Mind the Gap: The Bottom Line and Ethical Behaviour: How Volkswagen Failed to Reconcile the Two?
Posted: 3 Nov 2015 Last revised: 10 Feb 2020
Date Written: November 1, 2015
It is said that the business of the business is to make money. The first reading of this assertion is that a company must do everything in its capacity to make profits. Therefore, the primary objective of an organisation is its bottom line. However, a second reading that is more important here is that, while the primary aim of any organisation is to make money (bottom line), the pursuit must be done ignoring ethical values. Good corporate governance might not assure the success of a company, but bad corporate governance will often destroy or severely limit a company. Moreover, good corporate governance engenders public confidence that management is devoting itself as best it can to the best interests of the company. Why is good corporate governance so important? The Volkswagen saga falls under this second reading. In fact, the consequences of the rigged Volkswagen emissions scandal unearthed has stunning implications, namely the probability of potentially affecting people’s health, the environment, the reputation of the industry and even Germany.
In fact, Volkswagen wanted to make more profits through deceptive and illegal practices that misrepresented its cars to millions of consumers and regulators, but will be obliged to pay more than US 20 billion in the united Stated alone.
What are the lessons to be learned with the Volkswagen case? How and why did this happen? How can people of supposed integrity do such things when they are acting for a corporation? According to Tsahuridu (2015), managers and regulators need to understand and address these pitfalls, and remember that:
• Organisational misconduct can and does happen – at unbelievable levels of complexity – up, down and across the hierarchy.
• Senior staff with professional and governance responsibilities, who might be expected to uphold standards of behaviour, can misbehave or help hide misbehaviour.
• Whistleblowers may go unheard. There are reports that Volkswagen was warned by insiders, yet the scheme was only unearthed by outsiders.
• Oversight and control mechanisms can fail within both companies and regulatory bodies. In Volkswagen case, this failure lasted six years!
To sum up the paper, Ndedi, Yota, Mua and Kouwos (2015) recommend that the current Volkswagen situation requires an overhaul of the regulatory structure, business ethics, corporate culture, and also engineering education within Volkswagen and other companies involved in identical unethical behaviours. According to the authors, laws in business ethics and their enforcement need to be tightened so that people have something to fear. With regard to capacity building, business and corporate ethics programmes are needed to capacitate workers. These programmes could then more clearly outline consequences of ethics violations, criminal charges and prison sentences; and finally unethical behaviours even when they are hidden will be punished sooner or later. (Ndedi et al.; 2015) The authors argued that an organisation can meet both ethical and bottom line goals. If Volkswagen failed in reconciling both objectives, it is just because the company wanted short courts gains, instead of pursuing most effective ways.
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