The leadership face plant at Wells Fargo I wrote about last week is not going to be corrected by a few cosmetic fixes.
This week, it was announced that the Manager in charge of the team will be “resigned” immediately instead of at the end of the year and have some compensation taken back. The CEO, Stumpf, will have $41M clawed back from his compensation. This was a result of the Board finally doing what a Board is supposed to have been doing all along:
- Assess the risks inherent in the company’s business and handle them before they develop into a crisis.
- Dispense compensation that does not encourage bad behavior.
- Monitor a company’s culture, from top to bottom.
In reality, leadership had been monitoring the culture – one of corruption and fraud – and handsomely profiting from it. The failure came from the first two points, not really assessing the risk of such corrupt sales practices and clearly dispensing compensation that encouraged the bad behavior.
CEOs are the guardians of company culture. It is incumbent upon them to make corrections to processes and people when things are off track. But as I said last week, results were more important than anything else at Wells Fargo, so how they were being achieved was not important. Stumpf was absolutely guarding his “results” and that of the company so that everyone benefited except, of course, customers and the employees who were asked to carry out the illegal behaviors. As Elizabeth Warren said of Stumpf’s pathetic performance on Capitol Hill, it was “gutless leadership.” But he did do one thing “well,” he monitored and preserved the company’s culture as long as results were produced, too bad that in his world corruption and fraud were acceptable cultural components.
At the end of the day, the salary forfeited by the CEO and the manager are minimal. They will still be multi-millionaires many times over and not prosecuted for their illegal behavior. (Wouldn’t you love to see them on the side of the road in orange jumpsuits picking up our trash?) Meanwhile, the employees who were fired for doing what they were told to do, have a black mark on their employment history and likely suffered much worse.
The final coup de grace in all of this are the revelations about the “ethics hotline” Wells Fargo had set up. Employees all went through ethics training and were told to call the hotline if they ever saw unethical behavior – and the reward for those whistleblowers who did? They were fired. Fortunately, they are now banding together in a class-action lawsuit against Wells Fargo due to the retaliation they experienced.
The only steps that might cause real change are a complete turnover of leadership and a cultural retrofit from top to bottom. What needs to be put in place is an ethical and moral way to provide products and services, create and maintain jobs and a legal way to earn profits. The critical first step that will show Wells Fargo intends to mend its ways is to fire the CEO – he has NO credibility or ability to change or “reform” himself or the organization. Next, they need to start with values, at a fundamental level. What should they be? Then align all people and processes behind those and the resulting objectives and you might remake it into a different company. Leadership matters. Good, values-based leadership produces extraordinary results. Winning doesn’t require cheating – it does require being good or even the best, solid values, and a leader who leader who is the guardian.
How can we as customers and the general public help make these types of changes at organizations where fraud and corruption are the norms? Don’t buy from them and don’t work for them. Banks have long used our money for their gains – it’s their product. Take your money back, use local or regional banks that don’t have deceptive and illegal practices or create an alternative to banks. Time for entrepreneurs to take advantage of their innate ingenuity and innovation to replace the “banking system” entirely. And remember, “Nothing strengthens authority as much as silence.”— Leonardo da Vinci
By The original uploader was Henry W. Schmitt at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons