive corporation

Industry: Automotive

Duration: Q4 2018

Objective: To implement a comprehensive ethics and compliance program across various legal entities, including legal entities in Spain and Slovakia, as part of the aftermath of an emissions scandal. The goal was to train participants at these entities to use the Transparency Initiative training material and subsequently teach it to their own staff.

Background: In September 2015, the United States Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen Group. The agency discovered that Volkswagen had intentionally programmed their turbocharged direct injection (TDI) diesel engines to activate emissions controls only during laboratory testing, causing the vehicles to meet US standards during testing but emit up to 40 times more NOx in real-world driving. This scandal, known as Dieselgate, led to significant legal and reputational consequences for Volkswagen, affecting about 11 million cars worldwide, including 500,000 in the United States.

As part of the settlements with U.S. authorities, the automotive corporation agreed to undergo monitoring by an Independent Compliance Monitor to ensure adherence to new ethical and compliance standards. This mandate required the automotive corporation to roll out an extensive ethics and compliance program across its global operations.

Challenges:

1. Complex Organizational Structure: Implementing the program across multiple legal entities with diverse operational cultures and practices.

2. Historical Skepticism: Overcoming skepticism and resistance within the organization due to the fallout from Dieselgate.

3. Language and Cultural Barriers: Ensuring the training materials and program delivery were effective across different languages and cultural contexts.

4. Failure Culture: Encouraging a culture of openness where employees at all levels can admit mistakes and learn from them, a crucial aspect for rebuilding trust and integrity post-Dieselgate.

Solution: I was brought on board as part of a dedicated change management team to oversee the rollout of the ethics and compliance program. My primary responsibilities included:

1. Program Design and Coordination: Collaborating with the central compliance team to adapt the Transparency Initiative training material for local use.

2. Training the Trainers: Conducting train-the-trainer sessions for key personnel at legal entities in Spain and Slovakia. These sessions focused on empowering local trainers to deliver the compliance training effectively to their own staff (train-the-trainers).

3. Stakeholder Engagement: Engaging with senior leaders and compliance officers at each entity to ensure buy-in and support for the program.

4. Promoting a Failure Culture: Emphasizing the importance of admitting mistakes and learning from them across all organizational layers, fostering an environment where transparency and accountability are prioritized.

5. Monitoring and Feedback: Establishing mechanisms for continuous feedback and improvement of the training program to ensure it met the required standards and addressed local needs.

Photo by Ivana Cajina on Unsplash

Key Deliverables:

1. Customized Training Materials: Adaptation of the Transparency Initiative training materials to suit the specific needs and contexts of legal entities in Spain and Slovakia.

2. Comprehensive Training Sessions: Successful completion of train-the-trainer sessions, ensuring local trainers were well-prepared to disseminate the compliance training.

3. Implementation Plan: A detailed implementation plan outlining the steps for rolling out the training across each legal entity, including timelines and resource allocations.

4. Feedback Mechanisms: Development of feedback tools to collect insights from training participants for continuous improvement.

Outcome: The rollout of the ethics and compliance program was successfully completed within the three-month period. The train-the-trainer approach ensured that local entities were equipped to maintain ongoing compliance training independently. Key outcomes included:

1. Enhanced Compliance Awareness: A significant increase in awareness and understanding of compliance requirements among staff at legal entities in Spain and Slovakia.

2. Improved Ethical Practices: Adoption of best practices in ethics and compliance, contributing to a more transparent and accountable organizational culture.

3. Sustained Compliance Monitoring: Establishment of ongoing monitoring and feedback systems to ensure continuous adherence to compliance standards.

4. Cultivated Failure Culture: A new openness in discussing and admitting mistakes at all levels, leading to a culture of continuous improvement and learning.

Conclusion: This project underscored the importance of a tailored approach to change management, particularly in the context of a complex and multinational organization like the automotive corporation. The successful rollout of the ethics and compliance program not only met the external mandates of the U.S. Independent Compliance Monitor but also laid the foundation for a more ethical and compliant corporate culture. Additionally, by promoting a culture where employees felt safe to admit mistakes and learn from them, the automotive corporation took significant steps towards rebuilding trust and integrity in the post-Dieselgate era.