Wells Fargo: A Lesson in Leadership & Culture Gone Awry

September 21, 2016 2 Comments

In case you missed this in the news, Wells Fargo is under investigation for opening fraudulent accounts for its customers. During a period between 2011 and 2015, it is estimated that there were as many as 1.5 million deposit accounts and more than half a million credit card accounts opened inappropriately on behalf of customers.

As part of a hearing of the Senate Banking Committee, U.S. Senator Elizabeth Warren grills Wells Fargo CEO John Stumpf and makes a few very important points. Stumpf heavily, heavily pushed his organization to cross-sell products, setting a long-term goal of 8 products per household, while the industry average was around three. He regularly touted the increase in products per household (over 6.1) to investment analysts and pushed his organization for the growth to continue.

My Take: Stumpf should resign (or be fired). That sounds abrupt, but let me explain…

In this blog, I often discuss the power of culture. It’s one of the most critical drivers of the behaviors of employees across large organizations. As a matter of fact, Peter Drucker has been credited as saying, “Culture eats strategy for lunch.”

Whenever there is a consistent set of widespread actions (good or bad), then the first place you should look to explain them is the culture. One of our Six Laws of Customer Experience is that employees do what is measured, incented, and celebrated. Clearly at Wells Fargo, cross-selling new accounts to customers was measured, incented, and celebrated.

So Wells Fargo employees acted in ways that were consistent with their environment.  They acted in accordance with the company’s culture. Does that mean that the individuals who did the wrong things should be absolved of their errors? Absolutely not. They were wrong and should face the consequences for their actions. But the acts of individuals are symptoms, while the culture that encouraged those behaviors is the systemic issue.

That gets me back to Stumpf. He created (or at least nurtured) the culture across Wells Fargo, and should therefore be held accountable for the consequences. Let me put it this way, should Victor Frankenstein be held accountable for the damage caused by the monster he created? Of course!

Stumpf was rewarded handsomely for the cross-sell results of the culture he created. It’s now time for him to pay the price for the problems caused by that culture.

The bottom line: Leaders must be more mindful of the culture they create.

 

Filed under CCXP1 Customer-Centric Culture, Corporate culture, Customer experience, Executive leadership, Purposeful Leadership Tagged with ,

About Bruce Temkin, CCXP
I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about these topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

2 Responses to Wells Fargo: A Lesson in Leadership & Culture Gone Awry

  1. Stacy Blaiss says:
    September 21, 2016 at 12:27 pm

    Hi Bruce, long time reader of your blog!

    Question about this one- I have worked at companies with a strong culture of upsell/cross sell, but it seem the problem at Wells was not this strategy per se, but some underlying acceptance of fraudulent activity. I just don’t see how 5,000+ employees could have opened over a MILLION fraudulent accounts without knowledge and tacit approval at the top. Between compliance and finance/data analytics, there’s just no way that fraud of this magnitude could go on for so long without executive knowledge of some kind.

    The cultural problem appears to be the acceptance of fraudulent activity, not cross sell.

    Thanks for listening-
    Stacy

    Stacy Blaiss
    Director, Product Marketing

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    Reply
    • Bruce Temkin, CCXP says:
      September 21, 2016 at 1:32 pm

      Stacy: Great point. The underlying cultural elements are pretty complicated, which seem to include some element of “cross-sell at any cost” — not just cross-sell. I’m not sure that the acceptance of fraudulent activity was a core part of the culture, but the lack of importance in eliminating fraud relative to the high importance of achieving cross-sell results certainly was. Thanks for sharing.

      Reply

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