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What if? Wells Fargo

what if? is a series of blog posts from Safe Places To Work that takes examples of corporate crisis that could have been prevented if the organisations had given their employees a voice and created a psychologically safe place to work.

It is interesting to see that, as part of their ongoing work to transform culture in financial services to reduce harm to consumer and markets,  the Financial Conduct Authority in the UK are creating a speak up, listen up culture in financial services.

It comes two years after Wells Fargo was exposed in one of the biggest banking scandals in history. So what if? the Wells Fargo had a culture was less about fear, blame and hierarchy?

The Apple Doesn’t Fall Far From The Tree

Under pressure to hit sales targets, Wells Fargo staff had created millions of fake bank accounts in order to hit their goals. News broke following the conclusion of an investigation by federal and state regulators that imposed a US$185 million fine as a result of the illegal activity. 

In his response, CEO John Stumpf layed the blame on “a couple of bad apples” and laid off 5,300 employees who committed the act, rather than an issue with systems or culture. 

” There was no incentive to do bad things. We think to the extent that some team member used a sales goal as a motivation to do something that is inconsistent with our culture is just not worth it”  

The investigation also found that several employees who witnessed the unethical behaviour had reported it to their supervisors or to the ethics hotline. One even claimed to have emailed Stumpf about it. Some employees were later terminated for blowing the whistle. 

Call to Bad Action

Sales targets were aligned to a performance management system which exerted significant, and in some cases extreme, pressure on employees to meet or exceed their goals. It created a cascade model of aggressive line management.

Senior managers developed catchy communication campaigns to motivate managers to drive sales “Jump to January” “Fly into February” “March into March “Eight is Great” “Going for Gr..Eight”. Internal marketing at its worst.

District managers were asked to literally “run the gauntlet” dressing up in themed costumes before running down a line to a whiteboard to report the number of sales they achieved. 

Supervisors were grilled on sales by district managers on four conferences calls every day at 3-hour intervals.

Many employees knew that failing to meet their sales goals could result in termination or career-hindering criticism by their supervisors, driving a culture of fear.  

Now pay attention, here comes the science bit…

In their studies of Implicit Voice Theories (IVTs) James R. Detert and Amy C. Edmondson identified taken-for-granted beliefs about when and why speaking up at work is risky or inappropriate.  You can see some of these IVTs coming into play with self-censorship at work in Wells Fargo.

  1. Presumed Target Identification It’s risky to challenge existing processes because it may be seen as questioning the wisdom of the individuals who established or support them.

  2. Need Solid Data or Solutions (to Speak Up) Saying “I’m not sure” when being questioned about some aspect of a new idea you’re presenting puts you in a bad position.

  3. Don’t Bypass the Boss Upward When you speak up t to your boss in front of people who are even higher in the organization, you make your boss look bad.

  4. Don’t Embarrass the Boss in Public It is important to give your boss time to prepare to discuss a problem or suggestion you have prior to bringing it up in front of a group.

  5. Negative Career Consequences of Voice Speaking up at work about possible improvements sets you up for retribution by those above you who felt threatened by your comments.

 Edmondson posits five important organisational conditions or antecedents to psychological safety.  There are some clear correlations to the lack of psychological safety that existed within Wells Fargo.

  1. Team Leader Behaviour. Leaders need to be available, invite feedback and admit mistakes.

  2. Informal Group Dynamics. Provide a sense of relatedness, accepted distribution of power.

  3. Trust and Respect. Individuals are respected for their competence and given the benefit of the doubt.

  4. Use of Practice Fields. Creating a safe environment to learn and trial or practice new techniques.

  5. Supportive Organisational Context. Allocate resources proportionately.  Share information freely.

Safe Places To Work assesses the antecedents and consequences of psychological safety in the workplace. what if?  this assessment had been conducted within Wells Fargo before this series of unfortunate events? If you would like to discuss this assessment for your organisation, PLEASE CONTACT US


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