Wells Fargo can earn our trust when its leaders live their values.
The failures at Wells Fargo over the last 5 years illustrate perfectly that discerning the core values of a business serves little purpose when individual leaders do not internalize and bring those values alive. Your CoreVals should elevate your teams to drive performance to higher highs. But at Wells Fargo, leadership ignored their stated values to the detriment of all the organization's stakeholders.
Early in the fall of 2016, a major scandal hit the news when the CFPB announced that Wells Fargo was responsible for "the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts… (and) funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent." For these crimes Wells Fargo was fined $185 million. In addition to the penalties, the government also forced Wells Fargo to return over $2 million to the customers it defrauded.
This was a massive failure at the top, and many sales-floor employees lost their jobs because of the poor culture that permeated throughout the organization. As reported by CNBC, multiple sales campaigns and internal reports pushed by higher-ups created unrealistic expectations and placed a great deal of pressure on sales teams to generate revenue. Meanwhile, regional leaders who encouraged their sales teams to sell duplicate accounts were used as positive examples.
For his part in the scheme, then-CEO John Stumpf agreed to forfeit unvested stock and even go without a bonus, with Stumpf admitting to Congress, "I am fully accountable for all unethical sales practices in our retail banking business." But Stumpf originally learned of the problem in 2013. In the years that followed he instead fired over 5,000 employees who had engaged in these unethical practices, while knowingly allowing the practices to continue in order to feed both his company's bottom line, and his precious year-end bonus. During the hearing, Stumpf claimed, presumably with a straight face, that Wells Fargo has, "a culture based on ethics, and doing what's right." Shortly after the hearing Stumpf finally resigned.
The former CEO of Wells Fargo admitted his responsibility for the theft of over $2 million dollars. To date he has not seen any jail time. Incredible, but true. So how has the culture changed since Stumpf stepped down?
Per the company's website, these are their current values:
What’s right for customers. We place customers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime.
People as a competitive advantage. We strive to attract, develop, motivate, and retain the best team members — and collaborate across businesses and functions to serve customers.
Ethics. We’re committed to the highest standards of integrity, transparency, and principled performance. We do the right thing, in the right way, and hold ourselves accountable.
Diversity and inclusion. We value and promote diversity and inclusion in all aspects of business and at all levels. Success comes from inviting and incorporating diverse perspectives.
Leadership. We’re all called to be leaders. We want everyone to lead themselves, lead the team, and lead the business — in service to customers, communities, team members, and shareholders.
The bank's core values actually haven't changed at all. They are the exact same 5 CoreVals issued under Stumpf, when Wells Fargo provided employees a 42-page booklet that outlined the bank's "Vision & Values." In the booklet, Stumpf opens his introduction by stating, "Documents such as this are rare these days in corporate America."
It's a good thing for all of us that Stumpf's document is a thing of the past. At least I hope it is. I'll give them some credit: it was a good starting point. The CoreVals and the descriptions listed on the website today certainly represent a vast improvement over the 4000+ words it took for Wells Fargo to explain them in Stumpf's booklet. Their new CoreVals are short, to the point, and somewhat memorable. But how are we to expect that these improved descriptions represent the new and improved vision for Wells Fargo, when these exact same values led to massive fails?
Just two years after the original scandal, in April of last year, Wells Fargo was busted for harming its customers again, this time for multiple violations including forcibly placing "duplicative or unnecessary insurance on hundreds of thousands" of borrowers' vehicles. Working with the Department of the Treasury, the CFPB issued Wells Fargo a $1 billion penalty, more than 5 times higher than the much-publicized customer fraud case.
The current CEO Tim Sloan, having been elevated from COO, and thus previously serving as member of Wells' Fargo operating committee overseeing corporate strategy, surely was aware of all these practices. Shortly after Stumpf's fall, the Chicago Tribune quoted a former Wells analyst, who said Sloan "is not someone you would consider a transformational CEO."
As someone who has seen first hand what having a valued culture can do to change the CorePurpose of a company, the hypocrisy here astounds me. Let's look at some of those Core Values again: Leadership. Ethics. What's right for customers. The former CEO at Wells Fargo failed to lead because his ethical choices allowed his bank to steal from customer. And his replacement, at a minimum, had awareness of the same cultural failures, and did nothing to prevent them. Are we supposed to believe Wells Fargo has affected real change?
There are concrete steps leadership can take to genuinely live their CoreVals. Perhaps instead of pressuring their sales teams to reach impossible goals, they could incentivize and inspire employees with meaningful rewards. One company I worked with, SABRE, has employees nominate the colleague they believe best represents one of the company's CoreVals, and each month leadership rewards a winner. Since implementing the Culture Czars methodology, SABRE has reportedly doubled their top-line sales. When you invest in core values, you give people reasons to love where they work and why they work, while also providing an ROI unmatched by any other kind of investment.
I love witnessing businesses realize meaningful change by creating a valued culture. Wells Fargo is the 3rd largest bank in the country, and the 11th largest in the world. We're talking about one of the most powerful, influential corporations in the world leading us into the future. I want to see the leaders of these companies becoming Culture Czars that understand why they must go beyond leading their company to leading a culture. Your values are a product of your actions, and those actions produce results that extend far beyond the four walls of your business.
Will Scott is passionate about creating environments where people thrive to become the best they can be. Great corporate culture drives great performance and investing in culture yields the highest returns in terms of revenue growth and employee retention. Author of the forthcoming book, The Culture Fix: Solve C-Suite Problems at Ground Level with 9 Deeds in 90 Days, Will regularly holds workshops and speaking events on corporate culture and can help you transform yours in just three months. His two key workshops, Discerning Your Core Values and From Core Values to Valued Culture, are now accepting registration for attendees. Click here for more information. Look for his book this June!