Wells Fargo: A Lesson in Leadership & Culture Gone Awry

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.

 

About Bruce Temkin, CCXP
I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and Emeritus Chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

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

  1. Stacy Blaiss says:

    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

    +1.770.407.1832 O
    +1.404.542.3146 C
    +1.866.929.1546 F

    BOMGAR | Connect Fearlessly

    • 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.

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