In 2015, the resignation of CEO Martin Winterkorn of the Volkswagen Group was a very public, international event. It happened just five days after American regulators charged Volkswagen with deliberately falsifying emissions tests for their diesel cars. The company’s stocks plummeted, and it took about five years for the company’s reputation and stock prices to recover. One might say, “Well, this bad behavior isn’t the CEO’s fault. It was just poor judgement by some department head.” And there you would be wrong. In June of 2021, news broke that Winterkorn would reimburse Volkswagen for $13.7 million. As the New York Times reported at the time, “The announcement came the same day that prosecutors in Berlin charged Mr. Winterkorn with lying to the German parliament about his knowledge of the carmaker’s emissions scandal, raising fresh questions about his role in a cover-up. . . . The scandal has cost Volkswagen tens of billions of euros in fines, settlements and legal fees.”
Cultural dysfunction always starts or ends with the leadership team. Volkswagen is one of many precautionary tales.
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