Human Resources: A Dismal Profession?

In all the discussion about Wells Fargo in the wake of their sham accounts scandal, there’s been no real mention of who or what was the direct architect of their corporate culture. In my opinion, human resources should be responsible for the integrity of an organization’s culture just as much as the CFO might be responsible for the integrity of that organization’s numbers. I’ve worked in HR – early in my career, I was an HR professional, and throughout my career, I’ve worked with HR roles within my portfolio of responsibilities – and I think it’s safe to say that HR needs to be held accountable for the cultural makeup of a company. They’re the team that develops incentive programs like the ones that allowed 5,300 employees at Wells Fargo to lose their jobs for following their culture’s status quo. They’re the team responsible for ethics training, handling whistleblowers, and helping employees deal with the strain of impossible sales quotas. In my new book (out in January) and in previous blog posts, I’ve compared workplace cultures to ticking time bombs, which go off when a company’s leadership neglects the reality of a workplace structured for scandal. When a culture is a ticking time bomb, HR is almost always part of that problem, either in the form of discouraging whistleblowers, creating programs that don’t truly address interpersonal conflicts associated with sales goals, or creating a veneer of caring about customers and employees that’s entirely false. I suspect much of this went on at Wells Fargo – just look at the HR gobbledygook on their website (which hasn’t been updated since 2015) for evidence of this. However, as much as HR can be part of the problem with workplace culture, they can also be part of the solutions to fix those problems – if only HR professionals had the courage and honesty to stand up, acknowledge cultural issues, and inform leadership in order to make actionable changes needed to avoid disgraces that harm customers as much as they harm the organization’s reputation. 

Photo: Getty Images via Wall Street Journal 

Being Wells-Fargoed Should Keep Top Executives and Boards of Directors Up at Night

The news broke this morning that Wells Fargo’s board has decided to revoke compensation valued at $41 million from the company’s CEO, John Stumpf, in relation to the sham customer accounts created by employees to fluff sales numbers. Additionally, Wells Fargo’s former head of the community banking division that is the source of the scandal, Carrie Tolstedt, has also been financially penalized. I was surprised to hear that these two were being reprimanded for the scandal by Wells Fargo – but then, it occurred to me just how similar this was to the Volkswagen scandal. As I’ve written about before in Directors & Boards Magazine, both companies initially found that a swath of employees were to blame, before moving up the chain to management-level employees who were turned out only after it became increasingly clear to the public just who was to blame for their respective breaches with the public trust. In short, Wells Fargo is scrambling, just the way VW did when the emissions scandal broke.

I’ve said it before, and I’ll say it again – CEOs need to be aware of what is going on in their businesses. Transparency is the name of the game here – not just with handling scandals in the public eye, but in managing employees in every sector of business. Firing scapegoated lower-level employees and revoking the huge payouts to executives is fundamentally a band-aid approach to fixing the problems that lead to scandals. Firstly, Tolstedt should not have been allowed to retire peacefully with a few penalties imposed on her severance package – Wells Fargo should have made a point of firing her. Additionally, if it is revealed that Stumpf was fully aware of the sham accounts and covered up for them, he should also be dismissed publically. However, before either of those two steps could be taken, the most important course of action for Wells Fargo (and any similarly scandalized corporation) is to conduce a full, comprehensive and objective investigation into the root causes of the wrongdoing that occurred. Having a complete picture is essential to actually curing the problems present in any organization – and it makes a more convincing argument to the public whose trust those organizations are trying to regain.

At the end of the day, Wells Fargo’s behavior is yet another stain on the already-tainted US banking industry. The pervasive nature of short-term goal oriented cultures will almost always result in similar scandals that further erode the public’s trust in those institutions they have no choice but to invest in. It’ll be a long time before those 5,300 employees let go for their “rogue” behavior will be able to get a job again, just like it will be a long time before the employees let go for whistleblowing will feel comfortable standing up for their principles again. Depending on how far this particular scandal goes, perhaps the entire board will need to be replaced before anyone is willing to give Wells Fargo their money again. 

Image: Stumpf on Capitol Hill last week. Image Credit: Gabriella Demczuk for NYT