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Culture change at VW may take time, HR chief says
March 30, 2017 / 3:47 PM / 10 months ago

Culture change at VW may take time, HR chief says

BERLIN (Reuters) - Creating a new era of accountability at Volkswagen (VOWG_p.DE) after its emissions scandal may take time, as it requires radical changes to the German carmaker’s decades-old corporate structure, its head of human resources told Reuters.

Volkswagen’s (VW) drive to become more transparent and decentralise power is seen by investors as a key part of its efforts to rebuild trust following its admission in September 2015 that it cheated U.S. emissions tests on diesel engines.

But reformers are battling a long-tradition of management hierarchies and some investors think their task is made harder by a tightly-knit ownership dominated by the company’s founding families and home state of Lower Saxony.

“Good ideas are worth nothing if they fail because of structural blockades,” VW human resources chief Karlheinz Blessing said in an interview published on Thursday.

“Not only the values must be right but also the structure,” he said, adding progress was being made to reduce the number of committees, streamline the development of models and move managers more frequently to improve their leadership skills.

Before “dieselgate”, there was an extreme deference to authority at VW and a closed-off corporate culture that some critics say may have been a factor in the cheating.

Although Blessing, a former steel manager who joined VW in January 2016, has pledged a complete overhaul of its structures, values and principles, some investors aren’t convinced.

“I see a governance and culture problem at the group for which the old guard is responsible,” said Ingo Speich, a fund manager at Union Investment which holds about 0.6 percent of VW preference shares.

VW is hamstrung by the different interests of its stakeholders - which include a powerful role for trade unions - and a lack of new leaders, he added. Chief Executive Matthias Mueller has been with VW for nearly four decades and Chairman Hans Dieter Poetsch was previously its long-term finance chief.

Blessing said VW wanted to put an end to managers shifting accountability to others and would ensure the best qualified people were handed responsibilities - something that might not always have been the case under a top-down management style.

    “That has to be learned, and it may take a bit of time,” he said.

    Blessing’s caution appears justified, according to two sources at the company.

    With VW pursuing an ambitious shift to electric cars and digital services, some managers have become afraid again of making mistakes and are more keen to protect their careers than lead the drive for openness, they said.

    “The search for those who made mistakes always took precedence over the search for the mistakes,” one of the sources said, speaking on condition of anonymity due to the sensitivity of the matter. “That mindset is still there.”

    Blessing declined to say how long it would take to establish a modern leadership culture at VW.

    “This is an ongoing process, and it’s nothing that will happen automatically.”

    Reporting by Andreas Cremer; Editing by Mark Potter

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