Last night PLMR’s Kevin Craig spoke on Sky News Ian King show of the challenges facing Volkswagen in its attempts to handle the crisis around the recall of 11 million Volkswagen cars in the United States. As well as handling many difficult media stories and currently being shortlisted by the PRCA for its crisis management work PLMR has delivered crisis management training in Germany to German owned companies with a truly global footprint. Here are some of Kevin’s predictions for what is going to happen next.
1. More sackings/ departures from VW – scapegoats needed please – and quick!
Called “personnel consequences” by VW we can expect further senior management departures – certainly in the USA and perhaps even in Germany. Whilst the former CEO Martin Winterkorn’s departure shows that VW’s extensive crisis management systems are in action, it won’t stop there. He has fallen on his sword as the company’s figurehead but expect every senior person that knew about the fiddling of emissions results to leave Volkswagen. Some may face legal prosecution for what they have done.
2. An urgent interim report will be published by VW.
Volkswagen has committed to an urgent internal inquiry. It cannot remain internal for long. Every day that VW does not publish an outline position on the fundamentals of this crisis – what we call the What? Who? When? Why? questions, the more difficult it is for this situation to be brought under any form of systematic control. The more this precious brand is damaged. The more confidence drains away. Media outlets in the USA, Germany and across the world – both traditional and social – are currently filling the gap in speculation. This cannot be allowed to continue. Questions include who decided that in in the US VW would install software in roughly 482,000 diesel passenger cars sold since 2008 – software which turned on the cars’ full emissions control systems when the cars were being tested by the US Government and which then turned off those systems during normal driving outside of the testing zone? How many people knew about this? Who sanctioned it? What was the rationale? Did anyone in the business outside Germany know? Has this happened anywhere else in the world……? You get the idea. VW needs to tell its own story – and quickly.
3. Lawyers are going to make a lot of money.
This crisis is highly litigious in nature. The menace of legal action is real and not just in the USA. Companies such as VW have very extensive legal insurance systems in place and VW is going to need to minimise the cost to its business of the huge legal claims that may follow these revelations with some authorities in the USA already speculating on jail terms for individuals involved in this. Billions of dollars will be spend on handling VW’s legal position and lawyers will be at the heart of the crisis response. As with all crises, a balance will always need to be struck by VW between the caution of lawyers and the desire to emote of the communicators.
4. The Environmental Protection Agency (USA) will enjoy many moments in the sun and fair play.
Expect more press conferences from the US Environmental Protection Agency – this is a huge moment for them – and they will of course make the most of it both because they believe they should and also because it demonstrates value for money for American tax dollars. They have unveiled a huge scandal and it is proper that they seek to maximise credit for it.
5. Groups of angry consumers and suppliers will come together and join the debate.
People buy VW cars for many reasons. Many buy from Volkswagen because they trust the brand. VW was of the 31st most trusted brand in the world in 2014. Millions of people are going to have their cars recalled. They are not going to be happy. Their voice has been silent in this crisis until now. That will not stay like that. Expect their entry into the debate at any time in the next week. Many will see a chance for financial compensation. Likewise suppliers. At a time when billions of dollars of investment is being put into clean diesel technology, what message does this crisis send to those partners of VW?
6. Eventually – expect huge communications spend to rebuild the VW brand.
This cannot happen until the pain of the fact finding and fact release phase is undertaken. Once the world knows the answers to the questions I ask in Section 2 above, and the initial media storm moves on, then VW will undertake the huge communications process of rebuilding trust. It will involve huge spend on many communications disciplines including media buying and planning, traditional advertising in national and regional newspapers across the world, social media, public affairs, PR, You name it – VW is going to have to spend it to rebuild trust and confidence. Brave decisions will need to be taken early. Even though this crisis is not even a week old – VW must have advisers on board who encourage it to over communicate – because the damage to trust – an engineering crisis for an engineering brand as someone said – is immense.
7. Expect more apologies – set piece ones, huge media moments.
In this crisis, VW must show above all else how sorry and bothered it is about what has happened. In many contemporary situations the press conference as a communications vehicle is dead – it minimises your control over a situation – but for VW it will be an essential tool in the coming days and weeks to maximise global media reach. Having its leading figure able to communicate in English and German is essential.
8. It might not look like it – but a crisis management plan is underway – right now and at some point – VW will attempt to take proactive control of the media news agenda, and map out the next phase of this story.
PLMR has trained global companies originating out of Germany as recently as this year. We also know German and US business culture. We and our partner agencies across the world advise many big brands. Millions are spent every year by companies such as VW on crisis management plans. Huge systems are put in place and large amounts of time is invested to allow the company to be as prepared as possible for moments like this. BUT you cannot prepare for the specifics of a crisis. Systems and processes are great and VW has those in place yet what will decide the future of the brand are the decisions that VW cannot prepare for. When to intervene? When to go public with what VW uncovers internally? What explanation to give? How to best keep so many upset stakeholders informed? Crises can be moved on by those involved.
9. Volkswagen needs a new amazing figurehead to take control of its crisis response
The former Volkswagen Group CEO Martin Winterkorn has left the business. It is a good move for the company although clearly tough for him. The person at the top is ultimately responsible and his early departure yesterday afternoon gave the media something to report, filled a small part of the fact vacuum, and showed the company is taking this seriously. Every crisis needs a man or woman at the top leading its response. You cannot underestimate how distressing this crisis is for German business and politicians. VW is so trusted and a cause of national pride. The person chosen to lead the next phase of the response for VW has to exude competence, compassion, and authority from every fibre of their being – especially in the coming 72 hours.
10. Expect the unexpected.
This story is striking in its scale and its potential to unfold in so many directions. Cars allowed to emit 40 times the legal level of emissions. A US located crisis that threatens if unmanaged to damage work elsewhere in the world to make diesel a more sustainable cleaner fuel. The close involvement and huge influence of German politicians with and on VW – both at a federal and regional level. The numbers of cars being recalled. The potential for sensational information leaks at any level of VW. The list is endless. This crisis has denouements that we cannot imagine today. VW’s crisis response is live across the globe right now feeding into VW’s HQ hourly and it is a response that will need to be nimble enough to cope with the unexpected as the next hours days and weeks unfold.