How Can Wells Fargo Recover From Massive Stakeholder Insensitivity?


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All of the changes in customer decision-making dynamics, and influences on corporate and brand perception over the past decade or two, have brought business-to-business and business-to-consumer marketplaces to a new frontier. There is an increasingly critical connection between brand promise, corporate trustability and reputation, the customer experience as created by people and processes, and downstream customer behavior.

In an exploding Newtonian way, any small ripple in reputation change (such as through a product recall, operating scandal, or executive miscue), brand performance or customer service can have a tsunami type effect. And the ‘long-tail’ of online social media commentary may make the damage last indefinitely.

Employees have a particularly important role here. Studies have found that employees are often less than enthusiastic about their employers and the goods they produce. As noted in many discussions of employee ambassadorship, small lapses in committed behavior by employees, identified as ‘badvocacy’ by Weber Shandwick, can cause a great deal of damage to reputation and business outcomes. Negative or ambivalent employee attitude often drives customer complaints, some of which are expressed and some of which are either suppressed, mentioned in casual conversation, or posted on social media sites.

Wells Fargo Scandal

Enter Wells Fargo, and its alleged multi-year illegal sales practices across the company, first reported about two weeks ago – although, with all of the media attention, including widely-covered congressional hearings, it feels like the situation has been going on for months. After findings that many accounts had been falsified (such as creating fake email addresses) or forced on unsuspecting customers, netting the company billions of dollars in profits, Wells Fargo paid a (relatively small) $185 million fine to regulators.

In a September 13th Wall Street Journal article, CEO John Stumpf said that the bank didn’t have a bad culture, but that it has been working to weed out bad employee behavior. As he’s stated, “Everything we do is built on trust. It doesn’t happen with one transaction, in one day on the job or in one quarter. It’s earned relationship by relationship.” Pronouncements like that should reflect a customer-centric culture, ambassadorial employee behavior, and positive customer perception. At Wells Fargo, it can be argued that none of these exist. Instead, Stumpf has said that the problems were caused by ‘rogue’ employees, 5,300 of whom were fired over a several year period. These employees were principally non-managerial bankers and lower level supervisors. Large-scale employee dismissal is reflective of a disturbing business trend, where corporate executives blame staff for various negative customer value situations, rather than on rust, chinks, holes and dents in the cultural armor.

Like other recent, very public value-diminishing customer events, such as incurred by United Air Lines, Comcast, FedEx, General Motors, Toyota, and others, the Wells Fargo story may be with us for some time. Though Stumpf has said that “I’m thinking about how do we move forward”, his testimony before the Senate Banking Committee did little to help with doing that. And, in fact, at this writing, his job may be on the line (though he’d pick up over $100 million in severance if he left the company). As commented by comedian John Oliver, what Stumpf and his weak defenses of the Wells Fargo scandal have disclosed are issues of enterprise DNA and failed leadership.

On September 8th, Stumpf had sent a message to all Wells Fargo employees, the day news of the massive fraud was breaking. In it, he referenced the culture multiple times, saying “Our entire culture is centered on doing what is right for our customers.” A week later, in the WSJ article referenced earlier, he directly blamed employees, saying “There was no incentive to do bad things.” These are the words of an out-of-touch leader, reflecting an incoherent and non-transparent stakeholder culture.

Consistency and Clarity of Goals and Values

Particularly evident in the Wells Fargo reporting is the emerging operational and cultural disconnect which exists between senior and middle management, and lower level supervisory and non-managerial employees. A more real-world description of what Wells Fargo’s customers have experienced came from John Shrewsberry, the CFO, who has said that the bank’s issues were principally due to “people trying to meet minimum goals to hang onto their job.” If the massive pressure for cross-selling by the rank-and-file Wells Fargo employees isn’t a mirror reflection of a stakeholder-insensitive, values-absent culture, what is?

If there is agreement on goals and values between levels of employees within an organization, the good news is that people generally trust those that they work with every day. Unfortunately, per a recent survey done by the London Business School and MIT’s Sloan School of Management, the bad news, as can occur in a large company like Wells Fargo, is that senior management trusts junior management or non-management only about 10% of the time. Junior managers, supervisors and non-managers often can’t identify the organization’s major priorities, leaving a vacuum and lack of clarity. Result: More direct pressure and close supervision from above, a minimum of non-manager and first line supervisor enablement and empowerment, and an impaired employee experience. I’d submit that this combination of factors represents, over an extended period of time, what has brought Wells Fargo to this unfortunate position. Time will tell how long it takes the remaining employees, and customers, to recover their former levels of trust.

Build Stakeholder Experience From The Inside-Out and Outside-In

There is, of course, a prescriptive for helping rebuild Wells Fargo’s culture; and it begins with addressing drivers of stakeholder experience from the inside-out, as well as outside-in, i.e. from the customer’s perspective. One of my favorite models for doing this is Baptist Health Care, based in Pensacola, Florida. Baptist, simply, has one of the most progressive stakeholder-centric, value and values-driven, cultures to be found anywhere in the world. Here are some of the things I’d written about the organization from a few years ago:

There’s a culture of inclusion and participation at BHC which employees desire and appreciate. Money’s always a part of the value employees see in their job, to be sure; but, it’s the environment, training, plus the daily and long-term experience, that are so much more important to them. At Baptist, employees respect each other’s professions. It’s well understood, for instance, that nurses are the direct link to the patients. They’re at the bedside, the first line of patient-employee contact, like customer service reps. In a shared value and climate of ‘patients come first’, everyone pulls together. That’s a central reason why BHC’s rate of staff turnover continues to go down.

Employees want enrichment. They want communication and participation. They want training. They want recognition. They want to have pride in where they work. They want management to lead by example. At Baptist Health Care, this all exists; and the benefits of a stakeholder- and customer-centric culture are realities that everyone can see, everyday. If customer-centricity can be created in healthcare, it can be created anywhere.”

Baptist doesn’t have rogue employees. They have brand ambassadors. Baptist doesn’t have name-and-blame executives. They have servant leaders. Baptist doesn’t have a repressive, high-pressure culture. They have trust and stakeholder-centricity. Baptist Health Care is a leader in its industry. If the Wells Fargo board allows John Stumpf to remain as CEO, perhaps a near-term trip to Pensacola would be a useful way to begin moving forward.


  1. Hi Michael – just want to clarify because this is so important to the case: Wells Fargo’s sales practices are no longer alleged to be illegal. Also, the story broke to the public not two weeks ago, but back in 2013, from an investigative report by Scott Reckard of the Los Angeles Times. It came to my attention because the headline included the term high-pressure sales tactics, and I included a link to Reckard’s article in one I wrote in May 2015, concerning sales pay incentives, Teach Your Sales Force Well: Learning from Pay-for-Performance. . I used Wells Fargo as an example of how not to do it.

    Also, I believe the LA City Attorney’s case against Wells Fargo was the first legal action taken in this matter. Here’s the text from the LA City’s press release, which I believe was filed in 2013 or 14:

    “. . . Wells Fargo’s business model imposed unrealistic sales quotas that, among other things, have driven employees to engage in unlawful activity including opening fee-generating customer accounts and adding unwanted secondary accounts to primary accounts without permission. These practices allegedly have led to significant hardship and financial loss to consumers, including having money withdrawn from customer’s authorized accounts to pay for fees assessed by Wells Fargo on unauthorized accounts and derogatory notes on credit reports when unauthorized fees went unpaid, causing some customers to purchase identity theft protection. Furthermore, the complaint alleges that Wells Fargo failed to properly inform customers of misuse of their personal information and failed to refund unauthorized fees.”

    Hardly new news . . . Oddly, following the LA Times article, this story kind of went dormant, and I found little if any news about it, until it surfaced this month. Amazingly, the very practices that have spawned this week’s congressional outrage over Wells Fargo’s ethics were documented in Reckard’s December, 2013 article.

  2. Andrew –

    Agree that, with the payment of its fine to regulators, the word ‘alleged” with regard to Wells Fargo’s fraudulent activities no longer applies. And, the fraud only seems to be mushrooming. On Thursday, the image and trust level of Wells Fargo. took another hit when it agreed to pay $24 million for the improper repossession of cars owned by members of the U.S. military. Clearly, the bank has no shame and has shown little remorse for these illegalities nor have they shown much empathy or consideration for the employees they forced to leave. Their culture, built on rampant greed, needs major surgery.


  3. Incidentally, I’d add that, on further reflection the last word in the title of my post would more accurately be ‘abuse’, rather than ‘insensitivity’. This is closer to labeling the extreme degree of avarice and repression represented by Wells Fargo’s culture.


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