VW: Power struggle between CEO Diess and works council

IAt the Volkswagen Group, the power struggle between CEO Herbert Diess and works council president Bernd Osterloh has flared up again. Apparently, the CEO has demanded an early extension of his contract from the Supervisory Board, as a vote of confidence and commitment to his track record. Already in the spring, he was expelled from the control committee with this request.

It should be similar next week when the Supervisory Board meets for its last regular meeting this year. The Presidium of the Supervisory Council will already meet this Tuesday. An extension of the executive board contract, which runs through 2023, is not on the agenda for any of the meetings. “You can’t pressure the supervisory board,” say those around the committee.

The dispute revolves primarily around the filling of two positions on the board and the future structure of the board. On the one hand, the company is looking for a successor to purchasing director Stefan Sommer, who resigned in June; On the other hand, CFO Frank Witter leaves in June 2021 after having extended his contract for one year at the request of the Supervisory Board.

Oversight board rejects Diess staff

There is a bitter struggle in the background over personal details, there has already been talk of a “solution package” and that Diess cannot prevail with his wishes. Audi’s CFO Arno Antlitz is said to be his candidate for the finance position, but the works council rejects him as a board member. According to the Reuters news agency, Murat Aksel is under discussion for the procurement position, he is currently the head of acquisitions for the VW brand.

There is also talk of a new design for the executive board. For years, for example, employees have been demanding an independent IT manager. The quota of women also influences: there is currently only one woman on the board, Hiltrud Werner, responsible for “Integrity and Right”. Last week the dispute was made public in the “FAZ”. There was talk of a “fight for Wolfsburg” between Diess and the head of the works council, Bernd Osterloh.

Osterloh responded to the article with a cool display of power: on LinkedIn he posted a photo of himself on a stool with newspaper in hand, in the middle of “Südstrasse” at the Wolfsburg factory site – in the background the tower of the mark where Diess and the members of his board of directors sit. In the text, Osterloh wrote that no supervisory board had yet addressed the issue of personal data. “I do not know this argument.”

However, he is confident that the Supervisory Board … will make the right decision to shape the transformation of the coming years with the right candidates. In order to successfully develop Volkswagen together with Herbert Diess at the top for the next few years. “

CEO formulates basic program

As a member of the Supervisory Board, Osterloh has a say in whether these “next years” also extend beyond 2023. Formally, the extension does not expire until 2022, in accordance with the German Public Limited Companies Act and the rules of Supervisory Board procedure.

True, the committee could also strengthen the CEO position ahead of time. Only it will hardly do that. The head of the works council, Osterloh, must face reelection in the workforce in 2022, the lists for the elections will be drawn up next summer.

Employees also have a strong position of power by holding individual positions on the board. In the presidium of the supervisory council, responsible for the “long-term succession planning of the executive council”, there are five to three for them: in addition to four trade unionists, the Prime Minister of Lower Saxony, Stephan Weil (SPD) sits , who always seeks to strengthen ties with employees. For the family owners, Hans Michel Piëch and Wolfgang Porsche are present, as well as President Hans Dieter Pötsch.

In addition to the management team for the next few years, the conflict is about fundamentals. Diess made this clear in a LinkedIn post on Sunday, in which he formulated a kind of basic program and drew an intermediate balance of his previous five years at VW.

“When I took office in Wolfsburg, I made a firm decision to change the VW system. That means: breaking old and embedded structures and making the company more agile and modern, ”wrote the CEO. “Together with many colleagues with the same level of motivation, I have managed to do this in many places, not some, especially not yet at our corporate headquarters in Wolfsburg.”

Now he has “adapted his management style for Wolfsburg. Experienced managers who are familiar with the Wolfsburg system now take on more responsibilities. “

An example of how ticks from the “Wolfsburg system” could be seen two days earlier. The works council had invited a ceremony to mark the 75th anniversary of the introduction of employee participation at VW. Personnel manager Gunnar Kilian, former general secretary of the group’s works council, was the sole representative of the board of directors.

In speeches, former Federal Chancellor Gerhard Schröder, Prime Minister Weil and high-ranking trade unionists praised the unusually powerful position of the state and works council in the group, which is enshrined in the VW Act. You have contributed to the success of the company; In fact, VW is currently doing better financially than many other companies in the industry.

On the occasion, Osterloh made clear what he expects from his group’s executives: “Dealing with conflicts cooperatively, that must remain our goal,” he said. “The will to do it is simply a question of culture. And the longer you socialize at VW, the easier it becomes. “

Does this also apply to Diess? In any event, the CEO stated that with his “occasionally conflictual manner – addressing and addressing complaints and needs for action in a very specific way” – he has changed a lot in his professional career and has achieved good results.

Even in the written greetings for the works council anniversary, he couldn’t resist a confrontation. After praising the important “course set by the works council to ensure the future of their respective locations”, he made a clear requirement: “Efficiency increases are necessary and should not be underestimated for the continued existence of the companies, as demonstrated repeatedly numerous examples. Here at Volkswagen we still have to catch up. “

It did not implement this requirement. Ultimately, the dispute is over the power structures in Wolfsburg and not over strategic or content-related issues. Unlike Daimler or Continental, for example, the downsizing and transformation towards electromobility at Volkswagen have been carried out for years without major conflicts between management and employees.

Jobs at VW are being cut based on the future pact concluded in 2016; Tens of thousands of jobs will be vacant, and will no longer be filled, mainly through partial retirement. Both parties are also in agreement in principle when it comes to switching to electric mobility and investing billions in IT.

Now, according to the ideas of Diess, Volkswagen is going to transform into a digital company that “operates millions of mobility devices around the world in a reliable way, always keeps in contact with customers and improves services, the comfort of the vehicles and their safety weekly, every day better “.

He outlined the way there with a management method that he used to negotiate plans for the next few years at large events with many executives. In this context, for example, the idea of ​​the Modular Electric Construction Kit (MEB) was born, from which the new fleet of electric cars of all the Group’s brands is being built.

The description can be read as a stark contrast to the usual Wolfsburg custom of making decisions in the back room and then announcing them. It is questionable whether Diess can prevail over existing VW structures with this approach. In any case, disputes do not go down well in the capital market. Since last Wednesday, the VW stock has lost nine percent of its value.