President Harry S. Truman famously had a plaque on his desk that read, “The buck stops here.” It was a reminder to himself that he couldn’t pass responsibility for the way the country was governed. Ultimately, he was responsible.
Responsibility comes with leadership. If you’re in a position of authority, you’re accountable for what occurs under your watch. Whether or not you took the action that is being questioned, you have responsibility for what those in your charge have done. Former Wells Fargo CEO John Stumpf learned that the hard way when he had to resign after a scandal at the bank he ran.
In early September, it came to light that Wells Fargo employees had opened millions of ghost accounts on behalf of unknowing customers so it could charge them millions of dollars in additional fees. The Wells Fargo employees used phony PINs and fake e-mail addresses to enroll customers in online banking services they knew nothing about.
When I heard about the scandal, my first thought was for those Wells Fargo customers. Imagine what it felt like to learn that the bank you trusted with your money was actually using your personal information to open fake accounts! My second thought was how happy I was NOT to be a customer of the financial institution.
I doubt having all of your customers wondering if you have misused their personal information to charge them more fees AND having every other potential customer in the country excited that they weren’t banking with you is good for business.
So when I saw Wells Fargo’s latest commercial over the weekend, my first thought was, “How stupid!” The commercial spot I saw on one of the major networks finished with the line, “We’re renewing our commitment to you.” Really? That’s the best you could come up with?
Just to be sure I was clear about its meaning, I looked up the definition of “renew.” According to what I found, the definition of renew is to “resume (an activity) after an interruption.” Wells Fargo is telling us that for a while it wasn’t committed to its customers, but that has now changed. It has decided to end that interruption in its commitment to its customers by renewing it. In essence, the bank is saying that for a while, we really weren’t committed to our customers, but now that we’ve been caught stealing from them, we’re going to do better.
Maybe I shouldn’t have been surprised. After the scandal broke, Wells Fargo said that it had fired 5,300 employees over the last few years because of questionable behavior. Not one of those held responsible for the scandal was a member of the senior management team, even though the CEO eventually did resign. That’s right—Wells Fargo fired a bunch of lower-level employees and midlevel managers, but somehow no one in the executive suite was held responsible. Obviously, the buck stopped somewhere else. It took a very public shaming in front of a congressional panel before the CEO offered his resignation.
It gets worse—the media reported that former Wells Fargo employees who had tried to put a stop to these illegal activities were fired. You might think these were just some former employees who had a beef with the bank because they were fired. I guess that could be the case. But among those who claimed Wells Fargo had retaliated against the whistleblowers was a former bank HR official. He said the bank would find ways to fire employees “in retaliation” for bringing the illegal practices to light.
That’s incredible. Wells Fargo has thousands of employees opening millions of accounts on behalf of unknowing customers in order to charge them millions of dollars in fees. As part of its defense, the bank claimed that it has processes and procedures in place to ferret out this type of wrongdoing. But then we find out that the process put in place that allowed employees to bring misconduct to the attention of senior management actually led to the whistleblowers being fired.
I’ve heard so-called “experts” who have blamed the illegal activities on Wells Fargo’s incentive compensation plan. They argued that the bank should not have provided incentive pay to its employees. That makes no sense to me. Companies across the country have compensation plans that include sales incentives and commissions.
The problem isn’t with incentivizing employees to achieve results. The problem is with creating a culture where this type of behavior wasn’t just condoned but actually encouraged. You can’t create an incentive compensation plan without having the checks and balances in place to make sure it produces the desired results without allowing for unethical or illegal behavior. Wells Fargo’s problem wasn’t with its comp plan—it was its total failure in the oversight of employees’ activities. Or, worse yet, its potential encouragement of these illegal activities to drive bank profits.
It’s a shame that an institution that has been a part of the American culture for more than 150 years is now associated with this type of behavior. Attribute it to greed or whatever you’d like, but in the end, the leadership of the bank had to be held accountable. It seems that John Stumpf learned that the hard way.