What Volkswagen needs to do to regain public trust

Volkswagen’s acknowledgment that it cheated on diesel emissions tests has seen its US sales plummet.

Now the German auto giant is preparing for its ultimate challenge: winning back the trust of the US public.

Prof. Reinhard Bachmann, University of London has some advice for VW as it attempts to recover from the largest scandal in its history.

ResearchGate: What does it mean to trust a business? How does consumer trust differ from how we trust our family and friends?

Reinhard Bachmann: To trust in a business means that customers (or other stakeholder group) hold the belief (and also act on the belief) that a business organization is a) competent enough and b) willing to deliver what it promises to their customers in terms of product/service quality and delivery times. Beyond that there is a third dimension of trust which is based on 'benevolence' meaning that the customer believes that a business organization would be understanding and helpful if special circumstances arise. Consumer trust takes regulations into account. For example, if there is a legal right to return faulty products then this can help a consumer to trust a business organization because there might be legal sanctions available as a last resort. Such guarantors usually play no role in relationships with friends and family.

RG: Is there anything that makes this scandal particularly difficult to overcome?

RB: The difficulty lies in the fact that VW has obviously - and this goes back to your first question - violated customers' trust in their integrity. It would be much easier to repair trust in their competence even though technological competence is a specific selling point of the German car industry. If some tricky technological problem could have been identified and blamed for the disaster it would always be easier to credibly promise that this will never happen again as a learning process has taken place. If an individual or group of people, simply cheated this shows bad character and/or gang-like conspiracy which takes much longer to mend and can hardly be repaired from within the organization.

RG: What do you make of VW CEO Matthias Müller’s performance so far in response to the scandal?

RB: Mr. Müller has not managed to show that VW wants to root out the cause of this scandal once and for all. He has been quite defensive and the strategic approach to overcome the crisis does not appear to be very coherent. What would be much more effective than just waiting and hoping that potential customers might forget one day is a forward looking visionary approach, especially if a company of this size and position is involved in a scandal of this dimension.

RG: What does VW need to do to rebuild consumer trust?

RB: VW can rebuild trust in two ways: either localize the origin of problem and claim that there is one single person or procedure responsible for all the mess. Problems of such a nature can be resolved quickly and efficiently. Another way is to unreservedly apologies to customers and other stakeholders, offer compensation, sack the CEO, promise to restructure the whole organization so that anything similar can never happen again.

RG: Can you give us an example of a company that was particularly successful in rebuilding trust after a scandal? Any particularly drastic measures taken?

RB: Siemens and the bribery scandal of 2007. Siemens made radical changes in their organization to show that they take the misbehavior very seriously. Severn Trent Water (UK) was also very successful in rebuilding trust after they had reported false financial figures to the regulator ('Ofwat') between 2005 and 2009. Severn Trent Water was extremely willing to apologize, and offer compensation.

RG: What could VW learn from these cases?

RB: VW could learn that they need to be visibly proactive in sorting out the problem once and for all. Successful trust rebuilding presupposes this. VW has not (yet) done enough to clean their name. This can result in a slow decline of their business. If they went public and said that they will take this as an opportunity to become – at least with their core brand – the world's most dedicated producer of electricity-powered cars, consumers would feel that the scandal may have fulfilled an important purpose. This is what successful trust repair requires.

Image courtesy of Sal.