Sure, 2016 may have been a rough year for many. But Wells Fargo has most of us beaten. The company was slapped with an historic $185 million fine to settle fraud allegations for pushing banking customers into fee-generating accounts and extras (like overdraft protection) they never requested. During this time, the saga turned into a corporate blame game of equally historic proportions.
Wells Fargo CEO John Stumpf told The Wall Street Journal the company had “no incentive to do bad things” in place and the allegedly illegal sales practices running rampant throughout the company was the employees’ fault.
Employees tell a different story.
“We were constantly told we would end up working for McDonald’s,” former Branch Manager Rita Murillo told the Los Angeles Times. “If we did not make the sales quotas…we had to stay for what felt like after-school detention, or report to a call session on Saturdays.”
We may never know who exactly is to blame. Is it the top executives who allegedly created a “pressure cooker” environment of unrealistic quotas and threats? The lower-level sales and banking associates themselves for buckling under pressure? HR, for not recognizing (or, perhaps, turning a blind eye to) a major fault in the corporate culture?
Regardless, the issue brings up key lessons for HR professionals. Here are our top three.
- Keep the top brass in check.
Ethics is listed as the #2 value in Wells Fargo’s Code of Ethics & Business Conduct. The third value is “what’s right for customers.” What’s the #1 value, you ask? “People as a competitive advantage.” So executives were just trying to meet—and exceed–that #1 value, right? What’s an HR department to do?
“In the case of Wells Fargo, it appears that HR…leaned way too far into advocacy for the employer,” explains Carol Anderson, founder and principal of Anderson Performance Partners, LLC. “HR must do what’s right, what transcends any unilateral focus. HR must be an advocate for the employee and the organization by understanding clearly that allowing something that is not right to transpire is bad for both.”
- Understand that simply having a code of conduct isn’t enough.
For a long time, Wells Fargo has had in place an industry-leading code of conduct, internal reporting system and ethics training. But that doesn’t mean it was embraced or respected by the corporate culture.
“The existence of a code of conduct isn’t enough to stop bad behavior. The code must be enforced and supported by company culture, too. And if a company’s upper management isn’t enforcing the code, then it is HR’s job to do so,” writes Allen Smith, J.D. of the Society for Human Resource Management (SHRM). He adds HR professionals should stand up to the C-suite when they first hear of code violations from whistle-blower employees within the company, so that a culture of compliance and ethics trumps an environment of hitting sales goals at any cost.
- Define HR’s role and power during ethical dilemmas.
“I don’t know if HR was screaming from the rafters that something needed to be done or if they were silent. I don’t know if they encouraged leaders to be less focused on the sales because of the damage it could do or if they are so removed from the business that they really had no idea any of it was going on,” she wonders. “But what if they did? What if they knew and were doing everything in their power to do something about it but their words were falling on deaf ears? In that instance, should they have kept pushing or let it go and know that at some point, the leaders would learn the lesson another way?”
Jack Robinson covers the answers to these questions in depth in a recent Human Resource Executive article. He asserts it takes courage, a keen eye and the right relationships and planning to step up and report ethics abuse…and to ensure your red flags are not ignored.
“Building credibility to intervene effectively depends in part on having a strong nuts-and-bolts understanding of how the business works,” he says.
What other lessons do you take away from this sordid tale? Has the issue caused you to re-evaluate your own company culture as it relates to your code of conduct and ethics? Should it?
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