Analyzing Volkswagen's Crisis: Leadership, Culture, and Solutions

This presentation analyzes the Volkswagen crisis of 2015, triggered by the US Environmental Protection Agency's discovery of product tampering through the illegal installation of defeat devices in Volkswagen's 2.0-liter engines. The crisis, likely caused by overconfidence, executive narcissism, and pressure to meet expectations, resulted in significant financial losses, penalties, compensations, and lawsuits for Volkswagen. The company adopted a transformational leadership style to regain trust, which offered advantages such as rapid vision formulation, inspiration, innovation through collaboration, and facilitation of organizational change. However, this style also presented disadvantages, including overlooking reality, facing detail challenges, and the potential for wrong decisions. The presentation recommends that transformational leaders align their vision with SMART plans and involve people in the process. It concludes that organizational crises require proper leadership to overcome challenges and rebuild positive perceptions, emphasizing the importance of adequate guidance and motivation to steer change and regain control.

People culture and
contemporary
leadership
Submitted By:

Introduction
In this presentation the crisis of Volkswagen is presented and the likely causes
and consequence are presented along with discussion on leadership style that
was utilized to overcome the issue as well as their advantage and disadvantage.
An organizational crisis can be anything that can put a major product line or
business unit into risk or can hamper an organization’s financial output or can
damage wellbeing of customers, staffs, community or environment that surrounds
the business. Organizational crisis can also include things that can damage
people’s faith in an organization which can destroy identity and image.

Organizational Crisis: Overview and
Likely causes
In 2015, the US Environmental Protection Agency
(EPA) revealed that Volkswagen attempted product
tampering by illegal installation of defeat devices in
several of their 2.0 l engines
Likely cause of Organizational Crisis
• High level of overconfidence
• Narcissism in top executives
• Personal costs-pecuniary or nonpecuniary-of failing
to deliver expectations
• Less resistance faced

Potential consequence of crisis
• VW’s crisis resulted into cost in form of
penalties
• Led to compensation and buybacks
• VW faced net loss
• Faced lawsuits

Leadership style selected:
advantage & disadvantage
• VW has turned to transformational leadership style so as to regain trust
after dieselgate crisis
ADVANTAGES of Transformational style
It permits rapid formulation of a vision
It applies inspiration to motivate people
It facilitates innovation through collaboration
It facilitates organizational change by stimulating optimistic behavior

Contd…
DISADVANTAGES of Transformational style
• Transformational style may overlook reality and truth
• It can face serious detail challenges
• It can lead to wrong decision
• Issue of Prioritization

Recommendation & Conclusion
Recommendation
• Transformational leaders need to align their vision with SMART plan
• Also transformational leaders can attain vision through small goals
and targets
• Transformational leaders involve people
Conclusion
Thus it can be concluded that organizational crisis are situations that
are exposed without preparation and can be dealt with proper
leadership style which can help to overcome the crisis and rebuild
positive perception of the firm in the market and among customers. In
order to overcome crisis adequate leadership and guidance need to
be offered so that change can be steered to bring back things under
control. Also to handle crisis proper leadership should be maintained
so as to motivate people to overcome situations.

References
Hoch, J. E., Bommer, W. H., Dulebohn, J. H., and Wu, D.
(2018). Do ethical, authentic, and servant leadership explain
variance above and beyond transformational leadership? A
meta-analysis. Journal of Management, 44(2), 501-529.
https://doi.org/10.1177/0149206316665461 Accessed on
3/6/2019
Rhodes, C. (2016). Democratic business ethics:
Volkswagen’s emissions scandal and the disruption of
corporate sovereignty. Organization Studies, 37(10), 1501-
1518. https://doi.org/10.1177/0170840616641984 Accessed