CEO’s Letter: “W”ells “T”he “F”argo and “Cultural Rot”

By Elliot H. Clark

I have been chided before by our editorial team for sinking my fangs into a provider here and there. I have rarely commented on the HR practitioner audience. Throughout 2020, there have been numerous important HR-related stories. From HR’s response to the coronavirus pandemic to the role of HR in social progress with California Assembly Bill 5 (AB5), HR has been at the forefront of the business news. But Wells Fargo is an HR story that has been broken up into fang-sized bites -a story of the complete and utter failure of cultural management at one of America’s largest banks.

How do I loath thee? Let me count the ways. Four years ago, Wells Fargo was embroiled in a series of awful headlines about creating fraudulent banks accounts and loan accounts. At the time, CEO John Stumpf, who later resigned in the wake of these scandals, blamed overzealous employees trying to maximize their commissions and succumbing to greed. This was cold comfort to the thousands of customers who had to actively engage in credit report repair and who were being harassed for loan payments on accounts they knew nothing about. Stumpf at the time promised an overhaul of Wells Fargo’s culture and compensation schemes to avoid this happening in the future. Hold that thought as we move chronologically -we will come back to that issue after we take a side step into a recent diversity and inclusion fiasco.

Earlier this year, the new Wells Fargo CEO Charles Scharf commented on a call with employees that the bank had missed its diversity hiring goals due to a “lack of qualified candidates.” The story broke that African American employees were disturbed by the characterization, with news reports using terms like “tone deaf” given the recent racial tensions in North America. In my opinion, it’s a bit of a different issue. CEOs are careful in public communications. They have teams of communications and HR professionals reviewing and polishing their messages. I believe the bigger problem is Charles Scharf believes this or he would not have said it. In all likelihood, he heard this from members of his own team, including HR, who also believe it and have told him so. We all know diversity hiring is diffi cult. These groups are MINORITIES so less readily abundant than, oh, majorities. And, in some cases, salaries are bid up. In some cases, you have to hire for talent and groom for skills with good graduate recruiting programs. There are plenty of highly qualified candidates amongst the gender, ethnic, and racial minorities, so if you can’t make your goals, you set the wrong goals or you didn’t look hard enough. That’s strike two…

This was followed shortly by the revelation that more than 100 employees had been terminated for filing false Payroll Protection Program (PPP) applications, defrauding American taxpayers of millions of dollars. In a statement, CHRO David Galloreese indicated that the bank was “cooperating with law enforcement investigations.” When it involves one employee, it’s a screening issue; when it involves more than 100, it’s a cultural issue. Another example of rampant dishonesty.

We talk a great deal in HR about the importance of an ethical, responsible, inclusive culture. In HRO Today, we share best practices and the “shining example on the hill.” But with Wells Fargo, it’s the other example: the corporate cultural equivalent of a dumpster fire. And it’s ugly.

In the midst of this current pandemic, there are critical issues of ongoing operations to be addressed, but CEOs, CHROs, and HR leaders also have time to think about corporate culture on a long-term basis and evaluate screening not just for background but for behaviors. It’s time to think about training, recognition, and how to drive values. If you don’t, this kind of de-evolution of culture will quickly occur.

Think about the previous Wells Fargo brand: one of the oldest banks in the nation and an organization you could trust. Now, it has become a brand that disrespects diverse populations, where large groups of employees are investigated by law enforcement every few years.

Sad, but most dumpster fires start small before they get out of control. Make sure you don’t have one in the first place.

Tags: Culture, Magazine Article, November-2020

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