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

To Call Out on Your Way Out - Or Not

I mostly agree with the advice NYT’s Workologist gives to this employee who experienced bullying that forced him/her to resign from their job in this article. The employee was able to find a better job very quickly after resigning, and is considering sending an email to his/her former employer (and/or the boss’s boss) about what really transpired. While it can be good to focus mainly on the future, rather than past drama, it’s important that upper management knows what happened. As I’ve stated over and over again, workplace bullying is not something that should just be ignored – it’s a systemic problem that, if left unchecked, can lead to potentially life-ruining circumstances. Writing an angry note after the fact can feel cathartic, but instead of sending it or deleting it entirely, I would argue that the employee in this letter should send a measured, even-toned, fact-based and objective letter from a private, non-work email address to the bullying boss’s supervisor. The point is that when workplace bullying is involved, someone should be notified – it’s less about payback, and more about protecting the workers who still have to deal with the bully on a daily basis.

Image Credit: NYT Workologist Graphic, Gracia Lam via NYT

Is this the kind of company you would work for? Is this the kind of company you would invest with?

I have many thoughts on this particular story, where it seems that issues of harassment at the world’s largest hedge fund, Bridgewater Associates, are coming to a head. Firstly, it’s important to note that it’s not just females who get harassed sexually in the workplace. Essentially, a male employee was repeatedly sexually propositioned and harassed by a male supervisor, and was discouraged to report this by both the culture of Bridgewater and its internal reporting systems. Not only are all confrontations at this company video-recorded for circulation amongst managers and executives, but the entire culture of the fund is built around aggressively questioning employees about their new ideas on the spot, a policy they call “radical transparency.” The thought is to allow great ideas to rise to the top based solely on merit, but it sounds like a recipe for workplace bullying. This particular case of sexual harassment shows that this culture kept the harassed employee from getting the help and recognition he needed; additionally, after filing claims with several labor and human rights organizations, it seems like the employee was forced to settle due to the confidentiality agreements all Bridgewater employees have to sign. Everything about this story, and this organization, seems suspect – how can an organization support so-called “radical transparency,” without allowing people to come forward about workplace bullying and sexual harassment? You can read more about the alleged harassment at The New York Times.

Main Image: Ray Dalio, the founder and CEO of Bridgewater Associates. Image by David A. Grogan for CNBC/Getty Images, via The Hive. 

Standing Up to Sexual Harassment

The news of Gretchen Carlson’s sexual harassment lawsuit against Roger Ailes sounds all too familiar when bearing in mind the plights many women have to face in the workplace. Considering that Carlson’s show was at the top of its 2 PM time slot with an average of 1.1 million viewers, I would not be surprised to find that her accusations hold water. Being asked to perform sexually to assure the continuation of your contract, in addition to having to deal with what sounds like a sexist work environment, should be unacceptable for any employee. It’s heartening that Carlson is calling out Ailes despite his immense power in the communications industry – even those at the top of their fields should not be allowed to harass employees with impunity. You can read more on the lawsuit in The New York Times.

Image: Rich Polk/Getty Images for Variety

Creating a New Framework to Judge CEOs

The metrics for evaluating CEOs are often misleading – many of these measurements encourage managers to aim for shareholder return, rather than the long-term health of their company. CEOs should be paid for the long-term growth of their companies, so that instead of “running their operations into the ground,” they can be establishing a company that has staying power. The key to that? Creating a psychologically safe workplace for employees. If CEOs are encouraged to create positive workplace cultures that support overall growth, the managers under them will most likely follow suit. It’s a win-win for everyone involved in the company, from the board of investors to the lowest level employees. You can read more on this topic at The New York Times.

Wage Theft at Domino's

This is an absolute affront to working people everywhere. The way that a large franchise corporation, like Domino’s, can take advantage of people already making minimum wage is despicable. Wage theft is a real and systemic problem, but the reason why this particular case is so arresting is that, for the first time, there seems to be substantive evidence linking the corporate heads of a business to the use of software designed to keep low-wage workers from tips, overtime, and their regular pay. This isn’t just a bad workplace culture – it seems to be a business model built on employee exploitation. Oftentimes, in workplaces where I’ve seen similar types of bullying, other aspects of the business are being run unethically as well. If these allegations of wage theft are true, the government should step in and audit all of Domino’s business practices – if they treat employees this way, how are they treating vendors, food safety and sanitation, or other aspects of business?

One other point I’d like to make is that many people may call for a boycott of Domino's as this case moves along, but that would only further hurt those employees at the bottom of this chain trying to support their livelihoods. This needs to be sorted out in court, and subject to continuing investigations. You should read more at The New York Times.

Photo: A Domino's in Bed Stuy, Brooklyn; Image by Sam Hodgson for NYT

Ignored to the Point of Quitting

This article is a real eye-opener. In France, many workers have permanent contracts, or CDIs, that make it very hard for employers to fire them. Because of this, many employees fear what they call “the closet” – a strange situation where employers strip away an employee’s department budget, teams, and even basic duties. The goal is to “Try to make someone so miserable, he’ll quit.” This tactic, while brutal, is not unique to France. Many employers use the same methodology to get rid of workers. However, in France, the job market structure makes this systematic problem even more difficult to escape. You can read more about this at The New York Times.

Photo: Protesters in Paris against France's new labor law policies. Yoan Valat/European Pressphoto Agency via NYT

Collaboration or Exploitation? Arbitration in the Start-up Workplace

Arbitration clauses are coming to the forefront more and more these days. As start-ups go from being small businesses to large, valuable companies that employ thousands, it’s important to keep labor policies in mind. Like many bigger corporations, start-ups are widely instituting arbitration policies to protect themselves when they summarily fire employees based on arbitrary or unfair decision making. Arbitration may sound like “open collaboration” in solving problems, as the chief culture officer of WeWork stated in this article, but in reality, arbitration is severely tilted in the company’s favor. It prevents employees from banding together to complain, and prevents anything from really getting into court, where there’s a better chance that companies will actually be made to change their behavior. The perception of start-ups is that they’re run by young, hip entrepreneurs who care about their employees – why else would so many of these businesses be giving workers free beer, ping-pong tables and other perks? However, underneath the flashy incentives, we’re beginning to see a real return to exploitative business practices built to use employees. If you want to learn more about arbitration, start-up culture and a few specific cases where employees were treated unfairly by this system, check out the full article in The New York Times.

Photo: The Manhattan offices of WeWork, one of the highly profitable start-up companies featured in the NYT article. WeWork used arbitration to squash a class-action lawsuit concerning overtime. Photo by Cole Wilson for NYT

Sexism in the Workplace

Susan Credle, Global Chief Creative Officer at FCB, who was interviewed by NYT about sexism in the advertising workplace. Photo by Jesse Dittmar for NYT.

I’m not at all surprised by this headline. You’d think that, after a hugely popular show like Mad Men, which put the gender discrimination of the advertising industry on full display for public criticism, there would be more progress in the contemporary advertising workplace. However, by acknowledging cases of discrimination and harassment merely as things of the past, we’re doing at least half of the population a huge disservice. It’s “okay” to talk about diversity in terms of victories won, but leveling criticism against a decidedly un-diverse executive community, for some working women, is a recipe for inviting workplace bullying or mistreatment. While not contained to the advertising industry, systematic sexism in the workplace is an issue that’s mostly invisible to those with the most power to create positive changes. Read more on this at The New York Times.

360 Reviews and Workplace Bullying

In my opinion, 360 reviews can very easily turn into workplace bullying. These kinds of reviews consist of anonymous feedback from supervisors, peers and subordinate employees, and this combination sometimes leads to perceived “payback” in the form of severe or unfair commentary. It’s a feedback mechanism used by thousands of organizations, and in toxic workplace cultures, it leads to vitriolic bullying most of the time. Read more about these reviews at The New York Times.

Art Credit: Jacob Reeves for NYT