what if? is a series of posts that highlights corporate crisis that could have been prevented if the organisation had eliminated the fear of speaking out by giving their employees a voice and creating a psychologically safe place to work.
Two years after Wells Fargo was exposed in one of the biggest banking scandals in history, the Financial Conduct Authority (FCA) in the UK are creating a ‘speak up, listen up’ culture within the financial services sector. This is part of their ongoing work to transform the sector’s culture, in an effort to reduce harm to both consumers and markets.
What happened at Wells Fargo?
Following an investigation by federal and state regulators, it was revealed that, under pressure to hit sales targets, Wells Fargo staff had created millions of fake bank accounts.
The investigation also found that several employees who witnessed the unethical behaviour actually reported it to their supervisors, or the ethics hotline, and one claimed to have emailed John Stumpf, Chief Executive Officer (CEO), personally.
Stumpf defended the bank’s culture and instead blamed a couple of bad apples, stating: “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.”
As a result of the illegal activity the bank was fined US$185 million and 5,300 ‘bad apples’ were laid off, including some of the ‘whistle blowers’.
Where did it go wrong?
When sales targets are aligned to performance management systems it exerts significant, and in some cases extreme, pressure on employees to meet or exceed those goals.
It also creates a cascade model of aggressive line management, and Wells Fargo was no exception.
Senior managers developed catchy communication campaigns to motivate managers to drive sales:
Internal marketing at its worst!
District managers literally had to ‘run the gauntlet’ by dressing up in themed costumes before running down a line to a whiteboard to report on the number of sales they achieved.
Supervisors were grilled by district managers on four conference calls a day, every day, at three hour intervals.
Many employees knew that failing to meet their personal sales targets could result in career-hindering criticism at best, termination of employment at worst.
This all helped drive a culture of fear.
Why didn’t more employees speak out?
Various academic studies of self-censorship at work have identified conditioned fears about when and why speaking up at work is risky or inappropriate. Some of these appear to have been at play to some extent within Wells Fargo:
Challenging the status quo: questioning the wisdom of the individuals who established or support the way we do things around here
Not knowing the facts: saying “I’m not sure” when being questioned about a new idea you’re presenting puts you in a bad position.
Bypassing your boss: speaking up to your boss in front of people who are even higher in the organization, you make your boss look bad.
Embarrassing your boss: giving your boss time to prepare or discuss a problem or suggestion you have prior to bringing it up in front of a group is important.
Risking your career: speaking up at work about possible improvements sets you up for retribution by those above you who felt threatened by your comments.
How do you eliminate conditioned fears?
Conditioned fears can be eliminated through a shift in context or culture to provide psychological safety. In her book The Fearless Organisation, Amy Edmondson posits five important conditions that lead to psychological safety.
- Team Leader Behaviour. Leaders need to be available, invite feedback and admit mistakes.
- Informal Group Dynamics. Provide a sense of relatedness, accepted distribution of power.
- Trust and Respect. Individuals are respected for their competence and given the benefit of the doubt.
- Use of Practice Fields. Creating a safe environment to learn and trial or practice new techniques.
- Supportive Organisational Context. Allocate resources proportionately. Share information freely.
Our NO-FEAR CULTURE ASSESSMENT is based on the the extrinsic conditions of psychological safety in the workplace as well as the intrinsic fears that individuals have.
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