Why honesty is the best policy

10 November 2015, Blog

Earlier this year Volkswagen confessed to rigging-emissions tests by installing software that would ‘tweek’ figures for 11 million of its diesel cars.

Following the scandal which reached epic proportions, Volkswagen has reported its first quarterly loss for at least 15 years, driving the company €3.5bn into the red. Although VW anticipated the loss and set aside €6.7bn to cover the scandal, nothing could safeguard against the damage to its reputation, or could it?

Prior planning is archetypal of VW’s strategy, which has paved its way as a leader in the industry with one of the slowest vehicle depreciation rates. The company has succeeded in establishing itself as a safe bet as a result. Similarly, Volkswagen boss Matthias Müller has apologised profusely and vowed to be ’ruthless in punishing those involved’ in the emissions cheating scandal by ’leaving no stone unturned to find out what exactly happened and to make sure nothing like this ever happens again.’

This example highlights why the default position to transparency should override the desire to cover up at all costs. Reputations are too important to risk and has never been as important as it is today.

Those companies who are caught ‘red-handed’ can expect to see themselves being held to account for their actions in the stock market and by customers who have bought products in good faith. Much like the public sphere, private enterprise should incorporate transparency into their communications strategies in the first instance, in order to maintain positive stakeholder relations.

In the case of VW, a public apology from Müller on a trip to China with the German chancellor, Angela Merkel, is the start of a long process to rebuild the reputation of the company, and wider industry at large.

Given the reputation the company has built as, ‘the car of the people,’ it seems fitting that the VW has gracefully accepted the ‘manageable burden’ of short-term losses in order to retain its long-term integrity.

Whilst preparing for all eventualities is core to any PR strategy, the key to success is in reducing the likelihood of crises. Consistently maintaining transparency in the first instance, could have saved Volkswagen from this calamity. Moving forward, Volkswagen should redefine its reputation by fine-tuning its ethics and assuring customers that the company can still be trusted.

It then needs to take the steps set out in a clear plan of action to ensure that its actions are aligned with its messages.

The public, quite rightly, should expect nothing less.

 

By Lowri Pritchard, consultant at JBP

JBP Staff Member

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