Back in September of 2015, the CEO of Volkswagen was forced to resign just days after the U.S. environmental authorities disclosed that the company had rigged diesel engines to cheat on emissions tests. The disclosure led to civil and criminal litigation against the company, which has pleaded guilty to federal charges including conspiracy to defraud the U.S. Government and U.S. consumers.
Recently, that former CEO sat in front of the German parliamentary committee and made his first major public appearance since the emissions-cheating scandal broke. He denied any personal Knowledge or responsibility, saying “of course I asked myself if I missed a signal or misread them.” He went on further to say that he was still ‘searching for satisfactory answers’ as to how the decision to cheat was made and why.”
My sense is that he is telling the truth and that VW was clearly a victim of a silo culture in which managers in different departments fail or intentionally do not communicate issues to one another or to senior executives. Silos and fiefdoms are a topic that I have studied intently over the years and it led to a book I published a few years ago titled The Fiefdom Syndrome. In it I outline three human tendencies that are typically the source of the formation of silos and fiefdoms.
1.) The Urge to Control Data – There is a natural tendency for people to want to have total control over any information that might reflect on their performance.
2.) The Desire for Independence – Most organizations want to be left alone and want to be totally independent from the rest of the larger organization within which they reside.
3.) Inflated Sense of Self-Worth – Over time, individuals tend to believe that whatever they are doing, and no matter what the results are, things are going fine.
Realizing these tendencies, there are a couple of important steps that can be taken to avoid the kinds of silo and fiefdom problems that many organizations experience:
• Re-organize – When the same organizational structure is left in place too long it causes modes of operation to become institutionalized. Occasionally re-organizing to achieve fresh goals can shake the organization out of its complacency.
• Remove/Move People Regularly – When a person is in the same job for a long time typically the innovation stops and the individual becomes protective of the status quo.
• Checks and Balances – For activities that cut across many organizations in a company, such as information systems, safety standards, quality standards, etc., you need a central group that has the authority to reach into any organization involved in these activities and raise issues with the top management.
Net…Beware of silos and fiefdoms; it’s a natural tendency for humans to form them!