We have seen it before…the kind of toxic corporate sales cultures that give rise to disasters like the VW diesel emissions cheating scandal or the public accusation that Amazon oppressively monitored its employees with the unrealistic and harsh expectation that they perform like machines on the floor. Now we have another major example of what can happen when a corporate culture goes horribly wrong…the Wells Fargo debacle.
As much as CEO John Stumpf in his testimony before the U.S. Senate Committee tried to explain away the unethical behavior of so many Wells Fargo employees, many feel he should be the one held accountable. Yes, he fired about 5,300 employees for creating unauthorized and bogus accounts. But most financial analysts agree that it was the corporate culture he created that failed, not just those employees.
Here is our take. Corporate culture matters a lot…for good or for ill. Our organizational alignment research found that culture accounts for 40% of the difference between high and low performing organizations in terms of revenue, margin and employee engagement. An aligned culture can support a company’s success because employees are positively engaged; they operate with mutual respect; they live the company values and care about what they do. The opposite is true in an unaligned corporate culture. Employees simply check in and out with little allegiance to the company or brand; they lack respect for their leaders; they do not aspire to high ideals nor do they feel they are encouraged to practice them.
There are three major factors that contribute to a toxic culture and all three appear to have been present at Wells Fargo prior to the scandal:
Any one of these factors can quickly and systemically spread poison through the workplace through unaligned corporate beliefs, norms, assumptions and artifacts.
Unrealistic and Unreasonable Expectations of Employee Performance
If the news reports are true, it appears that Wells Fargo had unrealistic and unreasonable expectations of employee performance which contributed to employees secretly selling services to unsuspecting customers. When it comes to expectations, high performance cultures ensure that employees understand exactly what is being asked of them, believe that the performance expectations are fair and achievable, have the support they need to deliver on those expectations and know how they are performing compared to those expectations.
Minimal Accountability for Questionable Practices or Behaviors
It also appears that Wells Fargo’s culture created minimal accountability for the questionable practice of unfairly taking advantage of customers to meet sales targets. Your corporate culture and values dictate how employees behave and what happens when unethical behavior occurs. Getting caught creating over 2 million phony and unauthorized accounts to hit sales targets and receive bonuses screams of a serious leadership and culture problem. Similar to the VW emissions scandal, it appears that the results (hitting sales targets) greatly outweighed two of their core corporate values: “Ethics” and “What’s right for customers.”
An Atmosphere Where Employees Fear Repercussions for Speaking Openly
Lastly, we know based upon over 500,000 employee engagement survey responses that that employees only report questionable behavior when they have faith that there will not be retaliation for speaking up. The same lack of trust plagued VW. If you want your employees to be a positive force for change make sure that they trust leadership to set the right course, model the ways things should get done, and demonstrate integrity. Then ensure that management encourages constructive dissent and listens to and takes employee ideas seriously.
Wells Fargo’s website states that “culture is the attitude we bring to work every day — the pattern of thinking and acting with the customer in mind. It’s the habit of doing the right things, and doing things right.”
If they had followed their espoused corporate culture, they may have avoided the largest penalty, $185 million, since the Consumer Financial Protection Bureau was founded in 2011.
Take a close look at your corporate culture. Can you honestly say that your culture is aligned with your strategy and a positive force that does not risk being poisoned by one of the three factors above? Be sure. Few organizations can survive the kind of scandal Wells Fargo has just experienced.
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