Managers role, leaders and VW


logoOne of the things that make me think about the Volkswagen Diesel gate is the role of the management inside a company. All Diesel gate is a demonstration of how dangerous is to have bad managers in a company. It is supposed that managers have the responsibility to take decision and drive the company to reach the goals, this is the justification for their paycheck at the end a manager have to

  • take decisions
  • take responsibility

but is this actually the truth?

My experience as trainer, consultant and coach alas told me that the truth is quite different, and we can find clear example everywhere. Every time something goes wrong there are always good excuses (laws, government, economical outlook, competition, price …) great justifications (I didn’t know, I can’t look at every detail, my people should have dealt with this…) but seldom sincere apologies and acts of responsibility.

612ce929df63ee64b6ecf12219fea743Take as an example the Volkswagen affair. Volkswagen CEO resign, with a millionaire paycheck, after making such a mess of the company. But the rest of the managers? In a hierarchical structure there should be a mix of direct responsibility and delegation, 11 million cars not compliant can’t be done without anyone knows.

Someone has approved some bad choices, and someone has to be responsible. The CEO and at least all the management chain that deal with the production share a big part of this responsibility, and so they should pay part of the costs. And believe me the magnitude of the damage is big, and it will be clear in the next years. Once you lose the trust of the people you loose one of the most important asset of your company, something that a lot of managers are not able to understand. Alas it is easier to talk how to rise RoI through savings than how to keep value trough brand, company and personal ethics.

I am sorry but big paycheck means also you have to pay the price for your mistakes. Alas this is not what happen in today big infrastructures. Higher level often means the less responsibility for the bad performances. The responsibility is always pushed down till the lower levels.

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This is something that is quite clear to anyone worked in a Big Company. The problems are always someone else ones,  and when managers take “difficult” and “painful” decision, as large layoffs, they, basically, turn the problem and the cost of their bad choices to the lower level,  but you know:

someone has to pay.

When I train managers I usually try to explain them that their role is not to give orders but take responsibility.

Unlike personal contributors a manager inside the company has responsibility towards the lower levels and towards the upper level, being a manager means to manage resources in the proper way to meet the result the company need.

Managers

There are a lot of good reasons to want a manager do this.

If a manager is just a mere executor is actually  useless for the company: a paycheck without a brain is not something I would bet my money on. So what a manager should do?

Towards lower level a good manager should try to remove obstacle in order to allow them to reach their goals, and not expecting that the obstacle being remove by hisher people. This should be reflected in hisher KPI. If the team does not reach the goal all the company suffer, and a manager is the primary responsible.

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I always criticize managers that told me that they want solutions and not problems from their team. If they are not a part, proactive part, of the solution they are, basically, part of the problem.

Being part of the solution does not means to tell someone “do it” but means to analyze the steps required to solve the problem and use all the instrument available to solve it. This could means asking for new resources, change plans and escalate to upper levels the problem if resources are not available.

If the management structure is flat this means a manager couldshould share the resource request directly with hisher peer, in a more hierarchical structure the manager have to ask resource to hisher upper level who will find the correct way.

Of course all those activities should be done inside a framework of policies and indications that allow the correct monitoring and managing of the resources.

If in Volkswagen there was anyone who approved the actions that caused this mess then, heshe is the responsible. But also the rest of the management chain share the responsibility, since they didn’t put in place the correct procedures to avoid this.

Mistake or not this is anyway a management problem, and management should take the responsibility for that, not only the CEO.

All this has nothing to do with leadership but is related to management. there is always a big confusion between the two roles: a leader and a manager are not the same thing,

of course a good manager should have also some leadership skills, but mainly it has to be a good manager.

of course a leader should have also some management skills, but a leader can be just a personal contributor inside a company, not necessarily a manager.

Alas there are roles that need both, a CEO is one of them. As CEO of a company you should prove great management skills as well as leadership ones, same request for the board level.

But where a leader and a manager differs?

Well a leader should be able to inspire people, track new paths, being an example of ethics. A leader should be able to do that “step more” that managers can avoid to do.

But a leader can’t be necessarily a manager or highly successful entrepreneur, we should be wise enough to know the difference.

If you think to the nowadays industrial world there are some “leaders” that are able to inspire: people like Steve Jobs, Bill Gates, Warren Buffet, Richard Branson, Jeff Bezos to name a few well-known names.

Are they perfect? I don’t think so

Are they leader? yes they are

 

Why they are leader? The simplest answer is because people recognize their leadership and … have you noticed that all those examples “create” their company and brand?

There are also other leaders, may be not under the media’s spotlights, but those should be known mostly by everyone (well may be my mum would have some problem).

Then there are great managers and great entrepreneurs that are important as well, but are a completely different thing.

There are also a lot of companies that lives (or sometimes survive) without leadership but just with good management (sorry for the great management, leadership is needed).

Just to be clear there are also companies that lives also without leadership and good management may be because of the past glories but sooner or later have to pay the price (and I have some example in mind now).

What kind of company was VW in your mind?

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Managers role, leaders and VW was originally published on The Puchi Herald Magazine

How much worth scamming your customers, governments and sinking your brand?


Take the number of car “rigged” by Volkswagen (11 million), multiply it by three, and convert all in euro: well, that is the “golden handshake” with which the former ceo resigned yesterday, Martin Winterkorn will return home. 33 million in total.

Specifically, for the man who says he’s not “doing anything” and he learned of Dieselgate from newspapers, there will be a Board from 28.6 million. And  what emerges from the annual report, which Bloomberg says, “does not write down conditions for which the amount might not be paid. plus probably 2 years wage (is a manager leaving at the end) that bring things to 33 Million Euros.
So basically the guy will bring home more money I could do in several life just because he granted his company the biggest car scandal in recent history, an image damage that will be very hard to be recovered, some financial problems and of course a lot of money wasted into the sink.
guys this is great, Can I apply for a role of manager in VW, I can do even worse for far less money, I promise :)
I am truly sorry if the guys didn’t know, I mean is just the CEO, it has nothing to do with the life of the company he is ruling, no responsibility at all, as well there will be no responsible in all the management chain, probably the guilty is just the technician who wrote the faulty  code …
I wonder if any of hose guys will feel any moral and ethic responsibility for every worker that will lose his job because of their action. probably not, since they use to judge themselves in a closed circle.
 Again let me stress out that what was worse, in this affair, is that nobody made a correct risk analysis if would worth not to be compliant or not. if the cost is way more high than the benefits it simply does not make any sense to cheat. so it is not only morally, ethically and legally wrong, but also wrong from a management point of view.
But for being a bad manager people got 33 million Euro, payment probably related to the level of damage they did to the company, why managers should care? at the end someone else will pay the bill.
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How much worth scamming your customers, governments and sinking your brand? was originally published on The Puchi Herald Magazine

A lesson from VW: Vendors, reputation is everything


Just jumped on the news, between some soccer player affair and the wonderful Rugby world cup I put my eyes on the VW scandal: OMG they lie to customers and government agency… Why I am not at all surprised?

Let be clear, I have nothing against VW, it is a great brand with great product, but is a company driven by profit and so profit is the biggest interest, above ethic and other consideration. This is why government and consumers need to be vigilant and force companies to act fairly. It is surprising that something like that comes out from a German vendor, they are well-known for the quality of their product everywhere, but this simply show how difficult is to sure about quality everywhere.

It can be a hackable entertainment system in your car that allow an attacker to take control of your brakes, or a hacked result of pollution outcome from your diesel car engine all show that quality and control is a mandatory requirement for every vendor of any kind.

There are some interesting outcomes in this story:

we should be skeptic about everything, the moment we lower our attention here comes the problem, so at the end the more a vendor is under scrutiny the better is for the customers. even a major brand can make mistakes, willingly or not the vendor have to take full responsibility and put in place all the effort possible to avoid similar accident.

From a vendor perspective investing in quality is mandatory if they want to present themselves as a value added player, and not the cheap option. but quality is a complex issue, that require careful management of product, branding and communication.

quote-it-takes-20-years-to-build-a-reputation-and-five-minutes-to-ruin-it-if-you-think-about-that-warren-buffett-26787And the basic point is that once the damage is done the recovery will be painful and hard, ant it could burn all the profit we have made thanks to the cheat.

This is the same thing that happen with security, and information security (which is my field) is not an exception.

Security from a customer point of view should be a basic requirement, not just an add_on. Likewise for vendors security should be one of the core pillar because is strictly related to the quality of what a vendor do.

so let us take some consideration:

was the VW affair something done without the knowledge of the senior management?

If so, but at the moment I doubt it, this means that the senior management was not putting in place the correct set of control on quality. Quality should be a serious internal affair, and it means that you should know, check and control what is the output of your systems.

But to be able to check quality you should know exactly how to grade it, and what could come out form a not compliance. so if your process need to check the emission level of your engine you should e sure this is checked tested and cross referenced somehow by external entities before the government agency check.

If you do so you can be fairly secure you have your result consistent with your design, and think that a non compliance could be rally related to unpredictable events.

If you do not put in place something like that (that is important since it is a mandatory requirement from a specific market, well a lot of markets actually) you are guilty and you didn’t do your job correctly.

you made mistakes because you did not check correctly the risks and the consequences. you made mistakes because you didn’t put in place the correct chain of control, you made mistakes because you, basically, didn’t do your job. There is no excuse for bad management, managers are paid to take risk and make decision, so they are fully responsible. the fact they do bad their job can’t be a reason to be absolved.

pity there will be casualties for this mistakes that will hurt people working, so do not think for a moment this is something that can be taken lightly. every worker that will lose his job because of this should be accounted on those managers shoulders.

was the VW affair something done with the knowledge of the senior management?

150922175400-volkswagen-scandal-worsens-archer-intv-00001802-large-169well this is a completely different thing. or not? is being unable to do your job worse than willingly trying to scam customers and governments? because this is what we are talking about.

If higher management knew this it means that they were willingly trying to scam their customers to rise up their sales lowering costs. there is nothing bad in willing to raise sales and lower costs, till you di it in a fair, ethic, legal and fair way, not sure can be justified if this is done against the law (the comment is sarcastic, for the ones that didn’t get it).

so basically this means that the management did this math (I know I am over simplifying it):

cost without compliance =”X”

costs with compliance = “X+Y”

if we sell our product at “Z” our incomes will be “Z-X” if we are not compliant and “Z-(X+Y)” if we are compliant.

so we earn more with the not compliance.

now I hope they at least tried to check the cost fo being discovered and the %risk of being discovered, those 2 factors should be the point to analyze if it is worth to try the scam or not.

so basically they should have correct the math at least as

cost without compliance  = “X + (cost of being discovered * %of risk to be discovered)”

now the cost, apparently, will be as big as this year revenue for the company (may be more) this means that the cost of being discovered is almost Z, this rules out any chance to consider worthy the scam unless the %of risk to be discovered is really small, and for really small I mean several digit below zero.

but this % couldn’t be so small since there were external controls, chemistry and physics to work against them.

this means that they haven’t been able to correctly evaluated the costs of not compliance and so jeopardize their stream of revenue for nothing.

This basically means that:

  1. they were willing to scam
  2. they were fairly incompetent

so again this rules out any chance to be merciful, more for not being able to do their job actually.

Is this an isolated case?

Although I would like to say yes, I think this is a common practice in the industry of any country in any sector. Sometimes the cost of compliance is simply too high, sometimes management takes risks for not compliance knowing the eventual costs, most of the time they simply does not care because it is not in their targets (and we know that sales target are quarter based when we have a long vision, lol).

I am not talking here about honest mistakes, I am talking about willingly not being compliant or not doing all effort possible to carry out a serious, credible and reliable quality system.

Quality requirement could be mandatory (because of some law) or just best practice, or simply marketing claims but respect the quality baseline is always a serious matter that should be better evaluated.

VW scandals teach us that it is a priority for the management to act in a correct way because the cost of not compliance can be devastating. And in the connected world we are the repercussion are global. Let me claim also social responsibility for a company, a scandal like this can affect an entire country perception.

Bright side it happen in Germany, and so when I will talk with my German friends I will be able to say, come one stop making fun of FCA hacking car problem, you hack the EPA…

One last comment: when we will start to admit that “clean” cars and combustion engines are still way to come?

 

trust no one

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A lesson from VW: Vendors, reputation is everything was originally published on The Puchi Herald Magazine