Wells Fargo was lacking values-based leadership
IMD Professor Jennifer Jordan on the Wells Fargo Scandal
The story is all too familiar by now. In an effort to meet their targets, Wells Fargo employees created over two million fake bank and credit card accounts from which they charged various fees. While the fees were real, the fraudulent accounts were never authorized by the owners.
Companies set targets without being mindful of how those targets might elicit unintended unethical behaviors – behaviors that are inconsistent with their core values. In bold letters under the heading, “Vision and Values”, Wells Fargo CEO, John Stumpf, states on the company website, “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.” Well, it seems like Wells Fargo disregarded its relationship with millions of its customers.
Regulators are blaming the bank for not having tighter controls and oversight on employees’ behavior. But I seriously question if loose controls were the culprit. It seems like what was lacking was values-based leadership at the helm of this Wall Street behemoth. Research by myself and others demonstrates that the best leaders are those who not only emphasize meeting goals but also emphasize how those goals are met; for a values-based leader, a goal is only important to the extent that the company’s values are upheld in the process. Yes, setting goals is important for keeping employees motivated. But if those goals are achieved at the expense of the company’s values, then the achievement is more than shallow - it’s a major blemish to the company’s public image and trust.
Values-based leadership means that values are not just words but are translated into actions – actions including how targets are set and monitored. Targets are meant to be won or achieved. But in this situation, everyone involved – employees, the company, the customers, the banking industry – is a loser.
Jennifer Jordan is Professor of Leadership and Organizational Behavior at IMD. She teaches on the Orchestrating Winning Performance and Building on Talent programs.