Why didn’t anyone blow the whistle at Volkswagen?

Why didn’t anyone blow the whistle at Volkswagen?

Business scandals and poor performance management systems illustrate the need for a new approach to people management, says the CIPD

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development, used the Volkswagen scandal to illustrate why command and control cultures do not work.

Cheese was speaking at a seminar on performance management organised by Prospect.

The Volkswagen scandal

“Be it Volkswagen or Enron, at what point are we really going to have a different debate about what is the responsibility of business? Not just to financial stakeholders, which is what pretty much drives the private sector, but to other stakeholders, beginning with employees.

“Take Volkswagen. Not only has it shafted its own financial stakeholders, who it seems to be entirely obsessed and driven by, but it has shafted its employees, its customers, its suppliers, the regulators, the communities it works in and the environment. How much worse does it get?”

Cheese said this sort of behaviour affects the whole business community because “people think we are complicit in it”. He asked how many more scandals it would take before we accept that we have to do something different?

“For the most part we want to do the right thing. But put people in a work context … in a rule-bound environment and they stick rigidly to them fearing their job will be threatened if they challenge anything.”

This approach does not empower or get the best out of staff. “Why didn’t anyone blow the whistle at VW and, if they did, were they supressed? Actually what is becoming clear is that VW is a very command and control culture.”

Performance management isn’t working

Moving onto performance management systems, Cheese said they should be challenged because they are not meeting their goals.

Intended as a tool to incentivise, rigid performance management with forced distribution – “what the Americans call ‘rank and yank’ “ – means management now spend more time working out where people fit on a distribution curve than on any other part of the business, upsetting their staff to boot.

“A manager then has to inform employees of the results, invariably claiming the decision was taken out of their hands, thereby removing their accountability from the process and avoiding having an honest conversation.

“It means performance management has been reduced to having the difficult conversations rather than the positive ones. How do you improve someone’s performance while they’re doing their job? The first thing is you talk to them.”

How to be a good line manager

He said the new generation coming into the workforce expect managers to give regular feedback, coach and support them.

“Good people management is about your trust in your manager – the highest determinant of trust in your leader is a construct known as benevolence, or do you give a **** about them?”

Employees ask themselves if their manager even knows who they are? Whether they care about them and their aspirations, or whether factors outside work affect their performance.

Cheese said it was time to move away from a management style that tells employees who come into work stressed to ‘get on with their job’ while telling those with obvious physical injuries ‘to go home and get well’.   

 “We need a more people-centred view, which is happening with leading edge performance management examples. You start with the person; the idea of helping them improve their performance, which is my job as a line manager among other things.

“I have to coach and support, I have to have regular conversations and tell them when they have done something well – that is really important.

“The neuroscience shows that people get a longer lasting uplift from being told ‘you’ve done a good job’ rather than a material reward, plus the manager gets a kick out of it and becomes more engaged.”

Cheese acknowledged that this would require managers to be trained to have those conversations and encourage good performance, increasing engagement and well-being, with mental well-being now a core workplace issue at present.

“The biggest source of engagement, which affects your mental health and what you believe the organisation thinks of you, is your line manager.”

If part of the performance assessment impacts promotion or financial reward, regular conversations between staff and other managers would allow for a more transparent process, enabling the six-monthly or annual conversation to be about progression. “Development is part of a conversation that isn’t happening typically.”

Performance management should be as much about development as performance. He called for a change that puts people in the centre of work, and understands that performance processes are about helping people to perform better – not about tying management in knots with overly-complicated and failing processes.