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VW has always known that there is a commercial benefit to developing a trustworthy and reliable brand. The motor car manufacturer has used the values of trust and dependability in its marketing for years. And it has had huge success.
Then, last week, the balloon went up and all that hard work disintegrated practically overnight. The German car giant admitted cheating emissions tests in the US after an investigation by the Environmental Protection Agency (EPA). Some cars being sold in America had devices in diesel engines that could detect when they were being tested and changed the car’s performance accordingly to improve emissions test results.
The company recalled 500,000 cars in the US and the scandal as spread like a contagion. The UK, Italy, France, South Korea, Canada and Germany are opening investigations. In the UK 1.2 million vehicles, including VWs, Seats, Audis and Skodas are involved.
VW has set aside £4.7bn to cover the costs and could now face legal fines of many more billions as well as the biggest class action in legal history.
So how do you come back from such a monumental meltdown in trust? The first thing to do is to be honest, put your hands up and admit your failings. In the world of social media, reputations can be ruined in a viral flash so businesses have to be quick to act on complaints and crises.
VW America boss Michael Horn, couldn’t have put it more succinctly when he said: "We've totally screwed up.”
Group chief executive Martin Winterkorn said his company had "broken the said trust of our customers and the public".
Honest admission is vital if you are to gain forgiveness from your customers or clients.
The second thing to do is to take measures to stop the problem escalating and then to rectify it where possible, which VW did by recalling cars. At the very least it will need to remove the contentious devices from all its cars.
While the trust that the company built is in tatters, VW can still retain some reputation by acting transparently and co-operating publicly and openly with the investigations which will now take place.
In the commercial world, where consumers have a natural bias towards cynicism; trust and honesty are hard-won attributes for any brand. Studies have shown that consumers who trust brands are 80 percent more likely to recommend them to others. And 50 percent of people are willing to pay a premium for a product they trust.
Trust is difficult to quantify when it comes to products and services; people trust brands they believe are competent and reliable. They trust people who they believe are authoritative and genuine. These are all qualities that can be embedded in workplaces through the right training and development.
For VW the consequences of its loss of trust will be long-standing and serious. Some commentators wonder whether it will ever fully recover and the legal implications will grind on through the courts for years.
As Professor Dr. Ferdinand Dudenhoeffer, expert at the Automative Research Centre in the University of Dusiberg Essen explained: "This scandal will have considerable consequences for Volkswagen. The trust and belief in the brand is fundamentally shocked. A company needs a new beginning then, a company cannot go further like before."
The first step in building trust is honesty – even if it’s not great news
The second step is to know what information to share, when to share it and when not to share it.
Consistency should come in in words and behaviours. It's not enough to just say you want to speak to everyone and have an open door policy.
Self-serving agendas in organisations can cast doubt on trustworthiness. In reality, everyone has self-serving agendas, but it is the level of that self-interest that determines the level of trust in that person. To increase trust:
Trusted leaders are sorely needed. Leaders should be able to: