Narcissistic CEOs and Organizations:
The Case of Martin Winterkorn and Volkswagen
by Pia Baum
University of Groningen Faculty of Economics and Business
Research Paper for Pre-MSc IB&M (EBS014A10)
Abstract
The following paper deals with narcissistic leaders and organizations and the consequences that may have, specifically the former Volkswagen CEO Martin Winterkorn, and Volkswagen itself will be looked at. The DSM-IV criteria will be used to structure the secondary information, especially considering the Dieselgate scandal from 2015. After carefully evaluating each characteristic processed as hypotheses, the conclusion can be drawn that Winterkorn can be categorized as being a grandiose, sub-clinical narcissist who had a great influence on Volkswagen, who is categorized with the arrogant organizational disorder and VW has since tried to trigger cultural change within.
Key words: Narcissism, Leadership, Organization, Winterkorn, Volkswagen Research theme: Narcissistic CEOs and Organizations
Table of Contents
1. Introduction and Central Research Question ... 4
Initial Motive ... 4
Problem Description and Analysis ... 4
Central Research Question ... 5
Research Questions ... 5 Method ... 6 2. Literature Review ... 7 Theoretical Concepts ... 7 Case Information ... 15 3. Hypotheses ... 22 4. Research Plan ... 25 Sample ... 25
Measurement and Measures ... 25
Research Design ... 26
Analysis ... 26
5. Results and Discussion ... 27
6. Conclusions and Recommendations ... 28
1. Introduction and Central Research Question
This paper will deal with narcissistic leaders and the narcissistic organizations and its connection. After discussing the theoretical background, a closer look will be taken into the specific example of former Volkswagen CEO Martin Winterkorn as well as Volkswagen itself, and whether the description of a narcissistic leader and a narcissistic organization applies.
Initial Motive
An important part of an organization’s success is its leader. People like Bill Gates or Steve Jobs have characterized their organization and with their personalities have heavily influenced them. Throughout the past the focus had mainly been put on the effects of positive, heroic leadership styles while now in recent year more and more research has been done on different leadership styles, also in hindsight of organizations like Enron or the Lehman Brothers collapsing together with their destructive CEOs who feel on top of the world with a sense of entitlement (Higgs, 2009; Stein, 2014). Those narcissistic leaders are characterized as having low levels of empathy as well as emotional intimacy which then lead them to act in questionable ways (Brain, Campbell, Campbell, Hoffman, Marchisio, 2011). Both good and bad leadership has been identified along with the fact that traits of narcissism can be encountered amongst multiple leaders across the world and has been labelled as a critical issue (Higgs, 2009; De Vries, 2004). However, contrary to what one might think at a first glance, many of those narcissists build up a well-functioning career for themselves despite their behavior.
This paper will have a closer look at what defines a CEO and an organization as narcissistic and its effects. Specifically, the paper will focus on Volkswagen and Martin Winterkorn, the former CEO, assessing their narcissism in light of the Dieselgate. The case was chosen due to the global impact and the still ongoing case discussion regarding the accountability.
Problem Description and Analysis
scandal apologized but refused to take accountability, saying he had no idea what was going on within the organization and at first dismissed the possibility of stepping down as a CEO. He is currently being charged with aggravated fraud in Germany and is under indictment in the US (Taylor, 2017). Throughout the whole scandal, also before, different voices were labelling Winterkorn as a narcissistic leader due to his leadership style and that his behavior also had an effect on the company and contributed to the Dieselgate (Reuters, 2015). Whether Winterkorn and Volkswagen actually fall under those accusations will be analyzed in this paper.
Central Research Question
Was Volkswagen’s former CEO Martin Winterkorn a narcissistic leader and is Volkswagen itself a narcissistic organization?
Research Questions
The research questions are split in theory questions and case questions.
1. What is narcissism? – Description and Definition
2. What are the characteristics or symptoms, and types of narcissism? 3. What is a narcissistic leader?
4. What is a narcissistic organization?
5. How does a narcissistic leader influence the organization? 6. What are the short-term and long-term effects of this influence?
7. How can a narcissistic leader and narcissistic organization be identified, diagnosed and measured?
Method
The paper will gather its needed information through different sources. Secondary data from credible sources such as the Journal of Change Management and others will be used (see chapter 7, references).
In chapter 2, existing literature will be reviewed to create a theoretical background on the overall topic of narcissism amongst leaders and organizations. More secondary data, German and English newspapers, will be used to gather information regarding the case of Volkswagen and Winterkorn.
2. Literature Review
In the following the theoretical background will be developed and the research questions will be elaborated on one by one with the help of previously published research.
Theoretical Concepts
Narcissism. As the main topic of the paper is narcissism, it is important to start off with
a definition and explanation of the term. Narcissism itself stems from the narcissism personality disorder (NPD) which “is defined as comprising a pervasive pattern of grandiosity (in fantasy or behavior), a constant need for admiration, and a lack of empathy, beginning by early adulthood and present in a variety of contexts” (Ambardar, 2018).
The American Psychiatric Association (APA) defines narcissism as a person who has “a pervasive pattern of grandiosity, need for admiration and lack of empathy“ (APA, 2000: 717). The definition of the APA relates to the later on in detail explained DSM-IV-R criteria, and is seen as the standard, as well as the most important definition of narcissism. Definitions of other authors can be found in Appendix 1, page 37.
Characteristics, symptoms, and types of narcissism. In order to determine whether a
person is a narcissist or not, it is important to look at the characteristics or symptoms that define a narcissist, which will be done through the psychology approach of the issue.
The previously mentioned DSM-IV-R stems from the APA’s Diagnostic and Statistical Manual of Mental Disorders (Goldman, 2006). The book defines and classifies different mental disorders, such as the narcissistic personality disorder (NPD), with the goal to possibly improve the diagnosis and treatment of such disorders and contribute to overall research (APA, 2020). In the DSM-IV-R nine factors are presented who describe characteristics that can be found amongst narcissist. When it comes to diagnosing people, a person needs to match at least five of the below mentioned nine criteria in order to be diagnosed with the narcissistic personality disorder, but, “importantly, however, the narcissism must also cause distress or impairment” (Campbell, et al., 2011: 269). The criteria goes as followed:
(1) „Grandiose sense of self-importance
(3) Belief in “special” or unique status (including fixation on associating with high-status people or institutions)
(4) Requirement for excessive admiration
(5) Unreasonable sense and expectations of entitlement (6) Interpersonal exploitativeness
(7) Lack of empathy (8) Envy
(9) Arrogant behaviors or attitudes“ (APA, 2000)
There are two types of narcissism which can be differentiated:
Clinical narcissism: describes a person who severely suffers from his own narcissistic behavior and seeks professional help, which, however, is very unlikely. That person can be diagnosed with the narcissistic personality disorder.
Sub-clinical narcissism: a person with sub-clinical narcissism does not acknowledge his behavior in a negative way and does not suffer, while at the same time it may have a negative influence on his surrounding and other people may suffer from it. Sub-clinical narcissism can either be at a healthy or destructive level of influence on an organization, a possible problem is often the short-term success and the following long-term dilemma (Campbell, et al., 2011). Even though that person might match some of the DSM-IV-R criteria, the situation does not cause him any distress and is, therefore, not categorized as NPD. The focus of this paper will be set on the sub-clinical narcissism.
In general, there are two types of narcissists, grandiose and vulnerable narcissists, based on different combinations of characteristics. This paper will focus on grandiose narcissists.
Vulnerable narcissism on the other side “entails pronounced self-absorbedness, but apart from that, goes along with self-consciousness, social insecurity, and defensiveness“ (Benedek, et al., 2017) and will be perceived as being defensive people who tend to stick to themselves (Benedek, et al., 2017). They are more likely to reach out to psychotherapy since the vulnerable narcissism is linked to borderline personality disorder (Campbell, et al., 2011).
Narcissistic leaders. A narcissistic leader is a person whose characteristics can at least
partially be matched to the DSM-IV-R criteria or fits the overall definition of a narcissist while and at the same time are in a leading position such as for example the head of state, the CEO or any other position which is connected to some kind of power (Rosenthal & Pittinsky, 2006; Ambardar, 2018).
The major difference that should not be forgotten between a “normal” person and a narcissistic leader is the amount of influence they have. In times of leaders such as Steve Jobs, Harvey Weinstein and Donald Trump, we have seen the major influence they can have not only on their organization, but far beyond that, which also comes along with power that can lead to destructive consequences. Nowadays business has much more importance in people’s lives with its leaders often being presented as being visionary and charismatic (Maccoby, 2004). The famous quote by Lord Acton from 1887 describes the dilemma pretty well: “Power tends to corrupt, and absolute power corrupts absolutely,” (Dalberg, 1887). However, both good and bad leadership can stem from a narcissistic leader.
Leaders can be differentiated into having productive and unproductive narcissism.
An example from the business world for a productive narcissist is Jack Welch. People like him are characterized by being “gifted and creative strategists who see the big picture and find meaning in the risky challenge of changing the world and leaving behind a legacy” (Maccoby, 2004: 93). Those leaders have the ability to push for change while being overly charasmatic.
When it comes to the management styles of leaders, Mintzberg presented two possible ones, heroic and engaging management. When it comes to heroic leaders, they are known to present magnificent strategies, engage in risky deals and promise shareholders amazing results. All those characteristics can also be connected to a narcissistic leader, meaning they usually engage in heroic management rather than being engaged in the organization and trying to create a better working environment for everyone (Basu, Mintzberg, Simons, 2002).
Narcissistic organization. Narcissism cannot only be encountered amongst individuals
but also as an organizational personality with its own moral identity (Duchon & Drake, 2009). Organizational personality refers to different individual personality structures working together and developing the groups personality and is overall way less specific than individual personality. An organization develops its own belief system of good and bad, telling its employees how to behave and what person they have to become in order to rise in the organizations ranks. That organizational personality can be narcissism one (Hamedoğlu & Potas, 2012). According to Hamedoğlu and Potas (2012: 54) “organizational narcissism might be healthy or pathological“.
A different definition provided by Allcorn and Godkin (2009) connects interruptions in learning with arrogant organization disorder which again is associated with the DSM-IV-R criteria. „The arrogant organization suffers from a distorted world view and view of organizational life“ (Allcorn & Godkin, 2009: 46) and thereby, blocks them from unlearning unproductive behavior. Moreover, an arrogant organization is highly limited in learning from international joint ventures. According to the article, individual narcissistic leader behavior can heavily influence organizational or group behvaior due to the fact that “social networks propagate leadership attitudes“ (Allcorn & Godkin, 2009: 41). The employees are heavily influenced by group expectations and will act accordingly, following the premises made by the management (Allcorn & Godkin, 2009).
(1) „Exceptional pride is held for the organization, its accomplishments and great hope is held for future successes. Leaders see few limitations regarding what may be accomplished and are not inhibited as to how to accomplish goals.
(2) Feelings of exceptional entitlement support exploitiveness of others, customers and the public interest.
(3) When excessive pride is threatened and the pursuit of goals frustrated envy and rage arise. The leader or management group becomes hyperactive and willing to expend limitless time and energy to succeed and win out over rivals including aggression often tinged with sadism and revenge.
(4) There is a history of firings and demotions and of non-supporters and resistors being banished to internal organizational Siberias. Resistance is a threat and will not be tolerated.
(5) Management by intimidation is common.
(6) Fear suppresses accurate reality testing and creativity.
(7) Filtered information flows alter organizational reality and magical thinking is present. Operating problems it may be seemingly thought will pass without taking action to resolve them. It is too dangerous to confront management behavior that contributes to problem generation and perpetuation.
(8) Others are frequently blamed and scapegoated.
(9) The sense of mood within the organization is unpredictable where one day a great success is celebrated and a week later there exists despair over not achieving the smallest of goals.
(10) Many in the organization are alienated from the organization and its leadership group preferring to hide out in their foxholes (offices and cubicles).
(11) In and out group dynamics are polarized and there is considerable evidence of distressing and destructive internal competition and open warfare.“ (Allcorn & Godkin, 2009: 45-46)
Influence of a narcissistic leader. There are some major areas where the narcissistic
question how he influences the organization can be answered simply by saying that his opinions and views will be delegated and pushed onto others and the organization overall.
A narcissistic CEO can have multiple different aspects that can positively and negatively influence the organization. According to Deutschmann (2005) they can be visionaries and thereby, great innovators and inspire and charm many people which will then lead to them rising up the ranks fast and pursuing their interests and opinions (Rosenthal & Pittinsky, 2006; Chatterjee & Hambrick, 2007).
They are also known to engage in bold or unconventional actions which can lead to great success for the organization but also to great losses, which can also be described as strategic dynamism as they prefer to try out other paths. Moreover, the narcissist’s increased tolerance of risk can be a reason as to how he influences the organization as it has a direct effect on his behavior. The strategic decisions made due to the CEO’s narcissistic characteristics can be poor, as “they will search for the novel and dramatic” (Chatterjee & Hambrick, 2007: 358) option rather than the most obvious on, but again that can also turn into a big win. As stated by Rosenthal and Pittinsky (2006: 622) “their visions are grand ones, because they are inspired by a personal need for power, glory, and a legacy“. With such actions, which are based on the narcissistic leader’s personality, he can heavily influence the strategic direction of the organization as well as the way the company is perceived by the press. Moreover, his way of doing business will be taken up from his employees and reproduced, just like his behavior overall will influence the employees and any of their future actions (Guo, Liao, Li, Zhou, 2019). Due to the employees in an ongoing process having to feed their leaders ego and stick by the created rules, no matter what, CEO’s also take great influence (Lubit, 2002).
When it comes to how he influences the public face of the organization one can recognize that as the leader he will present the company at for example press conferences, business fares or in their advertisement. Since he is the face of the organization, he steers the picture by the way he acts.
Short- and term effects. A narcissistic leader can have different short- and
long-term effects on his organization. There are good and bad aspects of the leader being a narcissist, it can be seen as a trade-off. There is a reason why at the top of many organizations one can find narcissists (Campbell, et al., 2011). Having narcissistic traits makes them a “stronger, more driven leader with tremendous charisma, creativity, and power” (Rosenthal & Pittinsky, 2006: 622). There are different, closely related, categories which can be recognized such as: the strategic direction, its effects; the performance and also HR effects.
When it comes to the strategic direction, due to their need for great admiration and fast successes, narcissistic leaders tend to engage in highly risky actions which can turn into great success and improved performance, however, there is a great chance there will be negative outcomes, both short- and long-term. It is very common to have short-term success, followed by a long-term dilemma. According to Rosenthal and Pittinsky (2006: 622) “when they do not like the rules, they ignore, or even change them”. The misuse of that power can have dramatic consequences. An example would be when narcissists make use of the organization for their own benefit like for example channeling off money such as for example Russ Wasendorf did, which then led to the collapse (Chatterjee & Hambrick, 2007; CBS, 2013). Moreover, grandiose narcissists are usually hypersensitive, which can lead to escalating situations, for example the Cuban Missile Crisis with John F. Kennedy and Fidel Castro being involved (Steinberg, 1991).
Narcissists are more likely to engage in risky and unnecessary deal to receive public attention to satisfy their needs which in the long-run can destroy influence shareholder value (Chatterjee & Hambrick, 2007).
2002). Leaders need to recognize, “that employees are not one- dimensional creatures who park their human nature at the door when they enter the workplace“ (De Vries, 2004:188)
As already mentioned, narcissistic leaders engage in strategic dynamism which already alone is risky. However, research has also shown, that CEO as well as top management team tenure are usually negatively correlated with strategic dynamism (Chatterjee & Hambrick, 2007). According to Rosenthal and Pittinsky (2006: 619) “Narcissists are notoriously poor, overinvolved, and abusive managers“ which has a big influence on the working environment. They take all credit for success while the fault is solely blamed on others (Rosenthal & Pittinsky, 2006).
Especially when it comes to performance effects, they are difficult to separate from the strategic and HR effects. According to Lubit (2002) due to the employees constantly having to feed their leaders CEO and having to stick to his rules can heavily impact the productivity in the long-run. The grandiose visions the narcissist has, and his creative plans can lead to great losses, but also to great wins. It is hard to give exact predictions on what effects it will have in the short- and long-run; one can make the assumption that fluctuations along with strategic dynamism will create a lot of change, ups and downs within the organization (Rosenthal & Pittinsky, 2006; Chatterjee & Hambrick, 2007).
Fluctuations in performance are common for those CEO’s and their organizations. His want for highly visible actions can result in for example major acquisitions or other business engagements even though that might destroy shareholder value. However, such action cause big publicity, while simply making the organizations internal process more effective will not, and is therefore, left to the side (Chatterjee & Hambrick, 2007).
Identifying, diagnosing and measuring narcissistic leaders and organizations. There
are many ways to measure whether a leader or organization is narcissistic, this paper will focus on the previously presented DSM-IV criteria which helps diagnosing the narcissistic personality disorder and identify the characteristics (Dreher, 2018). An NPD is diagnosed when at least five of the nine criteria are met, and the person feels distress over himself acting that way. However, when less than five but still some are met or the person simply does not suffer from his condition, sub-clinical narcissism is indicated (APA, 2000; APA, 2020). When it comes to measuring the NPD, the narcissistic personality questionnaire by Motter (2009) can be used, which consists of 102 items based on the DSM-IV.
When it comes to identifying, diagnosing and measuring narcissistic organizations, we use the criteria by Allcorn and Godkin where when seven of the given eleven are met, we are able to diagnose the arrogant organizational disorder (2009). Hamedoğlu and Potas (2012) also developed an organizational narcissism scale which can be used in order to measure the level of narcissism within an organization.
Case Information
After having build a theoretical background, information regarding the case will now be presented and structured with the previously stated criteria, DSM-IV for individuals, and the Allcorn and Godkin criteria.
Winterkorn. In the following each criteria of the DSM-IV by the APA will be
investigated on in relation to the former Volkswagen CEO Martin Winterkorn, who took over in 2006 until his resignation in 2015
(1) ”Grandiose sense of self-importance”
(2) ” Preoccupation with fantasies of unlimited success or power”
When Winterkorn took over as a CEO in 2006, he set the challenging and ambitious goal to become the world’s largest carmaker by 2018, called “Strategie 2018” (Volkswagen, 2010). He did reach that goal in 2015, but at which cost (Cremer & Funakoshi, 2015; Fielkow, 2015). His plan was seen as aggressive and “Skeptics may snicker that Winterkorn's grandiosity is delusional“ (Muller, 2013). Now one knows the costs were huge, despite the success, the way Volkswagen reached that position is questionable.
(3) “Belief in “special” or unique status“
Winterkorn definitely believed that his position as the CEO of Volkswagen gave him a unique status and left him in the position to think that no one was allowed to criticize him and his way of going about business
(4) “Requirement for excessive admiration“
Winterkorn wanted to continue the great success of the previous CEO Ferdinand Piech, he wanted to be even more successful and to be known for that. Now his legacy seems to be stained forever (Fielkow, 2015).
(5) “Unreasonable sense and expectations of entitlement“
(6) “Interpersonal exploitativeness“ (7) “Lack of empathy“
The two above mentioned criteria are heavily related in the case. Winterkorn was known to be a very demanding boss with an authoritarian management style who despised failure which also contributed to the climate of fear within the organization. A “no-failure” and “growth at all costs” culture was developed within Volkswagen driven by Martin Winterkorn (Glazer, 2016; Fielkow, 2015; Reuters, 2015). Promising thousands of people that Volkswagen‘s cars are “cleaner” and better for the environment while actually doing the opposite is dreadful (Epstein, 2017).
(8) “Envy“
When it comes to envy, one can argue that Winterkorn was definitely envious of Toyota’s success and their market leading position among car makers. When the engineers following the “clean” way could not compete with the competitors, other ways had to be found in order to boost sales (Epstein, 2017; Ruddick, 2015).
(9) “Arrogant behaviors or attitudes“
Volkswagen. Just like the previous section, each of the Allcorn and Godkin criteria for
the arrogant organizational disorder will be individually addressed in regard to Volkswagen. Some information is overlapping.
(1) “Exceptional pride is held for the organization, its accomplishments and great hope is held for future successes. Leaders see few limitations regarding what may be accomplished and are not inhibited as to how to accomplish goals.“
Both Piech and Winterkorn had great visions for Volkswagen which at the beginning of their area seemed impossible and critics labeled it as impossible. Against the critics they did reach the goal of becoming the biggest carmaker in 2015, however, the part of being the most sustainable producer was nowhere to what they would have wanted people to believe (Cremer & Funakoshi, 2015; Fielkow, 2015).
(2) “Feelings of exceptional entitlement support exploitiveness of others, customers and the public interest.“
According to David Bach, a senior lecturer at the Yale School of Management, the predominant self-righteousness within Volkswagen had a big influence (Ewing & Bowley, 2015). Looking at the Dieselgate, many employees at Volkswagen had no moral problems with exploiting the customers and polluting the environment to a way higher extent.
(3) “When excessive pride is threatened and the pursuit of goals frustrated envy and rage arise.“
(4) “There is a history of firings and demotions and of non-supporters and resistors being banished to internal organizational Siberias. Resistance is a threat and will not be tolerated. “
Cases such as the let go of Daniel Donovan, who accused Volkswagen of firing him after he refused to take part in the cover up, are known (Noecker , 2016). However, due to the lack of data, and VW stating something different, the case could not be resolved. There is another example which can be named, which relates to employees being pushed out. In 2012 the head of VW’s China operations was moved from his position, “partly because of an embarrassing quality problem with new gearboxes in its cars“ (Muller, 2013).
(5) “Management by intimidation is common.“
When it comes to the management style at Volkswagen, one has to mention the patriarch of the founding family Porsche/Piech, Ferdinand Piech, who switched to VW in 1993. From there on transformed Volkswagen into the massive organization it is nowadays. However, with his roughed-up personality, his self-declared struggle with empathy, and reputation of being an aggressive and demanding manager who says he will fire anyone who does the same mistake twice, he heavily influenced Volkswagen and its organizational personality to the present day (Hetzner, 2019; Schudel, 2019). With his threats, high expectations, and autocratic management style, he created a climate of fear within the organization as well as to “a management style of concealment” (Schudel, 2019). German newspapers Handelsblatt and Deutschlandfunk labelled him a narcissist (Maack, 2011; Jakobs, 2017). The autocratic path that Piech started, Winterkorn simply continued which lead to the organizational personality to form in that way.
(6) “Fear suppresses accurate reality testing and creativity.
Throughout the 20 years under Piech and Winterkorn “Volkswagen had become a place where subordinates were fearful of contradicting their superiors and were afraid to admit failure“ (Ewing & Bowley, 2015). As already mentioned in previous sections, a climate of fear was fostered within the organization, that shaped the overall atmosphere and also had a great influence on the Dieselgate scandal. Many people must have been involved in a scheme as big as this, still it went on for quite a while and no one really blew the whistle.
One of his employees is quoted saying that Winterkorn “doesn't like bad news. Before anyone reports to him, they make sure they have good news." (Muller, 2013)
(8) “Others are frequently blamed and scapegoated.“
Within Volkswagen it is common to shift the blame towards others. In the case of the Dieselgate, one can see that at first it was tried to shift the blame downwards within the organization (van Erp, 2018).
(9) “The sense of mood within the organization is unpredictable (…)
(10) Many in the organization are alienated from the organization and its leadership group preferring to hide out in their foxholes“
The 9th and 10th criteria are both cases where either no reliable information is given or does not really apply to Volkswagen as an organization. Further inside information would be needed to elaborate on the above.
(11) “In and out group dynamics are polarized and there is considerable evidence of distressing and destructive internal competition and open warfare.
Preliminary conclusion. After reviewing each characteristic with overall regard to the
research question one can overall conclude that Winterkorn is a sub-clinal grandiose narcissist. For most of the criteria, information supporting the criteria can be found which leads to the result. At this point at least five of the characteristics seem to be fitting Winterkorn very well.
3. Hypotheses
The Hypotheses can be divided into two major groups, concerning Winterkorn as an individual, and Volkswagen as a whole organization.
First set, based on the DSM-IV-R criteria:
H10: Winterkorn has a grandiose sense of self-importance H11: Winterkorn does not possess this characteristic
H20: Winterkorn has preoccupation with fantasies of unlimited success or power H21: Winterkorn does not possess this characteristic
H30: Winterkorn has a belief in “special” or unique status H31: Winterkorn does not possess this characteristic
H40: Winterkorn has a requirement for excessive admiration H41: Winterkorn does not possess this characteristic
H50: Winterkorn has an unreasonable sense and expectations of entitlement H51: Winterkorn does not possess this characteristic
H70: Winterkorn lacks empathy
H71: Winterkorn does not possess this characteristic H80: Winterkorn is envious
H81: Winterkorn does not possess this characteristic
H90: Winterkorn has arrogant behaviors or attitudes H91: Winterkorn does not possess this characteristic
Second set, based on the Allcorn and Godkin criteria:
H10: Volkswagen has exceptional pride for itself, its accomplishments and great hope for future successes
H11: Volkswagen does not possess this characteristic
H20: Volkswagen has feelings of exceptional entitlement support exploitiveness of others, customers and the public interest
H21: Volkswagen does not possess this characteristic
H30: WhenVolkswagen’s excessive pride is threatened and the pursuit of goals, it frustrated envy and rage arise
H31: Volkswagen does not possess this characteristic
H50: Within Volkswagen management by intimidation is common H51: Volkswagen does not possess this characteristic
H60: Within Volkswagen fear suppresses accurate reality testing and creativity H61: Volkswagen does not possess this characteristic
H70: Within Volkswagen filtered information flows alter organizational reality and magical thinking is present
H71: Volkswagen does not possess this characteristic
H80: Within Volkswagen others are frequently blamed and scapegoated H81: Volkswagen does not possess this characteristic
H90: Within Volkswagen the sense of mood is unpredictable H91: Volkswagen does not possess this characteristic
H100: Within Volkswagen many are alienated, leadership prefers hiding H101: Volkswagen does not possess this characteristic
H110: Volkswagen has in and out polarized group dynamics, evidence of distressing, destructive internal competition, open warfare
4. Research Plan
After having conducted secondary research and gathered a theoretical background and some specific case information, a research plan to collect primary data will be designed. The plan, however, will not be executed for this paper but prepared under the assumption of full access to people. A market research company will collect the data.
Sample
As the research questions concern the situation within Volkswagen, a survey among current and former employees will be conducted. They globally employ around 650,000 people, which is why it is important that people from different levels of the organization participate such as for example Winterkorn, the current CEO Herbert Diess, but also engineers working in the US branch in order to be representative. Therefore, the first question should ask for the level within the organization. It is up to the participant whether he wants to fill in the surveys anonymous or not. A minimum of 180 answers should be collected, ensuring that different levels within the organization have been covered.
Measurement and Measures
The questions should be based on the DSM-IV, as well as the Allcorn and Godkin (2009) criteria in order to get information specifically to those characteristics and increase reliability (APA, 2000). Meaning there will be a minimum of 21 questions in the questionnaire. The answers should be based on a five-point scale, Likert scale, with an additional blank to fill in any additional comment the participant might want to make. It can be a mail survey, however, keeping in mind that responses from different levels and important people like Winterkorn are necessary. The survey will be provided in English, VW’s official language.
Example question:
Do you think that within Volkswagen management by intimidation is common? Strongly Agree – Agree – Undecided / Neutral - Disagree - Strongly Disagree
Research Design
The research can be described as deductive due to the fact that existing literature is used for analyzing the case study about Winterkorn and Volkswagen. Moreover, qualitative data is collected.
Analysis
Once the data has successfully been collected, it will be analyzed via the statistical tool SPSS and reported with regard to descriptive statistics.
Table 1 below shows in summary the different research activities which will be conducted:
Table 1 Research activities Chronological order Research activities
1 Development of questionnaire including pilot testing with 5 people (to increase liability)
2 Sending out survey to target group
3 Collection period (making sure different levels within VW and important people such as Winterkorn send in answers)
4 Send reminder
5 Close survey (only when min 180 answers have been collected)
6 Analysis via SPSS
7 Interpret outcome and compare with literature review
5. Results and Discussion
6. Conclusions and Recommendations Conclusions
After having done the research it time to conclude the answers to the research question which was formulated in the beginning:
Was Volkswagen’s former CEO Martin Winterkorn’s a narcissistic leader and is Volkswagen itself a narcissistic organization?
In order to give precise answers to both parts of the question, we will first take a look at Winterkorn and then Volkswagen as a whole. Both, however, are only preliminary findings based on secondary research and analysis. Conclusive findings can only be presented after acting out the research plan.
Winterkorn. Previously we have already evaluated each DSM-IV characteristic in
detail (see page 15). The outcome can be seen the table below, further reasoning can be found in Appendix 2 (page 37):
Table 2
Summary of DSM-IV characteristics applied to Winterkorn
Characteristic Winterkorn
Grandiose sense of self-importance NO
Preoccupation with fantasies of unlimited success or power NO
Belief in “special” or unique status NO
Requirement for excessive admiration NO
Unreasonable sense and expectations of entitlement YES
Interpersonal exploitativeness YES
Lack of empathy YES
Envy YES
Overall, we can see that Winterkorn possess five of the nine DSM-IV criteria, a high degree, and can, therefore, be categorized as a grandiose sub-clinical narcissist. He sees himself in a special position and above others, creating a climate of fear and not accepting failure with its lack of empathy.
Volkswagen. Again, a detailed look at each of the Allcorn and Godkin criteria in
relation to Volkswagen was taken earlier on (page 17), the following table shows the summary, further reasoning can be found in Appendix 3 (page 40):
Table 3
Summary of Allcorn and Godkin criteria applied to VW
Characteristic Volkswagen
“Exceptional pride is held for the organization, its accomplishments and great hope is held for future successes
YES
Feelings of exceptional entitlement support exploitiveness of others, customers and the public interest
YES
When excessive pride is threatened and the pursuit of goals frustrated envy and rage arise.
YES
There is a history of firings and demotions and of non-supporters and resistors being banished to internal organizational Siberias. Resistance is a threat and will not be tolerated
YES
Management by intimidation is common YES
Fear suppresses accurate reality testing and creativity YES Filtered information flows alter organizational reality and magical thinking is present. (…) It is too dangerous to confront management behavior that contributes to problem generation and perpetuation
YES
Others are frequently blamed and scapegoated YES
The sense of mood within the organization is unpredictable NO Many in the organization are alienated from the organization and its leadership group preferring to hide out in their foxholes
NO
In and out group dynamics are polarized and there is considerable evidence of distressing and destructive internal competition and open warfare“
We can conclude that overall nine of the eleven characteristics apply to Volkswagen, a high degree, which means they can be characterized as having the arrogant organizational disorder due to their distorted organizational climate.
To conclude and answer our initial research question we can say, that both aspects seem to be true. Martin Winterkorn was a narcissistic leader during his time as the CEO of Volkswagen, and Volkswagen itself is a narcissistic organization. However, to fully validate the statement though, primary data would first have to be collected in order to reach a conclusive outcome as previously stated.
A small remark to keep in mind when looking at the final conclusion is that one has to be aware of the great impact that the long reign of Piech had, who then was succeeded by Winterkorn, who picked up right at the same level. As CEO’s for a longer period, they both immensely shaped the organization and the organizational climate (Rijsenbilt, 2011). Another remark to remember is that Volkswagen is a huge corporation with many different branches and that maybe in some areas a different approach is taken, however, at the main core, which stems downwards from the CEO, a clearly narcissistic organization can be found.
Recommendations
Looking at the Dieselgate scandal we have the perfect example of where this narcissistic behavior, both within the organization and from the leader, can lead to and that change within the organizational culture needs to happen. Since Winterkorn was let go as a CEO and the whole scandal unfolded, Volkswagen has been in a process of fundamental transformation trying to become a more sustainable organization in the long run and creating a better working environment. The project Together4Integrity was launched in 2018 aiming at implementing long needed change and trigger cultural change. Regaining the customers, but foremost the own employees trust is the new priority (Volkswagen, 2020).
Volkswagen have already had a positive influence, and also more importantly to reach a conclusive outcome, the research plan should be acted out and a question should be added regarding the change in organizational climate since the Dieselgate.
Reflection
A limitation of this research is the lack of information regarding the current state of the organization and its climate which would have been collected through primary data. Much information regarding the anticipated change can be found, none regarding its effectiveness so far though. Hence, the characterization of Volkswagen as a narcissistic could be outdated by now.
Moreover, it is difficult to predict whether the negative organizational climate is the same in all locations, since Volkswagen has around 700.000 employees and production plants in 31 countries.
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Appendix Appendix 1
Many other definitions of narcissism can be found, such as the following chosen one with its three key aspects formed by Campbell and his colleagues (2011):
(1) The self: “the narcissistic self is characterized by positivity, “specialness” and uniqueness vanity, a sense of entitlement and a desire for power and esteem”
(2) Interpersonal relationships: “narcissistic relationships contain low levels of empathy and emotional intimacy”
(3) Self-regulatory strategies: “there are narcissistic strategies for maintaining inflated self-view” (Campbell, et al., 2011: 269)
As one can clearly see from the three aspects mentioned above is that a narcissist is all about himself and is sometimes even described as “perverse self-love” (Rosenthal & Pittinsky, 2006: 618). Moreover, according to Horney (1939) the type of admiration that narcists expect from others based on their own views on themselves are due to qualities that narcissist actually, contrary to their own beliefs, do not have.
Appendix 2
After having collected detailed information on each characteristic of DSM-IV criteria published by the APA, in the following the final decision for each will be made.
All the below stated reasoning is based the secondary data that is available in relation to Martin Winterkorn. With more data, such as for example primary data as collected through the previously presented survey, changes might have to be made.
(1) „Grandiose sense of self-importance“
(2) “Preoccupation with fantasies of unlimited success or power”
The above stated statement can be viewed from different angles. On one hand Winterkorn did indeed have a big vision for Volkswagen that critics deemed as impossible. On the other hand, he did manage to reach that goal in 2015, however, if played according to the rules, without the cheat device, who knows if VW would have been able to reach that goal by 2018. However, as he did reach the goal primarily, Winterkorn is not preoccupied with fantasies of unlimited success or power
(3) “Belief in “special” or unique status (including fixation on associating with high-status people or institutions)“
Winterkorn definitely had a special status which came along with being the CEO of one of the biggest car makers in the world, however, no information regarding for example him being fixated on being associated with high-status people or institutions can be found. Therefore, Winterkorn is not associated with that characteristic.
(4) “Requirement for excessive admiration“
Unlike other major leaders, Winterkorn was not focused on coming across as being charismatic, he simply wanted to people to not question him and follow his lead without any questions. Therefore, Winterkorn is not characterized with a need for excessive admiration.
(5) “Unreasonable sense and expectations of entitlement“
(6) “Interpersonal exploitativeness“
Winterkorn definitely possess interpersonal exploitativeness. He had no issue whatsoever with making his employees redo projects and destroying months of work if he did not like the smallest detail. His “growth at all cost” culture included the personnel and directly related to the Dieselgate also the peoples desired for environmentally friendlier cars.
(7) “Lack of empathy”
Lack of empathy can also definitely be associated with Winterkorn. He willfully continued the climate of fear within the organization and had no understanding whatsoever for people making mistakes. Failure did not exist for him and like previously mentioned he had no issue with heavily criticizing his employees work.
(8) “Envy”
When it comes to Winterkorn being envious, one can argue that he is envious of other people’s success that he wants to reach by himself, no matter the cost. Just being second was not good enough for him, he wanted to have it all. Therefore, Winterkorn can be characterized as envious.
(9) “Arrogant behaviors or attitudes“
Appendix 3
After having collected detailed information on each characteristic of the Allcorn and Godkin criteria, in the following the final decision will be made.
Again, all the below stated reasoning is based the secondary data that is available in relation to Volkswagen as an organization. With more data, such as for example primary data as collected through the previously presented survey, changes might have to be made.
(1) “Exceptional pride is held for the organization, its accomplishments and great hope is held for future successes. Leaders see few limitations regarding what may be accomplished and are not inhibited as to how to accomplish goals.“
One can definitely argue that great pride is held towards the organization and its abilities to reach even higher sales results. Previous leaders such as Piech and Winterkorn wanted to grow at all cost which definitely influences the organizational personality. Therefore, VW can be connected with the statement.
(2) “Feelings of exceptional entitlement support exploitiveness of others, customers and the public interest.“
When it comes to the entitlement to exploit others one clearly has to go with yes while having in mind the Dieselgate. Over years the customers were fooled, the environment polluted way more than promised and multiple employees at Volkswagen would have to have known. A big sense of self-righteousness lies within the organization.
The third characteristic can definitely be confirmed as the overall atmosphere within VW was to be aggressive at all times, a climate of fear was developed and there was immense pressure on the employees.
(4) “There is a history of firings and demotions and of non-supporters and resistors being banished to internal organizational Siberias. Resistance is a threat and will not be tolerated.“
There are allegations made against Volkswagen, however, no real evidence could be collected due to VW stating different. However, due to the autocratic leadership style it sounds very likely that the situation occurred multiple times, but VW covered them up. Therefore, one could agree with the presented statement.
(5) “Management by intimidation is common.“
When it comes to the fifth criteria it clearly has to be approved. Terms such as “climate of fear”, “no failure” and “being aggressive at all times” clearly demonstrate the atmosphere within Volkswagen. Piech had started that area, and Winterkorn followed the same autocratic leadership style.
(6) “Fear suppresses accurate reality testing and creativity.
(7) Filtered information flows alter organizational reality and magical thinking is present. Operating problems it may be seemingly thought will pass without taking action to resolve them. It is too dangerous to confront management behavior that contributes to problem generation and perpetuation.“
(8) “Others are frequently blamed and scapegoated.“
When it comes to evaluating the eight characteristics while having in mind the Dieselgate scandal, one has to recognize that shifting the blame was definitely a big part of the case. Subordinates were tried to be blamed for the whole issue. Therefore, one can confirm this statement.
(9) “The sense of mood within the organization is unpredictable where one day a great success is celebrated and a week later there exists despair over not achieving the smallest of goals.
(10) Many in the organization are alienated from the organization and its leadership group preferring to hide out in their foxholes (offices and cubicles).“
As mentioned in the previous analysis no reliable information could be found, hence they both do not apply.
(11) “In and out group dynamics are polarized and there is considerable evidence of distressing and destructive internal competition and open warfare.“
