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.