Volkswagen - With a knowledge advantage through the crisis

The COVID-19 outbreak in China, which occurred earlier, gave Volkswagen a head start in terms of knowledge: how do you restart production in an organised manner? The Group is now a real best-practice example with its 100-point plan. Gunnar Kilian, Chief Human Resources Officer at Volkswagen AG, provides insights into how the Group is dealing with the crisis, what role HR is playing here and how the HR department will continue to develop.

For HR, the last 6-8 weeks were primarily characterised by operational issues relating to COVID-19. The focus has been on the safety and health of the workforce, virtualisation and digitalisation of work processes and, depending on the industry, capacity adjustments.

• How unexpected was the extent of the pandemic despite your previous experience in China?
• How different did reactions have to be depending on the brand, country and function and where were you able to take a standardised approach within the company?
• What did you learn during this phase in terms of
  • Flexibility of employees, their managers and decision-making bodies?
  • Cross-departmental cooperation in the search for short-term solutions?
  • The positioning of the HR function in relation to such crises?

Gunnar Killian: The speed with which coronavirus has hit Germany and Europe has of course presented us all with major challenges. But you are right: due to the lead time of the pandemic development in China, we had the decisive advantage of having already gone through the lockdown and the restart of our plants in full. This gave us fundamental insights that helped us a great deal in ensuring an organised approach in other parts of the world too. The procedures for this were and are similar all over the world - even if, of course, national particularities had to be taken into account.

In my view, German short-time working, for example, has once again proven to be the best way to deal with a major labour market disruption. That is why we have also seen many governments around the world introduce similar regulations at lightning speed. As far as the behaviour of our employees is concerned, I can only say that I am full of gratitude. Our very consistent measures have been accepted and followed everywhere. The restart has also been characterised by great discipline.

It is difficult for me to assess the efficiency and effectiveness of our crisis management, as I head Volkswagen's crisis team together with my fellow board member Frank Witter. I can only say that we are all doing this work with the utmost concentration and seriousness. And I could also add that there has never been a major pandemic outbreak at any of the 125 Volkswagen plants worldwide. In addition, just a few weeks after the start of the crisis, we were able to support public healthcare and thus the outstanding work of doctors and nursing staff. For example, through our 40 million euro aid package or the paid time off for our medically trained colleagues to volunteer in the fight against the virus.

Looking at the HR functions in companies, it seems clear to me that there has been a clear upgrade in recent weeks and months - first and foremost, of course, where HR staff sit on or lead the crisis teams, but also beyond that. After all, lockdown, health protection and restarting operations are all about people and organisational issues.

Over the next 3-9 months, VW, like many companies, will focus on restarting operations under conditions that remain restrictive. The issues on the HR side will primarily revolve around the logic and order in which employees can be returned to work, which medium-term protective measures can take effect, but also how managers can be empowered to provide security and orientation in the ongoing situation.

• What is the logic behind your plans to resume operations and which HR-related factors played the biggest role in your decision?
• How are you dealing with the current uncertainty - are there specific scenarios that you are planning from an HR perspective?
• How do you specifically support managers so that they can deal with the situation even better in the coming months?

Gunnar Killian: The experience of the past few weeks, in which we have gradually ramped up our production, shows us that Volkswagen is more than well positioned in the run-up to the restart. Even if there may be slight deviations in some countries, we have clustered all jobs in red, yellow and green. For example, in the red area, where minimum distances cannot be maintained despite the best efforts for technical reasons, work must be carried out with mouth and nose protection. We also divide the path back to normality into three phases everywhere. We have drawn up a manual with around 100 protective measures to be followed and distributed it globally. This is now also considered state-of-the-art by our suppliers and in many other companies.

What happens next will of course depend largely on how the crisis develops. Our priority is to protect the health of our team. In addition, the aim is to ramp up production in parallel with the recovery in demand until we are back to our usual level. As described, protecting our employees always takes priority, but our economic foundation is of course also a valuable asset. All personnel policy decisions in the coming weeks and months will be made between these two poles.

This also brings us to the topic of uncertainty: as no one can predict the exact development, we have to be prepared for various options. Fortunately, we have flexibility instruments anchored in our collective labour agreements everywhere, which give us room to "breathe" in terms of personnel in the factories.

In 9-18 months, a "new normal" will emerge and the question arises: what will remain of the COVID-19 crisis? How have companies changed structurally? Where has digitalisation accelerated? What has happened to the attitudes and preferences of consumers and employees? And most importantly: Has the organisation emerged from the crisis stronger and more resilient? The corporate reality and also the HR reality could have changed permanently. While the financial market crisis of 2008/09 mainly challenged the CFO, this time it is the CHRO who, in our opinion, is at the centre of attention.

• Will the role of the HR function at Volkswagen change permanently as a result of the crisis?
• What will be the three things from Corona that will stay at Volkswagen (and that you want to keep) - which things will be more temporary in nature?
• What is the one thing you would give to other HR directors and CHROs?

Gunnar Killian: Well, on the first point, I hope to return to my regular job as soon as possible, because it's very stressful at the moment. One of the lasting things about Corona is certainly the experience of the vulnerability of our modern world. We always realised that a global production network can be fragile. But I don't think anyone expected such a sudden shutdown. At the same time, however, the advantages of a global orientation have also become clear. In China, for example, we are seeing clear signs of recovery, while in Europe and the USA we are currently trying to get the economy back on track. It remains to be seen to what extent this will lead to a discussion about new forms of company organisation or the structure of work. In any case, decentralisation and the greatest possible autonomy of sub-areas are not the wrong recipes.

The biggest changes will certainly be in the area of office-based knowledge work. Millions of knowledge workers have been working from home since mid-March 2020. Services such as Skype, Microsoft Teams and other digital collaboration tools have become knowledge workers' preferred tools virtually overnight. Corona has thus helped the digitalisation of office work achieve a breakthrough and led to a quantum leap in the digital literacy of German employees. We have just analysed this development in more detail in Volkswagen AG's HR department with our own study on "Home office, virtual leadership and collaboration in times of COVID-19". 1,000 colleagues took part in the study and the tenor was unanimous: mobile working has worked well during the crisis. It seems unlikely that the trend can be reversed "after coronavirus" and returned to the old culture of working from home, and it would also be difficult to communicate this. Not only will young parents in particular continue to have massive childcare problems: Many employees have noticed during the crisis that working from home is easier and more productive in some respects.

The weeks and months of working from home have, of course, also had their downside: the loss of stabilising contact with colleagues and the resulting social isolation, which was perceived as stressful, especially by younger employees, the so-called millennials. This generation of workers entered the labour market in the midst of an exceptional ten-year economic boom, was courted and has so far been able to take advantage of a great deal of freedom in their professional lives. Now this cohort is experiencing its first serious economic crisis and it will be interesting to see how they come to terms with it. The signals of loneliness and devotion that many millennials have sent out in the coronavirus era have not only transformed the classic managerial understanding of leadership - these signals also show that many millennials still need to prepare themselves for the robustness of the working world.

Finally, as far as my advice to colleagues is concerned, I am tempted to respond with a quote from Willy Brandt:

"Nothing comes by itself. And very little is permanent. Therefore - remember your strength and that every time wants its own answers and that you have to be at its height if good is to be achieved."