Do the right thing

“While driving your car, are you concerned that your airbag will work properly? Will it get the advertised miles per gallon and meet Environmental Protection Agency standards? Until a few years ago, the answer to these questions was “Yes.” Today, the answer is, “I am not sure.”

In the 1960s, a young Ralph Nader penned “Unsafe at Any Speed.” Little did he know, he was ushering in the era of the product recall. If it wasn’t the Chevrolet Corvair, it was Ford’s Pinto and the exploding gas tank that triggered another recall and lawsuits against members of the automobile industry. These examples raise a basic ethical question: Where is the corporate conscience when these companies permit their products to enter the stream of commerce? Takata Corp. knew their airbags were defective. Volkswagen knew the EPA standards were not being met. And yet, both companies distributed their products to the ultimate consumer.

How does a company restore confidence in its brand after a major recall or buyback? The only times you see a Ford Pinto or Chevrolet Corvair are in a car show or auction. These brands were negatively impacted and became case studies in business school curriculum.

It is time to reinvest in quality control procedures, and review your current testing standards. Gain an independent opinion by engaging a firm that specializes in quality control and testing. Have the firm review your company’s procedures and make recommendations that would reduce the potential for recalls. Install a process that audits your procedures to ensure they are being followed by your employees at all of your locations. Your suppliers also should be subjected to an audit to ensure your company is being provided with the highest quality components.

These steps will help reduce your company’s exposure to recalls and potential claims of negligence, while maintaining its reputation among customers.

In the past two years, major car manufacturer Volkswagen has been found to have altered its performance statistics to meet EPA standards. If your airbag was manufactured by Takata, it could be defective and potentially injure or even kill you.

What has happened to corporate responsibility and the desire to take care of the customer?

In January, VW announced it would replace its head of integrity and legal affairs, Christine Hohmann-Dennhardt. The company’s decision was “due to differences in their understanding of responsibilities… .” In late October 2016, the U.S. District Court in San Francisco approved a plan for VW to spend $10 billion to buy back these vehicles. VW has promised to buy back the affected car and sport utility models. Already, 400,000 out of 500,000 owners have filed for the buyback.

In the case against Takata, the airbag manufacturer, it was determined that 34 million cars were impacted by the recall. In May 2015, Takata admitted the airbags malfunctioned. Earlier, it denied these facts for more than a decade, even as motorists were being killed by exploding airbags.

Both VW and Takata were reactive when confronted by the government. Responsible companies need to be proactive and demonstrate to consumers that their safety is placed above the profitability of the company. In today’s world of instant communication, your brand can be immediately damaged by just one Instagram, Facebook or Twitter post that goes viral. Once that happens, your reputation and image are diminished.

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Cary Silverstein
He was a senior professor at DeVry's Keller Graduate School in Wisconsin. Cary has published articles in periodicals and on the Internet. He recently published first book with Dr. Larry Waldman, "Overcoming Your NegotiaPhobia". Cary holds MBAs from L I U’s Arthur T. Roth School of Business. Cary has a BA from CUNY, Queens College. He has certificates in Negotiation from Harvard’s PON and in Labor and Employment Law from Marquette University.