23 Sep Wells Fargo Just Closed Its Most Important Account
Wells Fargo bank just closed the most important account any company has—the trust account. Not only did they open accounts in customers’ names without their permission and charge them fees for accounts they never asked for, but have now fired over 5,000 employees who more or less did what the company was incentivizing them to do. The icing on the cake, if it turns out to be true, are news reports that they fired whistleblowers who used their internal ethics hotline to express concern about the practice. Their CEO even got a now viral tongue lashing in front of a Senate committee by Elizabeth Warren.
Trust is the Key to Engaging Employees
Surveys show that working for an ethical company is near the top of the list of things that matter to employees. And my friend Jim Kouzes has asked people around the world why they would follow a leader and everywhere they said that “honesty” is the most desired quality. What’s more, when you ask people how they know if they are working for a company with a purpose, the top factor is whether their products and services help customers. The bottom line is that trust is the most important asset a company has to attract, engage and retain talent.
Almost twenty years ago now, Synovus Bank was named by Fortune Magazine as the best company to work for in America. I visited with Jimmy Blanchard, their CEO at the time, and learned that one of their values was to “do the right thing.” On my first day there, a salesperson in their credit card processing division told me about a million-dollar contract he had discouraged a client of theirs from committing to just a week before. “They didn’t need our help so it was the right thing to do. I knew the company would back me up for doing what was right and they did.”
Many people may wonder how Wells Fargo got itself into such a mess. I mean from the outside it sounds so ridiculously stupid to open up accounts for customers without them knowing it. Well having worked with almost six hundred companies all over the world, I can take a pretty good guess how it all began. Somebody ran the numbers and calculated how much the bank would make if each customer had eight accounts. In bank parlance, they call that getting a bigger share of wallet. Almost every bank I have consulted with has a goal to get customers and clients to have more of their accounts with the bank.
Then they said “let’s incent employees to get to ‘eight.’” How we got from incent for new accounts to opening up accounts without people knowing, we don’t know yet. But the fact that they have fired 5,000 people indicates the practice became widespread. Having worked with so many companies globally I can safely say that some pretty senior people knew what was going on. Whether they found out later or encouraged it, we have yet to find out.
Effective Leaders Drive Purpose not Numbers
The banks I’ve worked with may have had a goal to get a bigger share of a customer’s accounts but they focused on adding value to those clients. Never once have I heard an executive say “open accounts even if the customer doesn’t need them (let alone ask for them).” Something went terribly wrong at Wells Fargo and like all ethical slips there is a good chance it began a long time ago. Ethics are like that—one little lie leads to bigger lies and so on. The best way for a company to demonstrate trustworthiness is to be trustworthy. Even the smallest action that is encouraged or tolerated by leaders that isn’t good for customers or clients is the beginning of trouble.
What Wells Fargo Should Do Now?
So what should Wells Fargo do now? Well the CEO, assuming he was not aware of it, needs to clean house starting at the top. If he did know, he must step aside right now giving the board a chance to act. Instead of starting by firing thousands of front line team members, find out the highest ranking people who knew about this or tolerated it, and send them off. If whistleblowers really were fired, then heads must truly roll. He must reiterate the company’s commitment to integrity. Get uber transparent sans corporate speak with the employees. Rebuilding trust begins there. The customers won’t trust if the employees don’t. Then go back to basics, there is a pretty good chance there is something foundational in the culture of the bank that needs fixing.
Warren Buffet once said “it takes years to build a reputation and only five minutes to ruin it.” He has been silent so far on the scandal even though his company has a ten percent stake in the bank, but it looks like they should have read the quote a little earlier. I always tell my clients that when it comes to trust you can take the elevator down but you have to take the stairs up. Whatever small profit gain Wells Fargo made from the eight account program it will be undone multiples of times in the years to come. This is what happens when you close your most important account.