Ethical leadership – corporate culture and governance hand in hand
Business and ethics are not opposites, but go hand in hand. For companies, this is both an aspiration and a challenge. Audi recognizes its economic, ecological and social responsibility and has aligned itself accordingly – with the “Vorsprung 2030” strategy, a firm commitment to sustainability and binding ethical principles for corporate governance.
Thus, compliance and integrity are an integral part of all business processes and decisions within the Premium brand group. For this to work, it is crucial to have a corporate culture based on shared values.
The Compliance Management System
The Compliance Management System is divided into 7 core elements and combines aspects of compliance and integrity.
» Integrity management
» Preparation/communication of the Code of Conduct
» Promotion of a tone from the top and a tone from the middle
» Preventive advisory function as the Second Line
» Recording and evaluation of compliance risks in the company
» Development and review of countermeasures
» Risk prevention in compliance focal areas through target group-specific and needs-oriented consulting, communication and training measures
» Roles and responsibilities of the compliance and integrity functions
» Structure of the compliance organization within AUDI AG as well as at relevant subsidiaries
» Defined reporting lines to the Audi Board of Management, the Group Board of Management and the Group Chief Compliance Officer
» Risk-based compliance communication and training measures
» Monitoring of compliance measures within the divisions and at subsidiaries
» Continuous and lasting improvement of the CMS
The four corporate values at Audi are:
They foster a trustful working environment that enables successful collaboration, especially in times of fundamental change – collaboration between employees and managers as well as between the company and its customers, business partners and stakeholders.
Elke Neidlein, Head of Integrity Management, Anna Ehret, Head of Corporate Culture, and Prof. Dr. Miriam Müthel from WHU Düsseldorf, a university that provides academic support to Audi in the area of integrity management, explain why responsible corporate governance and a corporate culture based on values are key success factors for AUDI AG.
Legislators, markets and stakeholders provide companies with a framework for legally compliant and ethical conduct – and this is where our work comes in. In our governance role for compliance, integrity and risk management, we mitigate legal and financial risks for Audi, prevent possible misconduct and protect the reputation of our company. A concrete example of this is the Act on Corporate Due Diligence Obligations in Supply Chains, which is based on the UN Guiding Principles on Business and Human Rights and holds companies accountable.
We have long since established effective tools for responsible corporate governance. Among them are our Compliance Management System and our Integrity Management, as well as the Audi Code of Conduct. All employees – whether they are members of the Board of Management or skilled workers – must commit themselves to these principles. All of these tools are being continuously refined using synergies within the Volkswagen Group.
But that is not all. More than anything else, it is our values that make us trustworthy partners for our stakeholders. Integrity, one of the four Audi values, is also a key skill for successful, sustainable and responsible corporate governance. And that is precisely what we have committed ourselves to in the ESG (Environmental, Social, Governance) field of action of our “Vorsprung 2030” strategy, which is founded on integrity and compliance.
For us, acting with integrity is also important when it comes to procuring raw materials and working with suppliers. Product integrity, too, is an integral part of our brand pledge. Our customers can rely on us to ensure that our products comply with internal requirements, laws, regulations and standards at all times. In addition, a conscious approach to data and artificial intelligence also requires a sound understanding of digital ethics.
If business and ethics go hand in hand, ethical conduct and leadership must be part of our corporate culture. This means we need new and additional skills. In our Integrity Skillset training, for example, we teach future managers how to make ethical decisions in an increasingly complex environment and how to lead with values and consequences in mind. By showing them how to resolve dilemmas and act as a role model as managers with integrity, we also contribute to a value-based culture at Audi.
Effective, responsible corporate governance is based on a balanced interplay between systems, regulations and process logic on the one hand and soft factors such as corporate values and culture on the other. All this is essential for the success of our company.
What the following terms mean for Audi…
Compliance is understood by the Audi Group to mean the observance of legal provisions, internal company policies and voluntary commitments by the company, its bodies and employees.
Integrity for Audi means responsible, entrepreneurial action geared towards values and principles that are recognized in society and agreed on within the company.
Together for Integrity (T4I) is a global compliance and integrity program of the Volkswagen Group and its brands. With comprehensive tools and various communication and participation formats, it supports the effectiveness of the measures derived from the US Monitorship as a consequence of the diesel issue. AUDI AG has rolled out the program in more than 40 subsidiaries and participations worldwide. The companies will implement the program individually and sustainably on their own responsibility and according to a defined schedule by 2025.
Corporate Culture at Audi describes the shared values that guide the actions of all employees. The Audi corporate values and the Leadership.Compass with its clusters “Be a role model, be a coach, be a pioneer, be an entrepreneur” serve as orientation to help them put this into practice in their daily work.
A value-based corporate culture characterized by trustful leadership and collaboration on an equal footing is a genuine success factor for Audi. We want a culture based on appreciation, openness, responsibility and integrity that also supports our transformation. In this way, we contribute to “People & Culture,” one of the building blocks that form the foundation of our “Vorsprung 2030” strategy. Our way of leading and collaborating is characterized by “empowerment & ownership.”
What this means in concrete terms is that through empowerment, superiors give their employees more room to act and make decisions, thus encouraging independent, self-effective work. At the same time, there needs to be ownership – in other words, employees who are willing to take on personal responsibility. Only if both of these aspects are actively practiced can Audi employees use their skills to contribute optimally to the company’s success.
The key to this is a working environment that offers psychological safety and orientation, a place where different opinions are welcome, calculable risks are taken and mistakes are seen as opportunities to learn. We have already achieved a considerable amount in this respect. Moreover, a culture of trust is essential in order to retain employees and attract specialists and experts.
Of course, Audi, like many other companies, is traditionally defined by technical and financial key figures. Leadership and culture cannot be measured comprehensively, but here, too, we have developed specific key performance indicators (KPIs) such as the Leadership Indicator, which is based on the annual employee survey. This indicator is also specified in the target agreements of our top decision-makers.
Being a manager at Audi means being a role model, coach, pioneer and entrepreneur. We have incorporated this into the Leadership.Compass, our central definition of leadership. To translate this into day-to-day practice, we offer a wide range of tools for managers to examine their own leadership behavior in a confidential setting. For example, we have introduced a 360-degree feedback system that allows participants to obtain feedback from employees, colleagues and their own superiors. The managers find this to be a very valuable way of reinforcing strengths and working on personal fields of action.
Our understanding of leadership is reflected in our HR processes – from the selection of our employees to performance appraisals and development. After all, “We are progress” is not only our motto to present Audi as an attractive employer; above all, it serves as motivation for the people who make Audi what it is today and in the future.
Ethical leadership is not only a social mandate but also a success factor in corporate activity. Current studies show a strong connection between ethical leadership and the satisfaction of employees with their task and their superior. Managers who act with integrity are seen to be more trustworthy and more effective. They also contribute to a corporate culture defined by integrity, which in turn increases identification with the employer.
These insights are all the more relevant for companies and their decision-makers as they face increasing pressure from political conflicts, the digital transformation as well as from climate change and increased competition. Even under these conditions, for them it is a question of harmonizing economic targets and ethical conduct.
Managers therefore need clear guidance on values and must be in the position to implement these values. Ultimately, it is action and not intention that counts. Empirical research confirms that most people are intrinsically motivated to act compliantly and with integrity. However, they are often unable to see how they can attain both corporate and moral targets simultaneously.
This is where research can provide valuable approaches for everyday practice. In scientific terms, there are six skills that enable those in positions of responsibility especially to act with integrity, even when faced with a dilemma.
The Integrity Skillset trains the following skills:
- Recognize early signs of misconduct within the company
- Identify moral and legal dilemmas and understand the overall situation
- Recognize different action options and identify solutions
- Systematically prepare and take moral decisions
- Avoid pseudorational action and act accordingly
- Critically question individual and company misconduct and learn from mistakes
The Integrity Skillset can provide managers with sustained support in practicing the values in their daily business activities and setting an example. It is therefore now an element of leadership training at Audi.
The Integrity Skillset
The Integrity Skillset
The Integrity Skillset which Prof. Dr. Miriam Müthel developed in collaboration with Volkswagen under the Together4Integrity program, is now an established part of leadership training at Audi. It comprises six ethical leadership skills.
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