Over the last month it has been revealed that Wells Fargo employees set up between 1.5 to 2 million new deposit and credit card accounts to meet their sales quotas using false email addresses. This started in 2011.
In addition to paying full restitution to the victims of the scheme, the ramifications of these actions for the bank include:
- Firing approximately 5,300 employees identified as involved in establishing the fake accounts.
- Fined $185 million dollars by the Consumer Financial Protection Bureau, the City and County of Los Angeles, and the Office of the Comptroller of the Currency.
- CEO John Stumpf testified before the Senate Banking Committee about the scandal.
- Executives received unearned bonuses during the timeframe of these activities. So far, the Board of Directors has not moved to revoke the bonuses.
- Consumers’ personal credit scores have been impacted, including late fees and unauthorized movement of funds between accounts.
Beyond the unethical nature of all of these actions, the ramifications for all business leaders who can learn from the tribulations at Wells Fargo are far-reaching.
1. You actually get what you measure. Adjust accordingly.
The design of compensation packages, bonus structures and reward/recognition/incentive programs drives behavior not only for individuals, but for entire teams, departments and divisions. Look for what behavior you intentionally want to result and also for what behavior may result unintentionally.
Adjust your design based on the feedback you receive. No plan, program or design is perfect on the first try.
2. Intentionally craft your corporate culture.
Culture can enable your company to be the most attractive hiring destination, or it can cause you to end up dead last in the talent race. Take it seriously and be deliberate about creating a distinctive culture. Don’t let it happen by accident.
Now both current and former Wells Fargo employees are talking about the toxic culture at the bank and the difficulty of the pressure created by unrealistic sales quotas. Do not be the senior executive so far removed from the day-to-day that you do not realize what’s happening on the ground.
3. Mistakes are going to happen. You must lead through them.
The scale of the mistake may be large or small. The mistake may or may not make headlines. But as a business leader you must prepare in advance to handle them when they arise. Own it. Do not try to avoid it or lie about it. The truth always comes out.
Coach your team members through the experience. Help all parties involved learn from the experience so when the next mistake comes, you (and they) are ready.