Denial: It’s more than a river in Egypt

Gustavo Grodnitzky Culture Trumps Everything

For those of us not directly connected to (or victims of) the current Wells Fargo news story discussed in last week’s blog post, it has become the gift that keeps on giving.

This week, John Stumpf, CEO at Well’s Fargo, spoke with the Wall Street Journal. Stumpf did not specifically comment on who was ultimately responsible for the practices and sales-driven culture that led employees to open as many as two million accounts without customers’ knowledge, leading the bank to receive a $185 million fine. Instead he insisted, “There was no incentive to do bad things.” Really? Basic law of psychology #1: For a behavior to repeat itself (whether once or two million times) it must be rewarded in some way.

In the same interview, Mr. Stumpf went on to lay the blame for Well’s Fargo current situation squarely on the employees, stating, “They’re not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here, I really don’t.” Mr. Stumpf, please see basic law of psychology #1. Is it possible that in the Well’s Fargo culture, while you give lip service to putting “customers first” and honoring your vision and values, you were rewarding for sales goals (business norms) without rewarding for some measure of customer satisfaction or retention?

John Shrewsberry Wells Fargo CFO, speaking at a financial-services conference in New York stated the bank’s issues stemmed from “people trying to meet minimum goals to hang onto their job.” This statement, once again, appears to blame the employee, but it reveals much more.

If all 5,300 employees who were fired for opening more than 2 million accounts over the past 5 years were just trying to meet minimum sales goals to hang onto their jobs, where was the accountability for their actual performance? Where were their peers and supervisors teaching them about Wells Fargo culture, to “put the customer first?” Where did the Wells’ Fargo customer satisfaction scores fair while customers had illegitimate accounts opened in their names? Don’t spend time to find answers to the last question. If they had customer satisfaction scores in place, these improper behaviors would have been nipped in the bud a lot sooner as a red flag would have been raised sooner than this current 5-year period.

If employees were rewarded for sales goals only, without any reward or recognition of customer satisfaction metrics of any kind, Wells exhibited a purely business norm culture. The employees’ sales behavior (both proper and improper) were easily predictable by the culture, regardless of the hiring procedures at Wells Fargo.

Whether he is aware of it or not, Mr. Stumpf basically acknowledged this fact. In the same Walls Street Journal article, he stated, “We think to the extent that some team member used a sales goal as a motivation to do something that is inconsistent with our culture is just not worth it.” So he announced that the bank planned to eliminate all product sales goals in its retail banking operations starting in January.

Sales goals alone drive a business norm (rather than a social norm culture). Business norms drive more of the behaviors we don’t want, social norms drive more of the behaviors we do want.

Finally, Carrie Tolstedt, who led the community banking group responsible for retail banking operations, during this period of time – the person responsible for setting the culture (or subculture) for the retail banking operations “decided to retire.” She left Wells Fargo with a $125 Million package. Is that the type of reward that will increase the probability of this behavior repeating? Take it to the bank.

Keep cultivating your culture!