"Culture eats strategy for breakfast," a quote famously attributed to Peter Drucker, is being played out dramatically in the crisis at Wells Fargo Bank. Apparently, the culture in the Wells Fargo workplace is not aligned with the espoused values of the company. This misalignment has tarnished the brand built on an image of trust and customer care, resulted in the dismissal of over 5,000 employees, poses a threat to the tenure of top executives, and resulted in a precipitous decline in the market value of the company.
Wells Fargo CEO Stumpf has acknowledged that employees had opened bogus bank and credit card accounts for customers and then collected millions of dollars in illicit bank fees. In reporting on Stumpf’s testimony before the Senate Committee, Michael Corkery writes:
Mr. Stumpf disagreed with senators when they described the illicit sales as part of a deliberate scheme to increase the bank’s bottom line. He said the 5,300 employees who had been terminated over the issue — many of them earning $12 an hour — deserved to lose their jobs.
“The 5,300 were dishonest, and that is not part of our culture,” Mr. Stumpf said. “That is not scapegoating.”
This statement by Stumpf indicates that he does not realize that the dishonest behavior IS part of the Bank’s culture. It might not be what he hopes is the culture, but it surely is the normative actions of employees, recognized and supported by managers, and incentivized by the organization. The behavior is guided by the beliefs and assumptions of employees; it’s how they do their work, regardless of what it says in the company’s statement of values.
If you tell 12 dollar an hour employees that they can make more money by opening credit card accounts and “everyone is doing it” and maybe even, “Don’t worry about it, customers can always cancel”, then the company is rewarding unethical and, in some cases, possibly illegal behavior. And evidence suggests this has been going on for years. That’s culture trumping strategy!
Ethics training required of every employee seems to have had little impact on behavior. This is understandable given the culture of the organization. Whatever employees learned about integrity, honesty, and trust in the classroom was quickly forgotten under the pressure of cross-selling and making their numbers.
Wells Fargo is not alone in its failure to align workplace expectations and behavior with the strategic goals set by management. This disconnect can have very serious consequences for companies, as we are seeing at Wells Fargo. Every organization needs to periodically check to make sure that the actions being rewarded on-the-job are consistent with its espoused values and goals.