Business ethics are concerned with the study of ethical principles, values and problems that occur in the work environment. It connotes what type of organizational behavior is considered as right and wrong in business, determined on the basis of expected behavior approved by the society. Every company have a corporate responsibility to groups and individuals they can affect these include stake holders and customers alike. In some cases, companies have been found guilty of unethical practices while trying to maximize profit at the risk of customers.
The modern automobile industry is subject to extensive emissions testing with an increasing necessity to inflict as little damage on to the environment as possible. In 2013, a group of scientists at West Virginia university discovered that Volkswagen was using software in its diesel cars to cheat on emission test by purposely altering car performance during testing thus providing falsely favorable results. They discovered the emissions produced from these cars were forty times higher than the legal limit. The deception was achieved by the company’s installation of defeat device software in over ten million cars worldwide which enables the car to detect when it is being put under laboratory test conditions based on the position of the steering wheel, vehicle speed, duration of the engine’s operation and the barometric pressure the car then alters its performance making emissions cleaner than they normally are.
Lawyers know too well the legal ramifications of consumer deceit especially from a high-profile company like Volkswagen. It will open up several investigations and lawsuits on the company which can lead to serious financial losses and lack of consumer trust in their brand. This why I personally believe the in-house lawyers at the company were not aware of the emission cheating software which were being installed during manufacturing by the engineering team.
The subsequent backlash from the media and customers was massive, and they were hit by endless lawsuits from customers who were upset that their cars have lost value because of the software. Regulators in different countries began investigating Volkswagen and its stock price fell in value days after the news. As a result of all the negative publicity, the CEO at the time Martin Winterkorn initially issued an apology but eventually resigned from his position saying ‘I am clearing the way for a fresh start with my resignation’. The head of brand development Heinz-Jakob Neusser, Audi research development head Ulrich Hackenberg, and Porsche research and development head Wolfgang Hatz were also suspended.
In April 2017, A federal judge ordered Volkswagen AG to pay a $2.8 billion criminal fine for rigging diesel-powered vehicles to cheat on government emissions tests, formalizing a punishment the German auto giant agreed to earlier this year in an unprecedented plea deal with U.S. prosecutors (Rogers & Spector, 2017).
In addition to the fine, Volkswagen also agreed to pay $4.3 billion to settle the United States Justice Department probe paid $500 each to owners of affected vehicles in the United States and the gesture cost Volkswagen $250 million. They eventually ended up recalling the 8.5 million affected cars across Europe.
The Bible teaches that ‘a good name is more desirable than great riches to be esteemed is better than silver and gold’ (Proverbs 22:1). Once praised as one of the top automakers in the world due to the efficiency of their vehicles Volkswagen ended up losing their credibility due to their deception with the emissions test. Many critics have suggested that Volkswagen values company profit over its impact on the international environment.
As a Christian, I believe it is very important to be honest when dealing with customers. Gaining the trust of your customers is vital to building any successful business. Another helpful bible principle states that we should ‘Do unto others as you would have them do to you’ (Luke 6:31). Many great businessmen/women have used this one principle as a foundation to start and grow their business into a thriving corporation. People in positions of leadership should always treat always treat others as they would like to be treated. ‘Moreover, the principles that allowed Jesus to build an enduring legacy should be reflected in your business or organization, just as they are practiced by some of the most prolific brands of our day’ (Chancey, 2016).
At the start of 2016, Volkswagen decided to wipe the slate clean and shed some of the bad publicity which resulted from their unethical practices the previous year. The German company change their previous tagline ‘Das Auto’ meaning ‘The Car’ – for an even simpler one that just read ‘Volkswagen’.
‘The brand refresh may seem like an afterthought, or a rushed attempt by the automaker to make a new name for itself before the new year. But a manager who took part in a recent closed-door meeting where the slogan was discussed said it was a necessary move’ (Rodriguez, 2015). Often times we read articles or hear on the news how much damage is being done to our environment on daily basis air pollution and global warming are some examples of these problems. This exactly why the United States Environmental Protection Agency (EPA) designed the Clean Air Act as a federal law to control air pollution on a national level. Volkswagen disregard showed they were more focused on making profit rather than take care of their customers. ‘Volkswagen’s conduct is quite egregious, a concerted fraud around the core value proposition of ‘clean diesel.’ Somebody at Volkswagen deliberately conspired to manipulate tests run by a multitude of government agencies to mask emissions. No wonder the potential consequences for Volkswagen are severe’ (Lippe, 2015).