Culture, Not Rogue Employees to Blame at Wells Fargo


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Employees at Wells Fargo have done a bad thing. Now, the question is who’s to blame?

Last week, Wells Fargo made national headlines when it was revealed that employees have opened more than two million phony bank and credit card accounts since 2011. These accounts were opened in the names of actual customers without their consent in an effort by employees to achieve aggressive sales goals. Roughly 5,300 employees have been fired as a result. 

John Stumpf, Wells Fargo’s Chairman and CEO, wants to make it clear that this was the work of rogue employees. He’s wrong. The fault lies squarely with Stumpf, his executive team, and the culture they’ve created.

More on that in a moment. For now, let’s look at Stump’s take that Wells Fargo had, and continues to have, a customer-focused culture. Here’s a quote from the Wells Fargo website:

Stumpf sent a message to all Wells Fargo employees on September 8, the day news of the widespread fraud was breaking. He referenced the company’s culture no less than four times, including this:

“Our entire culture is centered on doing what is right for our customers.”

On September 13, Stumpf defended the culture in an interview with the Wall Street Journal and blamed employees for the massive fraud. “There was no incentive to do bad things.” 

That same day, the company’s CFO, John Shrewsberry, told an audience at the Barclays 2016 Global Financial Services Conference, “It was really more at the lower end of the performance scale where people apparently were making bad choices to hang on to their job.”

All of this follows a disturbing trend of corporate executives trying to blame their employees for widespread service failures.

The truth is that this epic fraud didn’t occur despite the culture at Wells Fargo. It happened because of it. Here are just a few things to consider:

First, the numbers are staggering. I’m sure this type of activity happens at a low level in nearly every bank. But, 2 million phony accounts and 5,300 employees fired is an epic scale. Culture isn’t defined by a slogan or what the CEO claims in an interview. It’s defined by what people actually do. And, for the past five years, thousands of employees have been behaving badly.

Second, the timing looks bad. Here’s a timeline that puts it into perspective:

  • June 30: The company set aside $190 million for fines and customer remediation. 
  • July 12: Carrie Tolstedt, head of retail banking, announces her retirement.
  • September 8: Wells Fargo reveals the settlement agreement.
  • September 13: The company announced it will eliminate sales goals for retail employees, effective January 1, 2017.

It should be noted that Tolstedt supervised the 5,300 rogue employees. The 2 million phony accounts happened on her watch.

Publicly, Stumpf is backing Tolstedt. In a statement announcing her retirement, Stumpf gave her nothing but praise. “A trusted colleague and dear friend, Carrie Tolstedt has been one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership.”

Notice Stumpf mentioned culture. A culture where 2 million phony accounts are created without customers’ consent. A culture where 5,300 employees are fired over a period of five years for this fraud.

Finally, there are the many comments from Wells Fargo employees describing an intense culture that pressured employees to cross the line. Here are just a few:

Julie Miller, a former Wells Fargo banker, told the Charlotte Observer, “It became a living nightmare. They almost doubled our goals and decreased our incentive pay. It drove me to drink.”

Sabrina Bertrand, a former Wells Fargo banker, told CNNMoney, “I had managers in my face yelling at me. They wanted you to open up dual checking accounts for people that couldn’t even manage their original checking account.”

Back in 2013, former branch manager Rita Murillo described the retail banking culture to the Los Angeles Times. “We were constantly told we would end up working for McDonald’s. If we did not make the sales quotas … we had to stay for what felt like after-school detention, or report to a call session on Saturdays.” Murillo said she had to provide her bosses with hourly updates on her branch’s progress towards sales quotas for opening accounts.

So, why would Stumpf defend his company’s culture despite all this evidence to the contrary? 

Just like their employees, Stumpf and other Wells Fargo executives have their own financial incentives to consider. Stumpf was paid $19.3 million last year. Shrewsberry, the CFO, was paid just over $9 million in 2015.

Fortune reported that Tolstedt is leaving the company with $124.6 million in stock, options, and restricted shares. Tolstedt would have had to give back at least $45 million if she had been fired instead of retiring.

That’s lottery money. As in, buy your own island and a yacht to sail around it money. 

In a world where people physically assault each other for free t-shirts at sporting events, it’s easy to imagine what a corporate executive would do when crazy lottery money is on the line.

Republished with author's permission from original post.


  1. We’re on precisely the same page here. Over the past several years, we’ve all witnessed situations of major corporations like Wells Fargo, Comcast, and FedEx defending their cultures and laying blame for misdeeds and performance shortfalls on employees. At Comcast, for example, it was senior execs saying that their culture doesn’t push employees to deny a customer the right to discontinue service. The incident where this occurred was recorded by a customer and seen by millions of people on YouTube. Contrary to the statements of Comcast executives, rank-and-file customer contact employees affirmed the daily push to both keep customers and to cross-sell and upsell them. As you’ve described, Wells Fargo executives blamed “bad” employees for opening accounts for customers without their permission. Over 5,000 employees were fired – including bankers, managers, and bosses of those managers. As with Comcast, rank-and-file Wells Fargo employees who had been terminated often put the responsibility for Wells Fargo’s illegal sales policies squarely on the shoulders of top management, who pressured them to sell. These are two very public examples of the name-and-blame which often accompanies disjointed cultures and non customer-centric activities.

  2. Hi Jeff: I agree with your points, and think that the Federal investigation of Wells Fargo will prove that senior management’s policies were a root cause for this fraud. Lest there be any confusion, this is a sales scam that happened at a bank. It is not evidence of a systemic breakdown in our financial system.

    I began to follow this story in December, 2015 when I read about Wells Fargo’s ‘high pressure’ sales tactics in an article from the LA Times. At the time the legality was unclear, but their tactics earned Wells Fargo a spot on my 2015 Sales Ethics Hall of Shame.

    Interesting that Stumpf praised Wells Fargo’s culture at least four times in his letter to employees. A report in today’s Wall Street Journal noted that the term “cross sell” appears 20 times in the company’s latest annual report, which also referred to its bank branches as “stores.” Hmmmm.

    So you’re saying that a company couldn’t have 5,300 rogue employees? . . . As one commentator mentioned on NPR this week, 5,300 “employees don’t just wake up with the same bad idea.” Amen to that. Wells Fargo’s management wrongfully manipulated its employees as much as it did its customers. My blog about Wells Fargo will be posted this week, and I’ll expand on this idea.

  3. Yup.

    To quote Dan Pink, “When the profit motive becomes unmoored from the purpose motive, Bad Things happen”

    It appears that’s what happened here.

  4. right article, wrong headline, Jeff! It is not culture that is to be blamed as you put into the headline. It is the executives! Culture is a derivative, set by the example, guidance, goals and metrics given by the leadership. So, as you rightly say in the article Mr. Stumpf and his colleagues in the executive board – perhaps augmented by the advisory board – are the ones to blame. They set the goals, they set the metrics, and they probably set them not overly realistic. Goals and metrics result in behaviours; so one could say that the employees were the rational (yet ruthless) ones.

    Just to be sure: I do not condone their actions, but I am with David Lazarus who calls the Wells Fargo execs ‘Weasels’ in his LA Times article

    And I think that executives who failed like the Wells Fargo ones should go – without package because they harmed the business, very much so.

    2 ct from Down Under

  5. Thanks for all the comments! A few notes:

    @Michael – I think the comparison to Comcast is a good one. In both cases, executives tried to blame frontline employees for their own poor decisions.

    @Andrew – Yes, I was surprised to see that LA Times article was from 2013! This has been out in the open for a long time, but it apparently continued.

    @Shaun – Good point about purpose. Had Wells Fargo really had a customer-focused culture, employees would have approached things very differently.

  6. @Thomas – It sounds like we agree on a lot, such as the executives are primarily to blame. So we might be splitting hairs here on culture vs executives.

    How do you define culture? And, what separates that from the actions of executives?

    I like a definition from my colleague (and culture expert) Catherine Mattice, “Organizational culture is the way an organization’s members think, act, and understand the world around them.”

  7. Jeff, yes, I might be hair splitting – although I don’t have any hair left to split :-))

    I like Catherine’s definition, although I would add that it is governed by (common) values. How about rephrasing it to something like:

    Organizational culture is governed by values and expressed by the way the organization’s members think, act, and understand the world around them.

    Blaming the ‘culture’ to me is like abstracting actions away from accountability. Culture doesn’t have consciousness. Do you blame Microsoft’s infamous Twitter bot Tay for being trained to become a blasphemic racist by a bunch of Twitter trolls?

    Culture will not change by itself, only by the people creating it. And the ones powerful enough to do so are the executives. One can blame the employees for succumbing to the culture, though. They had the choice to leave.

    As said, in the text you rightly blame the executives. They define, set and enforce a corporate culture by setting examples, giving goals, metrics and thus show what is to be valued.

    Being a bit cynic I could add that their salaries/packages are already enough to show what is of value to them – Gordon Gecko is still very much alive 😉


  8. Hi Thomas – Thanks for continuing the conversation with me!

    Your definition makes sense for organizations with strong, purposeful cultures. Mattice’s definition is meant to encompass all organizations, even if they have a culture that’s weak, fragmented, or even toxic. In other words, some organizations don’t have stated values (or, like Wells Fargo, clearly don’t follow their stated values), but there’s still a culture that guides employee behavior.

    Of course, I may be misunderstanding what you mean by values. I think you mean stated values. Is that correct? Or, do you mean the values that people actually observe and follow?

    I think this is an important distinction. I realize they can be the same thing. In organizations with healthy cultures, they usually are. However, there’s often a disconnect between stated values and how employees actually think, act, and understand how they should perform and behave.

  9. Hi Jeff, it is a good and interesting discussion! And I think we are very close to each other.

    Actually I meant the values that are set by the executives. These sadly are regularly different from the values that may or may not be written down in a corporate constitution. Every company has values, many just don’t write them down, but they are always used for employee appraisal – also hiring processes.

    The challenge is when the written corporate values – that Wells Fargo has – differ from the values that get communicated via goals, metrics, and executive behaviours. The latter get observed by the rest of the employees and supersede the written values. These ‘executive’ values then lead to corresponding behaviours on the employee side, which may be just wrong, even illegal.

    I think this is a problem that many companies have, albeit likely not as blatantly as Wells Fargo. But looking into the past years worth of bank headlines the banking industry seems to be pretty bad at aligning ‘observed executive values’ with corporate values.


  10. Jeff: I agree with your assessment, and think that it’s fair to impugn the culture at Wells Fargo for the fraud its employees committed. Culture is malleable – a blend of beliefs, values, behaviors, and actions that occur – in this case, within a company. Calling that out doesn’t exonerate a company’s executives. Rather, it implicates them. In large measure senior executives are responsible for corporate culture. Sure, we can look at the actions (or inaction) of certain individuals as the root cause of Wells Fargo’s fraud, but culture is the vehicle that enables bad practices to become systemic. I expect the testimony we will be hearing about Wells Fargo will clearly demonstrate the role senior executives had in fostering a culture where deceit could flourish.

  11. I like to think of culture as a set of consistent behaviors. What people actually do is what matters most, not the stated philosophy, values, etc.

    I believe it was McKinsey who said that culture is “how we do things around here.”

    That doesn’t mean that values don’t matter, of course they do. But if a stated value (e.g. “don’t rip off your customers”) isn’t reflected in behavior, is it really a value or just words on paper?

    Following my logic, how do certain behaviors become acceptable (cultural)? By management’s action, or lack of action. In the case of Wells Fargo, it appears over 5K employees learned that they had to make sales targets at all costs. Lack of management action made it seem “ok” to cheat.

    In this case, an indictment of “culture” is the same as an indictment of management. Sales targets didn’t come out of thin air. And, the lack of audits/controls on “gaming” behavior is also a management responsibility.

    It will be interesting to see if any senior executives are fired, or their compensation “clawed back.” If not, this will be another signal to the WF organization that it’s ok to cheat so long as you don’t get caught, or are high enough up the food chain to claim ignorance.

    I’ve been a Wells Fargo customer for 20+ years. This incident really gives me pause whether I can trust them to handle my money fairly. Now excuse me while I go audit my accounts and credit cards to make sure there aren’t some “extras” I didn’t ask for.

  12. Hi Bob, I think your quote about culture hits the nail on the head (as we say in German …)

    ‘How we do it’ is a set of behaviours, behaviours are driven by values, or the other way round, behaviours are an expression of values. Corporate values (the ones on paper) are not always the ones that are expressed. The ones that are expressed are the ones enforced/endorsed/condoned/promoted/encouraged – add your own word here, perhaps – by the senior executives.


    PS: I hope the review of your accounts went to your satisfaction

  13. Thanks for posting the link to Warren’s blistering commentary and questioning of Stumpf. I could not be prouder of her command of the facts and the way she exposed management’s patent dishonesty and feckless leadership. I just posted a related article, Anatomy of a Scam: Wells Fargo’s Treachery Can Happen Anywhere. I’m interested in your thoughts.


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