What Went Awry at Wells Fargo?
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What Went Awry at Wells Fargo? The Beaten Path of a Toxic
Culture
Preoccupations
By JON PICOULT
OCT. 8, 2016
Senator Elizabeth Warren, Democrat of Massachusetts, left, criticizing John G. Stumpf, Wells Fargo’s chief
executive, during Senate Banking Committee hearings last month into the opening of unauthorized accounts
at the bank.
Gabriella Demczuk for The New York Times
A
company discovers that its employees have been behaving badly, even
unethically. Regulators swoop in to investigate. Public outrage grows.
Company executives express shock at the revelations and assert that they
never directed the staff to act in such a reprehensible way.
Sound familiar?
This describes the recent scandal at Wells Fargo,
where it came to light that
some of the bank’s employees, in an effort to meet aggressive sales goals,
had opened bank and credit card accounts for customers without their
knowledge.
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What Went Awry at Wells Fargo? The Beaten Path of a Toxic Culture - The New York Times
John G. Stumpf, the bank’s chief executive, declared that the actions were
an ethical lapse involving 5,300 low-ranking workers,
who have since been
fired. But some current and former employees have cited an environment in
which managers checked with staff members several times a day to monitor
progress toward sales quotas. Those who met sales targets earned hefty
bonuses.
But this isn’t just a Wells Fargo story line. It is a well-worn narrative that
has ensnared many an organization.
At Volkswagen, engineers outfitted millions of cars with software to cheat
United States emissions testing
so the vehicles would meet budget
requirements. At General Motors, managers reportedly delayed recalling
defective and potentially dangerous switches out of concern over
replacement costs. And let’s not forget the Department of Veterans Affairs
scandal, in which patient waiting lists were falsified to meet aggressive and
unrealistic service levels.
In
all these cases, management expressed dismay over the lapses, and
investigations ended up blaming the company “culture” for the situation.
But
how can a toxic culture develop in a way that is diametrically opposed
to everything leaders supposedly say and stand for? The answer lies in a
variation on the classic “Do as I say, not as I do” admonition. Employees
will get their cultural cues not from what management says but from what it
signals.
Those
signals are embedded throughout the workplace. They can appear in
overt
ways, such as how compensation and recognition are done. Or they
can emerge in subtler ways, as in which metrics managers obsess over, what
questions they pepper employees with and how they react to dissenting
opinions.
These
signals can easily overpower even the most carefully crafted
corporate statements of mission and values. They surround employees at
every turn,
directing their focus and shaping their perceptions about what
constitutes good versus bad behavior.
The
troubles at Wells Fargo, Volkswagen, G.M. and Veterans Affairs are all
prominent examples of how workplace signals can shape organizational
culture and employee behavior in apparently unintended ways. But this
dynamic is present virtually everywhere, as I have witnessed while helping
organizations find these contradictions.
In
the worst cases, these signals motivate unethical or even illegal behavior.
More frequently, however, they simply inform employees’ views about what
types of people and behavior a company truly values. While those effects
might not make the headlines, the consequences can still be quite severe.
For
example, one company I worked with struggled to get its phone
representatives to focus on the quality, rather than speed, of call handling.
No matter what the executives said, employees stubbornly remained fixated
on getting off the phone as quickly as possible, customer service be damned.
What
was really driving their behavior? With every call, their computer
monitors prominently displayed a digital clock, menacingly ticking with
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What Went Awry at Wells Fargo? The Beaten Path of a Toxic Culture - The New York Times
every second the call persisted. That’s a workplace signal that
management’s pronouncements simply could not eclipse.
Another
company was challenged by low morale among its service staff
members, who perpetually felt like second-class citizens despite
management’s repeated assertions about the importance of service to the
company’s success.
But
the workplace signals told employees a different story. The service staff
was housed in a tired, worn building — in stark contrast to the majestic
gold-domed structure that housed most of the other employees across the
street.
That
gold-plated signal of privilege also pervaded the company’s incentive
systems. Outperforming sales representatives were rewarded with trips to
lavish resorts. When service staff members exceeded their goals, they got a
free meal ticket to the company cafeteria.
And
then there was the retailer with employees who were so focused on
adhering to rules and regulations that they lost sight of the very customers
they were supposed to serve. After digging into the workplace signals, the
company spotted a problem. The first topic new hires heard about during
corporate orientation was the 17 ways they could be fired for violating
company rules. No wonder they were so focused on compliance at the
expense of customer service.
Organizations
are often puzzled when employees act contrary to a
company’s stated values or to its executives’ exhortations. There is no
reason for surprise, though. The writing is on the wall, in the form of
behavioral cues that shape a company’s cultural norms. Until business
leaders start paying attention to these subtle workplace signals, they will
continue to be surprised by what their employees are motivated to do.
Jon Picoult is founder and principal of Watermark Consulting, a management advisory firm.
A version of this article appears in print on October 9, 2016, on page BU5 of the New York edition with the headline:
The Beaten Path of a Toxic Culture. Order Reprints | Today's Paper | Subscribe
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What Went Awry at Wells Fargo? The Beaten Path of a Toxic Culture - The New York Times
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