Values, Values on the wall, Just do business and forget them all: Wells Fargo, Volkswagen and others in the hall
There is a growing discrepancy between the values stated on the wall and values in action. In the case of Wells Fargo, most of the company’s values and visions were breached. In this article, the authors discuss effective ways to practice values in action to align it with a company’s mission and vision.
Enron’s heyday ended long ago. We all hoped that other companies would have learned their lesson and paid more attention to the issue of ethical or value-based management. However, the global business community is now watching a painful new chapter in this saga. On the 8th of September 2016, Richard Cordray, director of the Consumer Financial Protection Bureau, announced that Wells Fargo would pay $185 million in fines for illegally creating unauthorised deposit and credit card accounts across the USA.
The saddest part of Wells Fargo’s fraud is that no one is surprised. The leading Israeli humorist, gestalt master and coach, Lenny Ravich is quoted to say: “99% of bankers give a bad name to this profession.” We would go as far as to add, “Many bankers nowadays are ashamed to introduce themselves as ‘bankers’ in public presentations”.
Wells Fargo’s stock price dove, shaving 24 billion dollars from its investors. 5,300 employees were fired, but surprisingly few senior executives among them.
On the 20th September 2016, at the Senate Banking Committee Hearing, Senator Elizabeth Warren questions Wells Fargo’s CEO and Chairman of the Board John G. Stumpf about accountability. He then made a strategic media mistake. He refused to share any opinion on any matters regarding personnel, senior leadership resignations or claw back. He was evasive and claimed that he did not know all the details. Considering that this investigation is not new to the bank, these answers were an insult to our intelligence. That unprepared, indecisive and evasive answers will be probably part of PR case studies in universities across the globe on how not to handle the media during a crisis.
To that hearing day, there have been no senior-level resignations nor returned personal windfalls generated from the fraudulent activities. On the contrary, Carrie Tolstedt, the former head of the consumer banking division and executive who has been directly responsible for overseeing the retail banking sector of the company where the fake accounts were created, was rewarded for her act. Instead of being fired and denied a bonus, she was allowed to retire in July of this year, holding roughly $96.6 million in various stock awards.
On the 28th of September it was announced that John Stumpf has agreed to give up $41 million in unvested stock awards following the board of directors’ investigation. Carrie Tolstedt, Wells Fargo’s former head of community banking, will forego all her unvested equity stock awards valued at $19 million and will not receive retirement benefits worth millions more. Tolstedt was responsible for the division during the time employees allegedly created sham accounts to meet sales targets. She has announced she will retire at the end of year.
But public opinion and sentiments towards the leadership of Wells Fargo became very negative.