Ethical leadership – corporate culture and governance hand in hand

Business and ethics are not opposites, but go hand in hand. For companies, this is both an aspiration and a challenge. Audi recognizes its economic, ecological and social responsibility and has aligned itself accordingly – with the “Vorsprung 2030” strategy, a firm commitment to sustainability and binding ethical principles for corporate governance.

Thus, compliance and integrity are an integral part of all business processes and decisions within the Progressive brand group. For this to work, it is crucial to have a corporate culture based on shared values.

They foster a trustful working environment that enables successful collaboration, especially in times of fundamental change – collaboration between employees and managers as well as between the company and its customers, business partners and stakeholders.

Elke Neidlein, Head of Integrity Management, Anna Ehret, Head of Corporate Culture, and Prof. Dr. Miriam Müthel from WHU Düsseldorf, a university that provides academic support to Audi in the area of integrity management, explain why responsible corporate governance and a corporate culture based on values are key success factors for AUDI AG.

Legislators, markets and stakeholders provide companies with a framework for legally compliant and ethical conduct – and this is where our work comes in. In our governance role for compliance, integrity and risk management, we mitigate legal and financial risks for Audi, prevent possible misconduct and protect the reputation of our company. A concrete example of this is the Act on Corporate Due Diligence Obligations in Supply Chains, which is based on the UN Guiding Principles on Business and Human Rights and holds companies accountable.

We have long since established effective tools for responsible corporate governance. Among them are our Compliance Management System and our Integrity Management, as well as the Audi Code of Conduct. All employees – whether they are members of the Board of Management or skilled workers – must commit themselves to these principles. All of these tools are being continuously refined using synergies within the Volkswagen Group.

But that is not all. More than anything else, it is our values that make us trustworthy partners for our stakeholders. Integrity, one of the four Audi values, is also a key skill for successful, sustainable and responsible corporate governance. And that is precisely what we have committed ourselves to in the ESG (Environmental, Social, Governance) field of action of our “Vorsprung 2030” strategy, which is founded on integrity and compliance.

A value-based corporate culture characterized by trustful leadership and collaboration on an equal footing is a genuine success factor for Audi. We want a culture based on appreciation, openness, responsibility and integrity that also supports our transformation. In this way, we contribute to “People & Culture,” one of the building blocks that form the foundation of our “Vorsprung 2030” strategy. Our way of leading and collaborating is characterized by “empowerment & ownership.”

What this means in concrete terms is that through empowerment, superiors give their employees more room to act and make decisions, thus encouraging independent, self-effective work. At the same time, there needs to be ownership – in other words, employees who are willing to take on personal responsibility. Only if both of these aspects are actively practiced can Audi employees use their skills to contribute optimally to the company’s success.

The key to this is a working environment that offers psychological safety and orientation, a place where different opinions are welcome, calculable risks are taken and mistakes are seen as opportunities to learn. We have already achieved a considerable amount in this respect. Moreover, a culture of trust is essential in order to retain employees and attract specialists and experts.

Ethical leadership is not only a social mandate but also a success factor in corporate activity. Current studies show a strong connection between ethical leadership and the satisfaction of employees with their task and their superior. Managers who act with integrity are seen to be more trustworthy and more effective. They also contribute to a corporate culture defined by integrity, which in turn increases identification with the employer.

These insights are all the more relevant for companies and their decision-makers as they face increasing pressure from political conflicts, the digital transformation as well as from climate change and increased competition. Even under these conditions, for them it is a question of harmonizing economic targets and ethical conduct.

Managers therefore need clear guidance on values and must be in the position to implement these values. Ultimately, it is action and not intention that counts. Empirical research confirms that most people are intrinsically motivated to act compliantly and with integrity. However, they are often unable to see how they can attain both corporate and moral targets simultaneously.