In an April 5th article titled “33 Ways to Define Leadership” written by Brittney Helmrich for Business News Daily she surveyed 33 business leaders from a variety of companies and industries to find out how each of them defined leadership. Not surprising she got 33 different definitions. The interesting thing is that all of them were more or less correct on how they each described the qualities of effective leadership. The conclusion was that no matter how you define it the conduct of those in a leadership role can have a profound effect on how an organization performs and how dedicated its employees are to the achievement of its objectives.

In “Primal Leadership” authors Richard Boyzatis and Annie McKee posit that “if a leader resonates energy and enthusiasm, an organization thrives, if a leader spreads negativity and dissonance it flounders.” In his book “Boundaries For Leaders” Dr. Henry Cloud contends that leaders set the stage, tone and culture for a results driven organization. He adds that “leaders must own what they create or allow to exist.”

Following the revelation that over 5,000 Wells Fargo employees engaged in unethical and allegedly illegal conduct, in a public statement the bank’s CEO John Stumpf laid the blame for these actions entirely on the complicit employees. In attempting to defend the organization he stated that “there was no incentive to do bad things.” He went on to call the actions of those staff members as “not acceptable” and as if to drive home the point he added that the bank “doesn’t want one dime of income that’s not properly earned.”

Given the degree to which the banking industry is currently regulated, i. e. Dodd-Frank and the increased capital requirements being imposed by Basel III, banks are under enormous pressure to find more sources of revenue. As such many of their employees are increasingly under intense pressure to market and cross-sell products and services. Performance goals and annual bonuses are tied to the number of customer appointments they schedule and how much revenue they produce. In a high pressure culture such as that it is not difficult to see how something like what took place at Wells Fargo might occur.

Now I have no intention of defending the actions of those employees that engaged in that illicit behavior. The fact that they were terminated by the bank speaks to the severity of their actions from the organization’s perspective. However, I have to wonder why the CEO and by extension the leadership of the organization does not feel that they perhaps played a role in this. Was it not the leadership that created the culture where employees felt the constant pressure to generate revenue in order to meet established monthly or quarterly sales goals so as to secure their continued employment? Didn’t they effectively mandate the idea of cross-selling a variety of products and services to its customers in order to maximize revenues? In fairness the concept of cross-selling is not unique to Wells Fargo. Cross-selling has been a widely used strategy in banking for quite a number of years. But how it is emphasized by an organization and built into employee performance goals is certainly a company by company practice. Therefore in that regard shouldn’t the bank’s leadership team accept some accountability for what happened?

One of my leadership coaching principles is that leaders “Own the final results irrespective of the outcome. As the leader you celebrate the victories and suffer the defeats along with your team members.” A strong leader should assume accountability for the actions of the organization that they lead. The leadership of Toyota demonstrated that quite clearly when they publicly apologized for the engineering design flaws that led to mechanical problems in some of their vehicles that resulted in a number of fatalities and numerous injuries. The quality of the leadership greatly affects the environment and the culture of an organization. They have an enormous influence on how much their employees are engaged at work and how they conduct themselves in their jobs.

In a pithy book “O Great One!” David Novak, co-founder and former CEO of Yum! Brands, wrote of the positive impact that the recognition of the value and contributions of employees can have on the overall performance of an organization. There are numerous examples of businesses that have thrived despite a difficult economic environment as a result of leadership that promotes a culture that recognizes and values their employees. However, the flip side to that is that those organizations whose leaders avoid accountability and effectively throw their employees under the bus can create a culture of mistrust and disengagement that can have adverse consequences on organizational performance.

Given its asset size and huge capital base it is likely that Wells Fargo will be able to ride out the near term fallout from this incident. However, it remains to be seen how the message that its leadership has sent to its employees will affect how they feel about the organization and how they see their place in it.

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