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So WinterKorn is gone and about time too!  As Harry Truman was so clear about, whatever happens “the buck stops here”.

What happened at VW appears to have been a complete breakdown in management accountability.  Managers must know what their direct reports are doing. Winterkorn, apparently, did not have his fingers on the pulse of his  organizations   How could such a large and long-lasting fraud be perpetrated in a company of seemingly such calibre. He clearly needed to dive and probe more.  Be more hands on.

It’s easy to say in retrospect, but an important lesson to the many other CEO’s who run large companies

My experience working with CEO’s is that many do not know how to manage large groups of employees.  Often they delegate this management work to HR or a COO and distance themselves – or worse – abdicate from their accountability to manage the company.  To manage a company is to know what is going on.

Where was Winterkorn!?  This diesel scam was too large and had been in place too long for a CEO to miss it, surely? Winterkorn was known as the engineers engineer, and to be hands on in development…the sudden transformation of the diesel engines performance to meet US specifications must have made him questions how at some point.  But what management processes and structure had he put in place to help him.  How did he allow a cultural dysfunction to grow and suffocate the integrity and ethics of a great company.

It is clear he did not concentrate on one of his core accountabilities: to manage his company.  He failed to build a structure of accountability ,where employees were managed and held to account to perform to negotiated goals with transparent measurements of success.  He did not build a set of required behaviours that were enshrined in policy for all employees to understand and hold them accountable to work within them.

Sadly for his employees, shareholders and customers he missed the management boat.  The costs speak for themselves!

A CEO is accountable for all the behaviour and results of their company.  Today VW CEO Martin Winterkorn admitted that the company he is the chief executive of had mislead both regulators and customers. How is it possible for a global company fraudulently installing software in their cars to deceive their customers and regulators without the knowledge of the CEO?  This scam, due to its scope and scale, had to have the ear of senior management.

Volkswagen wants to be the largest automaker in the world, but how dare they have this aspiration when they get caught in such a sophisticated scam that is so stunningly deceitful. A company has an accountability to serve the communities it works and sells in.  It must demonstrate responsibility and care to this community.   When it breaks this bond of trust it loses it right to serve these communities.

Today VW launched a mea culpa PR initiative in the US.  The strategy being if you say sorry your customers will forgive you.   I believe this goes deeper….the company is sick and there must be consequences for this failure.  Winterkorn has, it is reported, refused to quit.  If the board is serious about ensuring this never happens again it needs to fire him when it meets later today.  Only then can they start a process to eradicate a culture, led by their CEO, that produced such duplicitous behaviour.

If they do not nothing will change.  How dare they fail to hold Winterkorn accountable for this scandal.

Reading @AndreaFelsted‘s piece yesterday in the Financial Times about Tesco one year in to Dave Lewis’ tenure as CEO, I was reminded of the piece I wrote on the importance of management in turning around the former UK retail heavyweight’s fortunes.

It is clear that Mr Lewis has failed to manage.  He destroyed the contract of trust by cutting thousands of head office jobs.

A CEO who cuts employees is an abject failure – his/her strategy did not work & employees pay the cost. Mr Lewis inherited this mess, so conveniently he can sidestep the strategy issue, but the fundamental problem remains: that he further strained the contract of trust while negotiating his compensation package.

Why would Tesco expect anything else from their employees but distrust, disconnection, cynicism and low morale?

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