Earlier this year, Hiltrud Werner, Board of Management, Integrity & Legal Affairs for Volkswagen AG, gave an insightful keynote presentation at ECI’s IMPACT Virtual Ethics and Compliance Conference. Werner’s presentation delivered a detailed look at Volkswagen AG’s Together4Integrity (T4I) program, a strategic undertaking that strives to ensure ethics and compliance is top of mind across all business sectors and to position the organization as a role model for integrity.
Volkswagen AG is staunchly transparent and forthcoming about the origins of the Together4Integrity program, which are partially rooted in the diesel emissions scandal that made headlines beginning in 2015. However, what began as a concerted effort to rebuild trust with employees and the public after times of distress continues to serve as a model for how organizations can build and maintain a strategic, research-based ethics and compliance program.
This interview was conducted by Pat Harned, CEO, ECI as a follow-up question and answer to the keynote presentation delivered at IMPACT. Harned speaks at length to Hiltrud Werner, as well as Tobias Heine, Chief Integrity Officer, Volkswagen Group and Dr. Katja Nagel, Founder and Managing Director of the Global Organizational Integrity Institute.
Some questions were posed by Harned and others were submitted by IMPACT attendees.
This is Part 1 in a 3-part series.
Implementing E&C across a global organization
Pat: Recognizing that Volkswagen is such a diverse organization, how do you ensure a uniform understanding and implementation of the program across the entire enterprise?
Werner: We built up a T4I toolbox which consolidates key initiatives, comprised of more than 120 measures, or deliverables, that defines precise targets and milestones for each initiative and each function. These targets and milestones are to be met by the entities of the group and this process is centrally located and also tracked. Our corporate functions on an entity level are responsible. So the group compliance is responsible with interacting with the compliance functions that are de-central, corporate HR functions interact with local HR functions, and so they help implement the initiatives in local entities. They also receive comprehensive info on the specific requirements linked to the individual targets of each responsible group function.
Pat: You mentioned that there were 100 suggestions (measures) in the toolbox. How did you identify those? Did those suggestions come from ECI’s Blue Ribbon Panel Report?
Werner: Absolutely. We used the Blue Ribbon Panel Report as a major source for identifying the measures that we want to see in the organization. Of course we also adapted it, but the inner logic for the Together4Integrity toolbox and the whole program is reflecting the 5 principles of the report. Many deliverables for the toolbox are really one-to-one to the leading practices defined in the report and some others we added as suggestions or as mandatory targets for every entity. The great benefit of the Blue Ribbon Panel Report for us was that it was already so complete. You want to address companies and many different business aspects and we needed to put that in the context of our own organization in the automotive industry.
Pat: I think that Volkswagen AG has been one of the first organizations to very comprehensively take that report and figure out ways to implement it and develop resources in house, so it’s just a pleasure for us to know that the report has been useful to you and hope that it will be useful to others.
“We used the Blue Ribbon Panel Report as a major source for identifying the measures that we want to see in the organization.”
Werner: For me, the best thing really was that when we started to promote the Blue Ribbon Panel Report as the source of our program, that the feedback from our managers really was overwhelming. They said that it was easy to read, easy to understand, very practical. It made compliance really digestible for everyone, so I can say that it was really a great catalyst for our program and that was confirmed by many, many people from our business units even outside the compliance entity.
Building trust in organizations with Together4Integrity
Pat: I would assume it was slow at the start as you build trust and credibility with the workforce as you have implemented Together4Integrity?
Werner: Changing culture always takes time and of course, you have to gain momentum at the beginning to get over a resistance barrier. But we had a very remarkably high level of engagement from the start, because, I mean with the diesel crisis in the background, of course people were eager to be part of the new Volkswagen, to be part of the change in corp culture, to play a role in it themselves, so of course that helped us to promote integrity as a core value. People want to be proud of the company that they work for, so that helped us a lot.
“…we had a very remarkably high level of engagement from the start, because, I mean with the diesel crisis in the background, of course people were eager to be part of the new Volkswagen…”
Another point that was very important… there was a saying in Volkswagen prior to the diesel crisis that said, “If Volkswagen HQ has the flu, everyone else has to take the medicine.” So this meant we were very often too centralized, and in this program we did it in a different way. We engaged the local entity far more. It was their program, their commitment and the top management of each local entity played an important role from the start. They had to demonstrate that T4I is a matter of their own entity and that it improves processes and cultures to the benefit of their own entity and not only to the headquarters.
Pat: Could you address how E&C culture activities are implemented now as to opposed to how they were a few years ago. Have the events from the past helped to shape culture and performance and would you say that Volkswagen is stronger now today than it was in the past?
Werner: The quantity and quality of all ethics and compliance initiatives and activities have multiplied, and our efforts over the last few years are incomparable to what we did 5 years ago. Of course, the greatest of that comes from the Together4Integrity toolbox, which bundles those activities. So I would say yes, our E&C culture is improving and we can already see the results of our yearly employee surveys, as well as also results from recurring perception workshops. We really think that these events from the past have been a wake up call, and we do not have to explain to anyone how expensive a compliance risk that materializes, because everyone has experienced that.
The diesel crisis made it so obvious for our employees and to everyone that we need to address these issues. Nothing else from my point of view could have created a stronger sense of urgency in the organization for that.
Training managers from the top-down
Pat: Most organizations are trying to figure out how to provide adequate training for managers. With respect to the manager training and integrity: how often do you do it? Who is involved?
Werner: We all work under the assumption that our compliance training department that constant dripping puts a hole in the stone. I would say right now that we have about 50 different compliance trainings at hand, and we decide which manager has to take what elements. A lot of those trainings are really e-learnings, others are 1 to 1’s, others are interviews, so there is a big difference. Of course, front line leaders have at least an annual training on code of conduct and other important elements. They all can be put together into very interactive formats and lots of trainings are available in many different languages.
Our training dept has built up a reputation of providing trainings that everyone benefits from. I get a lot of calls from managers that say they are glad they took the training, and that is a good sign from my point of view.
Pat: One of the things that I know many members of our community struggle with is when members of different departments have different databases, ways of implementing things. Have you had any challenges with the 11 key initiatives, for example where HR or environmental compliance handle a matter with a different db and ethics may not hear about it. Does the ethics function ultimately oversee all matters with a centralized db?
“…you could say that ethics is the glue that keeps the toolbox together.”
Heine: With T4I we have all the content centrally in one database, so that is one advantage. Of course, when you have for example environmental compliance or product compliance which are a little more process oriented, you could say maybe ethics doesn’t play a role in this. But when everyone agrees that when you have a process, that you cannot cut the process short and if you do it right or if you do not do it properly, that is a question about ethics. When that’s what everyone is working toward, you could say that ethics is the glue that keeps the toolbox together.
Achieving manager buy-in
Pat: Another challenge that a lot of organizations face, especially in a large org like Volkswagen, you hope that members of upper management will be supportive and enthusiastic about culture change, but some resist change. Would you talk about how you interact with those that have resisted change in your org?
Werner: Luckily, as I said we have had this high sense of urgency in our management. Of course there are always some individuals that don’t like change too much, and the key for our success in this was really our HR compliance. Our HR department has changed all the different processes from hire to retire and embedded compliance elements, ethics elements into each and every process, whether it starts from the interview of new applicants, or the annual appraisal process, or whether it’s a promotion. So, if you don’t apply the principles and values that the company stands for, than you get stuck in your career. That’s number one, the HR process is really important.
Second is with our campaigns, and with the more than 55,000 employees that we have reached directly with our program, we also have this pressure from the bottom on the management that says, “Engage with us, we want to talk about it.” It made managers comfortable to speak about these soft issues because they say that there was the demand in the organization to do so. We are not seen as just talking about the quality of cars and KPIs, but also on ethics and compliance. Helping them to feel comfortable about it has helped them to overcome their resistance.
“Our HR department has changed all the different processes from hire to retire and embedded compliance elements, ethics elements into each and every process, whether it starts from the interview of new applicants, or the annual appraisal process, or whether it’s a promotion.”
Pat: How large was your team for implementing the Together4Integrity program? Did you have a branding team?
Heine: We have a 50-60 person central team, but since we do the rollout to more than 700 entities, there are more than 2,000 people who are implementing the key initiatives in their area of responsibility and updating the database we just spoke about on a monthly basis. So its not [only] my T4I team rolling it out into the entities, but a lot of people from the first and second lines from the local entities involved.
For the branding, from the very beginning we thought about how we can address the people and we have worked with strong communication skills how we can put our topic together that is also recognizable.
Pat: So I suspect that with so many people rolling out the program across so many entities, how do you maintain communication with them? Do you have a system in place so that you are aware of what’s happening as different programs are rolling out?
Heine: The idea for T4I is to bundle everything all together. We have of course our central IT system, but I don’t believe that we solve issues with an IT system. Of course we always have very extended community calls that we carry out worldwide, with about 150 participants per call from the 250 entities participating, who are then spreading the message in their local entity. This is what we are going to have on a monthly basis, to have that personal interaction, but of course now that since we are bound to the home office we are glad to be able to have these calls take place using Skype.
Pat: How do you ensure that a new leader coming into the process picks up what’s been done and what is already in progress? As leadership changes frequently in many organizations, how do you manage that?
Werner: That’s a great question and it comes back to my answer earlier that HR compliance plays a fundamental role in HR processes. If someone comes into a role internally, from some of the other brands, than of course they are already familiar with some of the elements of the job, so there will be retraining and emphasis on that. If you have hires from the outside, it is ensured that within the application process or during the interview phase, we do not just focus on skills or experiences of people, but also on attitude.
We try to find out in the interviews whether someone is a cultural fit to the org. All hires into senior management do go through a process of HR compliance due diligence, so we review what their behavior was in previous jobs, whether there were any issues we should know. The application is also reviewed personally by the board of management and there is a central committee which also results in additional interviews. We like to know the [candidate] personally in addition to their reputation and skills. So there is a lot of management attention on recruiting, because if you mess it up in the HR processes, if you promote the wrong people, if you hire the wrong people, your employees will not believe that you take it seriously that compliance and ethics are as important as facts, figures and achievements.