Here’s What We Can Learn from Wells Fargo

  • Here’s What We Can Learn from Wells Fargo

    Here’s What We Can Learn from Wells Fargo

    I’m sure (unless you’ve been sleeping under a rock) you’ve heard about the Wells Fargo employee scandal. If not, you can find the skinny here
    While this particular fiasco is nothing new to the problems with monetary bonus incentives, it is a reminder and perfect example of the risks associated with such incentives.
    In the latest Wall Street Journal article headlined: Wells Fargo CEO Defends Bank Culture, Lays Blame with Bad Employees Chief Executive John Stumpf says:
    ‘There was no incentive to do bad things’
    Great try John, but that response confirms there are flawed processes within the company. Just own it!
    The truth is, this entire scandal is a great example of the problems any organization can face when offering monetary incentives to employees tied to sales vs. quality, ethics and service.
    Incentives often fail to consider process and methodology used to grant monetary benefits to employees, leaving an open space for interpretation when reaching set targets.
    Imagine a good employee who makes it practice to follow rules, prioritize quality and ethics. That employee may have good intentions to follow organizational values, and (due to a variety of reasons) may still be unable to reach popular targets attached to bonuses – which are also often tied to public internal/external recognition.  Not achieving this public display of recognition may cause a once intentionally good employee to become discouraged, especially if they observe or have reason to believe those “high-target achievers” are practicing unethical behaviors when meeting those targets.
    It can be then understood how such an employee can be swayed to cut corners, seek loop-holes in an effort to attract the same attention and recognition (albeit unethical) received by others; possessing a reasonable desire to become recognized as a leader among their peers; doing what they already see has successfully worked for others.
    Here’s how to avoid a Wells Fargo mistake:
    1. Add more requirements before distributing money. Bonus incentives are risky for any organization. Handled improperly, money-driven incentives can supersede employees’ desire to remain ethical if one fears they will be publically judged by targets vs. quality of output and overall performance. Tying additional requirements to a bonus incentive such as quality, following procedures, ethics and customer satisfaction would be ideal to insure consistency of performance is aligned with organizational values.
    2. Prioritize process and methodology. Your culture will eventually tell on you! If employees are doing something inconsistent with the values of your organization, it’s a clear reflection there is a lack of procedures in place to insure ethical practices and proper organizational standards/policies are followed. There must be a quality control evaluation process to determine if the volume or targets met were in alignment with organizational values. Separating the quality control auditors from the incentive is key in creating an effective process tied to monetary incentives. If the management team is the same team providing quality control audits of employee performance as to said targets, one could conclude the management team benefits from the incentive as well, therefore joining in unethical practices to support their own agenda. Separating the incentive disbursement approval process from leadership allows the organization to avoid bad managers who will also contribute in creating an unethical culture and further motivate employees to disregard organizational values when meeting sales goals.
    3. Understand that good intention does not guarantee good outcome. Intention is worthless if boundaries are not in place. Lack of clear boundaries tied to incentives and lack of effective communication tied to incentives are major ways to create unethical practices. Granted, your initial desire or design when creating incentives was not to encourage the “by any means necessary” rhetoric and behavior, but it could end up that way if not closely monitored. When the damage is done, intention doesn’t erase what happened. It’s good to know, but it offers no resolve.
    4. Blaming your employees is a bad business decision. When you blame your employees, you lose the trust of the remaining employees. While, in this case Wells Fargo fired 5,600 associates initially, I can bet there will be more associates that leave the organization based purely upon broken trust stemming from the response the organization has to this major leadership failure. Ethics, culture and quality stem from the TOP. It is the top leaders, executives and managers that design the policies/procedures one should follow to create and maintain an ethical culture within the organization. Firing employees then blaming them for your lack of ability to create and enforce the culture you desire is a cowardly move. Acknowledge the fact that the process and expectations tied to your set targets was flawed. Own it! Then create a plan to make sure it doesn’t happen again. It’s that simple.
    5. Create an stern accountability system. Every organization must prioritize accountability. It directly impacts organizational sustainability and success. If accountability is not a top priority and is not in the bare bones of an organization, how can it live up to its promises? If you deal with improper and unethical behavior immediately once aware, that outcome will resonate with the rest of the organization, which essentially puts them on notice of how serious you are about the organizational values. When leaders refuse to confront bad behavior at the onset they create situations such as the Wells Fargo mistake resulting in 5,600 losing their paycheck even though (as I suspect) only a very small microscopic few initiated this behavior that was never addressed. This situation serves as a perfect example of putting the wrong people in leadership positions not equip or willing to hold themselves nor others accountable to uphold organizational values.

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