The scandal around falsified exhaust emissions has plunged Volkswagen into an existential crisis. In such situations, it is not only necessary to limit the damage, but also to analyse what went wrong, to define strict compliance rules and, above all, to communicate them to the entire group. The objective is to install a new management and corporate culture, otherwise it won’t be possible to restore a tarnished reputation in the long term.
If we go beyond VW’s case (which is still too recent for everyone to know how deep it will shake up the first largest European automotive group), the question remains: how can any company facing that kind of situation not only return to its former corporate culture but completely reinvent it? Or on a more proactive note: if you see that a competitor is struggling with such a scandal, how can you avoid it from happening in your own organisation?
During the last decade, we’ve seen many similar stories disgrace market leaders all over Europe, from the food&beverage industry to investment banking, and from pharmaceuticals to the automotive industry, not to mention the drama of textile workers in 3rd world countries for the clothing industry. No industry, no market, no country is coming out untarnished. Knowing and appreciating Germany, I can see how much this VW scandal has hurt the “Deutschland AG” brand, and how strongly the German government is reacting right now. But this was the same as the Parmalat disgrace hurt Italy, or as Société Générale in France or UBS in the UK had to confront their rogue traders’ wrongdoings.
It would be too easy to claim there were some magic recipes preventing that kind of scandal, transforming every employee into a model of ethics, dignity and compliance. Very often, staff members can be facing situations in which it’s difficult to decide what is the right thing to do. On the other hand, companies can prevent such situations from occurring in conveying a culture of strict ethics and clear rules, where losing a deal to prevent the smallest risk of compliance is not only accepted, but highly praised.
How is this possible? If we get out of the theory and try to think how this could be correctly put in place, it is clear that any organisation wanting to prevent the smallest risk has to communicate all over the company on how to face potentially risky situations. All staff members must have a very clear understanding of what is acceptable. Anything which doesn’t fit 100% and with no compromises into this description should be reported and avoided, without incurring any backlash in one’s career.
Practically, digital tools can help as they play an important role when it comes to re-establishing transparency and developing and enforcing new and stricter compliance guidelines. I remember the case of a European financial institution who organised a company-wide training on compliance risk, in order to avoid finding itself in a state of crisis because of lack of compliance. The ability to track precisely who had been trained is a very efficient way to avoid mistakes and forget some groups of employees.
Another interesting aspect of using digital tools is that they are a very effective method to roll out clear rules all over the company, they enable the measurement of training activities around compliance and can install transparency in the company.
The last step is to confirm that everyone is aware of these new stringent rules that management demands Once again, using digital tools to enable proper evaluation, or even official certifications, is the most efficient and trackable way to deploy effective training and mitigate as much as possible the risk of compliance.
A final significant step that technology can provide is predictive analytics. When you are in a situation where you need to deploy comprehensive compliance training in a short period of time across a great number of people (employees, resellers, suppliers…), modern big data algorithms can calculate which group has the highest risk of not completing the training on time. Based on this information, it is possible to simulate which lever to pull in order to reduce this risk and solve problems even before they occur and make data-driven decisions with immediate impact on the business.
Any other ideas you'd want to share to lower compliance risks?
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