The case presents a Germany auto company, Volkswagen in a scandal for producing and selling cars with greenhouse gases emissions. The dictator managers in the case decide to increase company sales mostly in the US. However, they have to make a diesel engine with low emission, which meets US standards. They force the engineers to make the engine within a short time and with limited funds. The engine, which the engineers produce, hides the reality that the cars maintain high levels of emissions.

Issues

One of the issues arising from the case is the promotion of clean diesel cars in the US to increase sales. The sales for the company in the US had faced competition from other automotive companies like Toyota because of the US culture, which did not adjust. The problem resulting from the issue is the failure of the management to paying attention to the product lending to meet the US standards. In one of the US standards, diesel cars were not encouraged, and the government lowered the prices of petrol as an incentive for people to buy such vehicles. The fact is that diesel was more pollutant than petrol and the US government was strict in emissions from cars. On the other hand, Volkswagen was selling diesel cars, and the management was rigid to change to petrol to increase its sales in other countries.

Another issue is the making of a clean diesel car. The problem, which arose from the issue, is cheating that the cars made were not polluting the environment as required by the law mostly in the US. Volkswagen Company aimed at increasing its sales worldwide and the primary target was the US whose sales were meager. The strategy to boost sales in the US was only to make diesel cars in ways that lowered emissions more than petrol cars. The managers required the engineers to come up with a design engine, which minimized diesel emissions. However, after several trials, it was impossible to have such dream cars. The engineers were forced to come up with software, which would make the vehicles pass emission tests although the emissions were 40 times more than required.

Mechanisms causing the problems

The cause of the analyzed behaviors is management. The company sales were low in the US because of poor composition and structure of the administration, which focused more on labor than the product.  The family influence was weak compared to a combination of the government shares and those of the labor representatives. Both the government and the labor relations focused on creating and maintaining jobs. The result was a company, which focused more on labor than the business of producing quality cars. Volkswagen did not meet the design and requirements of its customers mostly those in the US. The US market needed cars, which were emitting fewer greenhouse gases and would be cheap to maintain and the Volkswagen cars did not have enough coffee cup holder. Once the salespeople informed the company’s directors about such issues, they would ignore.

The cause of cheating in car emission was the dictatorship management of the Volkswagen Company. The control was top-down, and everything, which the manager needed, the engineers and other staffs were supposed to produce without questioning.   In the case of cheating, the managers made a very high target for US sales and ordered the engineers to make cars whose emission was very low. After several trials, the engineers were not able to build vehicles with low emissions. However, because of the threats from the management of losing their jobs, they came up with a strategy, which would still increase sales by presenting the cars as emission free.  The plan was a software that would detect that the vehicle is on an emission test and therefore produce negative results while it emitted the gases when on the road. The engineers presented the invented lie strategy to the top management as the issues arose later in the court, which allowed them to go on with implementation.

Kerr’s seminar “On the folly rewarding A, while hoping for B” informs the case through identification of the source to the major problem. According to Kerr, most of the issues that organizations face results from wrong reward systems. Workers are rewarded for the behaviors that lead to accomplishing one goal and not for actual accomplishment of the purpose itself. The reward was for following instructions and not completing a task. By doing so, the workers would accomplish a set goal by the management regardless of the strategy. The result was a faulty system, which lied on emissions because the workers would retain the jobs. The case is, therefore, some people in the Volkswagen carrying out wrong management. The implication for the company is lack of trust from the public leading to low sales. Also, the public will no longer trust any auto company no matter how smart it comes out.

Recommendations

Volkswagen should join the various affected governments, an environmental organization and the public in projects that ensure a clean environment and safety for people. Also, it should support such activities through financial and other resources in schools, churches, and other institutions. The service and responsibility will rebrand the company again from the bad reputation it has created. People will see it as a company that cares and therefore, start building trust with it yet. The public will translate the responsibility of caring for people’s safety to its vehicles and therefore start buying from it again.

The company should also recall all the faulty vehicles and compensate all the affected people including governments and rectify the problem by coming up with an emission-free engine. The move is to create a notion that Volkswagen did not intend to lie to people, but the problem came from the interference of its operations by a few people who are no longer working with them. People will restore the trust they had with it and therefore claim back its market share.

Management should change its style of leadership to avoid such problems in the future. Volkswagen should blend a top-down with a down up control to prevent cases where the engineers and sales representatives do not have a chance to give ideas on what is possible and what is impossible. In the case, it was possible to solve the issue of cheating through listening to the engineers that finances and time were not enough to make the desired design. Also, the reward system should change to encourage the final product other than the process which would lead to improper and wrong means of getting to the end.

References

Kerr, S. (1975). “On the Folly of Rewarding A, While Hoping for B.” Academy of Management Journal, 18(4): 769-783.

Mansouri, N. (2016). A case study of Volkswagen unethical practice in diesel emission test. International Journal of Science and Engineering Applications, 5(4), 211-216.

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