Wells Fargo Scandal: Integrity starts at the top
John Stumpf, – CEO of Wells Farg0
The ethics of the Wells Fargo Scandal and how to get paid $124m for the pleasure
By Jon Michail
John Stumpf, the CEO of Wells Fargo, stepped down from his role recently. The announcement arrived amid fallout from the bank’s recent fraudulent account scandal. For years, leadership at the bank pushed employees to fulfill unreasonable sales goals by illegally opening customer accounts without the consent of the customer. The brazen actions and policies of the bank have shocked both customers and lawmakers in Washington—and sent Wells Fargo stock prices plummeting.
Stumpf’s stepping down and walking away with a reported US$124million payout is shocking, considering just a few weeks before he appeared in a senate hearing acting unrepentant and defiant in the face of harsh accusations regarding his competence as a leader. In one pointed exchange, he brushed off accusations of fraud and said, “The culture of the company is strong.”
“It was defined by greed”
We know of course that the company’s culture wasn’t strong. It was defined by greed and the lack of respect between superiors and their employees. And that culture was embodied and defined by the man at the top. A culture more common today than some people want to admit and that has lead to a morally bankrupt way of being in society as whole and will only get worse if it’s allowed to continue.
When reports of Wells Fargo’s unlawful banking practices were about to be first published in 2013, Stumpf’s first act was to protect himself. He sold off millions of share of Wells Fargo stock just days before the LA Times first broke the news—which saved him millions of dollars when the stock eventually cratered. Great leadership not. Meanwhile, over 5,000 employees who participated in the fraudulent accounts scheme were fired.
“He deflects blame away from policies he oversaw, while personally enriching himself.”
That’s the type of guy Stumpf appears to be: he deflects blame away from policies he oversaw, while personally enriching himself. And if his answers at the senate hearing are any indication, he appears to be unapologetic—or unaware—that he did anything wrong.
While Stumpf may not have personally opened any sham accounts for customers, he bears the full burden of responsibility as the leader of his organisation. Sorry, that’s the way it’s supposed to work. He was the one who set the business goals that incentivised Wells Fargo bankers to pursue shady deals. He was the one who allowed and perhaps encouraged these practices. And he was the one who sent the message that the bank cares more about profits than about the wellbeing of its employees.
Is it fair to blame one person for something that thousands of people across the country had their hand in? Not in this case. One of the burdens of the chief executive is to perform the values they would like to see reflected in the company. If a chief executive wants to run an honest company that values integrity, that executive must model that behavior.
“The dead fish rots from the head.”
The culture and values of a business always, always come from the top and never from the bottom. Like the old saying, “the dead fish rots from the head.”
The best businesses are organised around values of mutual respect and honesty and then actually practiced not just spoken. It’s now clear that Wells Fargo under Stumpf’s leadership (and its board) didn’t possess those values. Now that he’s gone, it will be the burden of the next leader to clean up the mess of the corporate culture….. but I’m not holding my breath for it to happen anytime soon, the new CEO Timothy J. Sloan was the past Chief Operating Officer and President of the firm.
What do you think?
Jon Michail is Group CEO of Image Group International, an award-winning author and recognised as Australasia’s No 1 image coach. Image Group International supports executives, entrepreneurs, and their organisations to become iconic and monetised leadership brands.
He is a regular commentator in international media organsations ABC, CNN, NBC, Harvard Business Review, Entrepreneur, Success, The Financial Review and Vogue.