Most boards become paralysed when faced with a threat to organisational reputation. Chairs must plan carefully to put unwelcome issues on the agenda.
Volkswagen's board failed to act at a critical juncture in the emissions scandal. Image: Gyuszko-Photo/Shutterstock.com
Organisational reputation is an increasingly critical issue for boards to consider and is certainly on a par with overseeing product quality and service delivery.
Volkswagen Group is a useful case in point. Its board’s inaction at a critical juncture for the organisation was partly due to Bosch software, widely utilised across the automobile industry, which distorted its emissions test results.
The board’s thinking appeared to be that “if all motor manufacturers are complicit, then why break ranks and recognise the problem first?” This was no excuse, and both regulators and consumers took a dim view of such corporate malfeasance
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