Christine Hohmann-Dennhardt

VW's New White Knight

Former high court judge Christine Hohmann-Dennhardt has an excellent reputation in the German auto industry. Source: DPA
Former high court judge Christine Hohmann-Dennhardt has an excellent reputation in the German auto industry.
  • Why it matters

    Why it matters

    In the wake of the diesel emissions scandal, Volkswagen needs to radically overhaul its corporate culture.

  • Facts

    Facts

    • Christine Hohmann-Dennhardt will be the first woman on Volkswagen’s management board, appointed to clean up its tainted corporate culture.
    • She has already done the same at rival carmaker Daimler, where she sucessfully headed the company’s integrity and legal affairs unit after a bribery scandal.
    • Last month’s emergence of VW’s diesel emissions manipulation has hurt its reputation and may cost tens of billions of euros.
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    Audio

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When staff at German carmaker Daimler open their laptops these days, they might be confronted with monsters. Legions of dark figures cooking the books, dealing in murky business and endangering the company with their deeds. It’s a computer game, and thousands of employees have already played it with great enthusiasm, says Daimler’s integrity and legal affairs department.

The game to encourage corporate ethics has been a neat little success for unit leader Christine Hohmann-Dennhardt. And achievements like these are part of why she is leaving the Daimler board of management for a similar position at Volkswagen in January.

At VW, she will oversee the response to the emissions scandal that has plunged the car manufacturer into the worst crisis in its history. The automaker has admitted to falsifying diesel emissions results for 11 million autos to circumvent U.S. regulations. Not only has the scandal severely damaged its reputation, it may also cost up to €40 billion, or $45.7 billion, in fines and recall costs.

Ms. Hohmann-Dennhardt, who has an excellent reputation in the German car industry, will be the first woman on Volkswagen’s management board, as she was at Daimler. Her task will be turning an entire corporate culture on its head, and she will have wide-ranging powers to get it done.

The former judge on Germany’s high court knows this process well. When she started at Daimler in 2011, the company was also embroiled in a massive international corruption scandal, and under investigation by U.S. authorities. The Stuttgart-based car giant had admitted to paying bribes in order to win contracts, and ended up paying a fine of $185 million to settle the charges. It also agreed to further tough measures: monitoring by a former head of the FBI, and a board-level appointment to look after integrity and legal affairs.

Looking to fill the new role, Daimler boss Dieter Zetsche remembered a senior lawyer he had met at an industry event. Discreet inquiries were made: she was a Constitutional Court judge, a Social Democrat with undoubted expertise and very highly regarded.

There is no doubt she is good enough to push through change in the face of resistance.

Not everyone at Daimler was thrilled when she joined the board, but there she was, and it was her job to ask tough questions that had been brushed aside for years: How do we really make sure our people aren’t paying bribes? Which businesses should we remove ourselves from entirely? What should Daimler’s stance be on Formula 1, whose boss Bernie Ecclestone faced bribery charges in a German court in 2014?

On these issues, Ms. Hohmann-Dennhardt had to fight her corner among the “car guys” of the Daimler board. It worked. Senior managers and directors came to understand that company culture needed an overhaul, just like the new car models they sell each year. Gradually it became clear that profits in the billions could happily go along with an uncompromising compliance policy.

Nevertheless, there were rumblings at Daimler about abolishing the Integrity and Legal Affairs unit, and not extending Ms. Hohmann-Dennhardt’s contract. After all, the company had fully complied with U.S. authorities’ demands. Lately, the former judge has mostly been clarifying the legal status of robot-driven cars.

That’s one reason why Daimler chairman Manfred Bischoff is relaxed about losing two senior executives to Volkswagen in a year. (Commercial vehicles boss Andreas Renschler has already switched to VW.)

It is also very much in Daimler’s interests – and those of the whole German automotive industry – to get Volkswagen quickly back on track. Daimler does not want a wobbling Volkswagen Group, which could plunge suppliers into crisis and damage the reputation of the entire industry.

The VW job will likely be the 65-year-old executive’s last big position. There is no doubt she is good enough to push through change in the face of resistance. And Volkswagen badly needs her to succeed if they are to make peace with the US authorities. Without that, there will be no fresh start for Volkswagen.

To achieve this, Ms. Hohmann-Dennhardt might want to think about dusting off her 1979 doctoral dissertation for her new job: “Company Decision Structures and Employee Interests: The Effectiveness of Worker Participation in Corporate Change.”

 

Markus Fasse specializes in the aviation and automobile industry. Martin Murphy specializes in the automotive, defence and steel industries. Christian Schnell covers the stock market and German auto industry. To contact the authors: fasse@handelsblatt.com, murphy@handelsblatt.com, and schnell@handelsblatt.com

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