Archive for the ‘Ethical Behavior’ category

The Week in Ethics: Wells Fargo’s Next Move? 10 Suggestions

September 22, 2016

Update: September 27, 2016: Independent directors of Wells Fargo’s Board issued a statement  they will lead an investigation into “the bank’s retail sales practices and related matters” with the Board’s HR Committee and independent counsel.  Chairman and CEO John Stumpf will forfeit $41 million of unvested equity awards and “will forgo salary during the investigation.” The statement also said former head of retail banking Carrie Tolstedt left the company (presumably this week as she wasn’t expected to leave until the end of the year) without severance and has forfeited approximately $19 million. Neither Stumpf or Toldstedt will receive a 2016 bonus. The U.S. House Financial Services Committee will hold a hearing on Wells Fargo’s “unauthorized customer accounts” on September 29 with Chairman and CEO called to testify.

How will Wells Fargo resolve the ethical and culture issues it faces? And, how will it move beyond a poor showing at the Senate Banking Committee hearing and start to rebuild trust? First some background. Then 10 suggestions.

The best thing a CEO with strong convictions about the “rightness” of his/her own position can do when embroiled in a crisis is to spend time with trusted sources (inside or outside their company) who see things very differently. Being open to these viewpoints and questions iphone-pictures2-222and multiple perspectives raised make it harder for  CEOs to stay wedded to their position. However, once a CEO is under fire the temptation to stick with like-minded people can increase. What’s lost then is stimulation to think deeply about different aspects of an issue to gain new insights and awareness that enable developing alternatives legitimately aligned with values. Being stuck in “rightness” can lead to error blindness, a term popularized by Kathryn Schulz  who points out, “Trusting too much in feeling you are on the right side of anything is dangerous.”

It can lead to decisions that put a CEO on the defensive in front of a U.S. Senate hearing, as John Stumpf Chairman and CEO of Wells Fargo experienced September 20, 2016 testifying before the U.S. Senate Committee on Banking, Housing & Urban Affairs.

Stumpf was questioned about the bank’s unauthorized accounts and allegations of a pressure-cooker sales culture which became public in 2013 (Los Angeles Times story) and continued. Wells Fargo has fired 5,300 employees, paid a fine, faces an investigation into its sales practices by New York and California federal prosecutors and can anticipate an upcoming hearing by the U.S. House Financial Services Committee in addition to follow up from the Senate Banking Committee. Earlier this month The U.S. Consumer Financial Protection Bureau filed a consent order outlining findings of the bank’s “improper sales practices”from 2011 to 2016.

A few days before the Senate hearing Stumpf, in an interview, disputed Wells Fargo has a culture problem. He maintained that stance with Senate committee members, while indicating changes the Bank planned to make. However, the bipartisan committee was united in criticism that Stumpf, the Board and senior leadership hadn’t gone far enough, fast enough and weren’t showing accountability. From the Republican Committee chair to Democratic challengers, Senators didn’t buy that the bank’s culture isn’t an issue.

Where does this leave Wells Fargo? Anyone who has been through corporate crises — as I and many others have — knows that criticism from outsiders is hard to take. However, there are huge pitfalls if Mr. Stumpf stays locked in the “rightness”of his position (in spite of his 30 plus years service at Wells Fargo, presiding over several of its acquisitions and knowing his industry and company better than outsiders).

His performance at the Senate hearing this week indicates his time has been spent with legal and public relations teams and like-minded insiders. Getting out of a crisis, turning around a culture and re-earning political and public trust, doesn’t happen by working harder with the same mindset. (The much touted definition of insanity is doing the same thing over and over and expecting different results.)

I’ve limited myself to 10 suggestions for Wells Fargo to support the start of a turnaround:

  1. The board should appoint a new chairman — an independent director — separating the role from the CEO for many reasons including signaling stronger board governance.
  2. The board should immediately decide about claw backs related to compensation of former head of community banking Carrie Tolstedt, Stumpf and any others. As part of re-earning trust, all their actions should be transparent and well communicated.
  3. The board should direct Stumpf and his team to meet with Wells Fargo’s ethics and compliance teams and risk officers to discuss/evaluate ethics, compliance and risk operations for strengths, weaknesses and safeguards to better integrate sales and all business strategies with corporate values and prepare a report for the board.
  4. The compliance and ethics leaders (and C-suite leader to whom they ultimately report) should initiate meetings with leaders of the Ethics & Compliance Initiative and the Society of Corporate Compliance and Ethics to address best practices, implementation challenges and examples where ethics and compliance leaders weigh in on business strategy discussions in sales and all areas.
  5. The board and senior management should identify outside experts to discuss how to  realign authentically culture around values. A place to start is the nearby Markkula Center for Applied Ethics.
  6. Stumpf and his management team should become acquainted with Margaret Wheatley’s concept of self seal (the rightness of one’s position), Kathryn Schulz’ TED Talk (error blindness) and Margaret Heffernan’s  Willful Blindness for starters. These are lenses that encourage conscious and unconscious unethical behavior.
  7.  A cross-functional team of senior leaders with ethics and compliance leaders should review the company’s five primary values; for each, identify five or six specific expected behaviors to be incorporated into company policy and discussed in ethics training and performance reviews. Currently, the values are too abstract.
  8. Under the value “Ethics” the company says “We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. “This should become a business objective with Board and CEO focus to keep this commitment at the center of the turnaround’s activities.
  9. At the upcoming House Financial Services Committee hearing, Stumpf and those testifying can start rebuilding trust by being fully prepared to answer questions directly and completely, having with them information relevant to committee questions. Stumpf should also make himself available to Senate Banking Committee leadership to make sure information provided since that hearing addressed open questions.
  10. Trust is a relationship where “integrity” and “principled performance” are realities, not marketing slogans. In relationships with employees, customers, customers affected by unethical actions, employees pressured by aggressive sales tactics, Wells Fargo leaders have to admit what went wrong and make systemic changes. A start is to amend the vision statement that says “We want to satisfy our customers’ financial needs and help them succeed financially” and add “in ways that build lasting relationships of trust and integrity.”The Week in EthicsGael O’Brien, September 22, 2016

    Gael O’Brien is The Ethics Coach columnist  for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her September column is “One man’s Leadership Toward a Goal: ‘The Great Mission of Business Ethics.'”

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The Week in Ethics: Women Leaders Galvanize Detroit Around Justice

November 8, 2015

photo gold key in puzzle doorWhen things fall apart for lack of human and financial resources, becoming overwhelming, the key that enables leaders to transform the impossible to solvable is a compelling sense of greater purpose that is shared.

An illustration is the story of how Kym Worthy, Prosecutor of Wayne County, Michigan raised, and is a catalyst in efforts to continue to raise, the millions of dollars needed to process over 11,000 rape kits that were unopened and untested, found in Police storage; some there as long as 30 years. The move to solvable is often slow, demanding resilience. For Worthy, who began this effort in 2009, it evolved from personal and professional commitment and actions to enlisting others in the goal that justice be available to each rape victim.

As with any leadership act once it taps into others’ shared beliefs, momentum builds that can overcome obstacles. Worthy’s efforts got on the radar of Detroit businesswoman Joanna Cline who involved other Detroit businesses in raising funds, awareness and donating services. A public-private partnership called Enough SAID (Sexual Assault in Detroit) has been created.

Meanwhile, Detroit had its own problems filing for, and then emerging from, bankruptcy. This could have derailed the business leaders’ efforts. However the fundraising continued. As an outcome of ethical leadership, the stakeholders had grown to include the city of Detroit as well as the rape victims.

“The business community has rallied around us,” said Peg Tallet, chief community engagement officer at Michigan Women’s Foundation in an interview, “particularly businesswomen who are saying this can’t happen here if we are going to make this the city we’re all working to make it.”

Worthy’s office “has been able to identify 625 people suspected of being serial sexual assault offenders.” According to one of the businessmen involved in Enough SAID, “…you can’t have economic development if you can’t feel safe walking to your car after work.”

Those involved in Enough SAID provide a crucial teachable moment for other cities, governments, chambers of commerce, businesses and communities in general.

The Week in Ethics

Gael O’Brien, November 8, 2015

Gael O’Brien is The Ethics Coach columnist  for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her September column  is “Volkswagen’s Next Challenge: Keep Scandal from Happening Again.”

The Week in Ethics: The Way Forward from Public Shaming

July 15, 2015

iPhone April 11, 2014 272 Students in a middle school painted words important to them on rocks placed under a tree. “Patience,” “courage,” “strength,” and “peace” were scattered under the limbs. However the lineup of a yellow heart, “tolerance” and “healing” held my eye during a walk in 2013; they were an antidote to the lack of humanity words as weapons cause.

I thought of those rocks this week after reading So You’ve Been Publicly Shamed, a new book by journalist Jon Ronson. He recounts recent examples of how far an online posse of righteous shamers can go condemning others’ ethical failings, judgment errors or offensive attempts at humor. Among the stories of social media shaming that Ronson includes are journalist Jonah Lehrer’s plagiarism, the racist-interpreted “joke” tweet of PR executive Justine Sacco and the obscene gesture in a photograph in Arlington National Cemetery Lindsey Stone posted of herself on Facebook.

Social media has a piranha capacity to feed off self-sabotage. Rationally, authors know plagiarism is an ethical time bomb, just as news anchors understand lying and distorting facts destroy credibility (the problems of Brian Williams erupted after the book was written). And no one should be surprised that Twitter and Facebook accounts don’t guarantee quiet repositories for acting out unfiltered attempts at humor.

However, not understanding the consequences of enraged social media is to be in denial over the potential consequences of losses — in jobs, trust, reputation, safety (as attacks cut more deeply personal) and even one’s life. It is a double-sided ignorance: Not seeing the piranha waits or recognizing if you and the piranha have become one.

Ronson, writing about the impact of the public shaming on Lehrer, explained:

“People were very keen to imagine Jonah as shameless, as lacking in that quality, like he was something not quite human that had adopted human form. I suppose it’s no surprise we feel the need to dehumanize the people we hurt — before, during, or after the hurting occurs….In psychology it’s known as cognitive dissonance. It’s the idea that it feels stressful and painful for us to hold two contradictory ideas at the same time (like the idea that we’re kind people and the idea that we’ve just destroyed someone.)”

Ultimately, shaming, Ronson writes, dehumanizes the onlooker as well as the person being shamed.

Shamers get trapped in feedback reinforcement says documentary filmmaker Adam Curtis , whom Ronson quotes. That process, Curtis points out: “… locks people off in the world they started with and prevents them from finding out anything different.”

A world of instant reaction means what we put out on social media stands alone without context or qualification. And rather than our comments accepted as random orphans of thought by people who know us and make allowances, strangers not in our circle can weigh in. To them, whatever we say or do is seen as a representation of who we are. It creates an accountability we dodge at our peril. Ideally, knowing this allows us to operate with more attention to our emotional intelligence — particularly our self-awareness, self-regulation and empathy.

As for viewers, instant reaction triggers instant judgments, often building off the tone of comments that have gone before. If reaction becomes outrage, are we even aware when it crosses over into shaming, bullying, threatening and deconstructing… fueled by assuming the other person “deserves” whatever we volley at them from behind the net of our anonymity? The irony is that our own thoughtlessness, insensitivity and capacity to injure can occur with the greatest frequency when we are convinced of the rightness of our own point of view.

In Dignity: Its Essential Role in Resolving Conflict, author Donna Hicks writes that while people have to earn respect through behaviors and actions, “dignity is a birthright” that everyone deserves. “Treating people badly because they have done something wrong only perpetuates the cycle of indignity,”she writes. “What is worse,” she continues, “we violate our own dignity in the process. Others’ bad behavior doesn’t give us license to treat them badly in return.”

“Dignity” — honoring one’s own and others –an enduring antidote to support diversity of opinion and our humanity.

The Week in Ethics

Gael O’Brien, July 15, 2015

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine where her July column is “Why More Companies Are Speaking Out on Social Issues.”




The Week in Ethics: Is Ethical Leadership Contagious?

July 24, 2013

If you were trying to foster ethical leadership in your organization, could anything make it “contagious?”

For starters, labeling it as “ethical leadership” might not take you as far as you’d like. How often do people say they are on board, “get it” and don’t need more?  While they might be willing to read about or take courses in strategic or global leadership, for example, many equate ethical leadership with what they learned growing up; if they need to spend more time talking about it, it might look like they are deficient in Golden Rule 101.

That’s the problem with blinders leaders, high potentials and any of us can have about our own ethical development — why it can suddenly be hard to give voice to values (because we’ve never thought about a potential conflict that suddenly surfaces) or why decisions are made weighing only legal and financial consequences (without noticing the potential for unintended ethical consequences) or why we need to be right.

When we talk about ethics and leadership in organizations, we need to translate it into values and behaviors we want visible in the culture that in turn build off a company’s values. While we say that ethical leadership encompasses the highest personal and organizational standards that vagueness creates an abstraction where everyone “gets it”  in theory, and can overlook it in practice.

Our language sets up creating the norm of what the organization stands for — and the behaviors supporting that — which then demystifies and brings the type of leadership we want to see and cultivate into day-to-day reality. If those qualities are talked about in examples and stories when the CEO meets with the board, direct reports and others; if they are linked to business success, reinforced in informal and formal mentoring programs, meaningfully incorporated into performance reviews, and play a role in why people get recognized, promoted or let go: the norm can be imitated and then owned.

Emotional Intelligence (EQ) is increasingly being reinforced in organizations as a way to develop leaders and help them succeed. (See Daniel Goleman’s What Makes a Leader.) Reinforcing EQ reinforces attributes important in ethical leadership so it is a win-win.

Some resources for thinking about how ideas can take hold in a culture include Contagious: Why Things Catch On by  Jonah Berger (video above) and the books that fueled his thinking: Gladwell’s The Tipping Point and the Heath brothersMade to Stick.

Applying that to what could make ethical leadership contagious involves first looking at what  natural advantages exist in your culture to tap into to help ideas take hold. Then, what ideas might offer perceived value. For example, creating a special leadership forum site with links to good articles, blogs, book reviews and news stories fosters leadership development that reinforces the norm you want, with triggers to keep the subject top of mind, while saving leaders’/potential leaders’ time in finding useful information they can apply and share with others. Launch it with a sense of exclusivity: perhaps needing a password. Enlist the support of admired leaders in the organization to make reference in meetings to an article on the site they liked, and find other ways to have the site talked about and positioned as a place high potentials go for useful leadership tips. Who wouldn’t want to be considered “high potential”?

How do the values and attributes of ethical leadership become contagious in organizations?

They are modeled by the board, CEO and other leaders. They are talked about and interrelated with business and personal success. They are mentored and cultivated, enmeshed in the culture’s stories and allied with how people feel/see they can make a difference. They are linked to reducing stress. They are connected to what stakeholders’ value, attached to what it takes to belong and reinforced throughout the organization.

Gael O’Brien July 24, 2013

The Week in Ethics

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. Gael is also a columnist for Business Ethics Magazine; her November 6, 2013 column looks at whether loyalty is owed when a boss acts as a good leader. 

The Week in Ethics: Wisdom in Action, Andrew Pochter and Martin Richard

July 13, 2013

Our individual wisdom is what shapes our leadership and determines our humanity. It comes out of how we see, feel and interpret joys and sorrow in life and what we’ve learned from others.

How we live and act on our wisdom is our legacy, a true measure of how we inspire and impact others.

The deaths of eight-year old Martin Richard in the April 2013 Boston Marathon bombings and Kenyon College student Andrew Pochter, a bystander in Egypt’s June 2013 political uprising, are among the more recent tragic consequences of a world-wide breakdown in wisdom when intransigent intolerance and random violence become the overpowering language.

Martin Richard cropA makeshift memorial in Boston’s Copley Square, bound on three sides by what seemed like thousands of running shoes, framed the tributes to those killed and the more than 260 injured in the bombings near the finish line of the Boston Marathon.

Martin’s parents were injured in the blasts and his sister, an aspiring dancer, lost a leg. The tribute to Martin focused on his own words: “No more hurting people. Peace.”

He had written that message on a poster for a class project after 17-year old Trayvon Martin was killed in Florida.

Andrew Pochter was in Alexandria, Egypt for an internship teaching English to children Martin Richard’s age when he was stabbed to death watching a protest. He had planned to return after college, his parents said, “to live and work there in pursuit of peace and understanding.” At his funeral July 12, 2013, his sister read a letter he had sent recently to a 12-year old he’d been mentoring the previous five summers at a camp for at-risk youth in Maryland. The camper was graduating from the program.

In the letter, Andrew congratulated him on all he’d accomplished, called out his strengths and offered snippets of Andrew’s own wisdom, telling the 12-year old: to surround himself with friends who do “good deeds” and care about his future, not blame others for their mistakes, and speak with confidence “because your personal confidence is just as important as your education.”

We can’t know what Martin or Andrew or any of the thousands of youth killed each year by political, religious and sexual violence or other forms of rage could have contributed by their leadership had they lived. However, globally there has been a huge loss of potential talent and contribution. We know that Martin and Andrew, among so many others, knew the wisdom of peace.

That legacy in a world torn up by intolerance — the opposite of peace — fueled by the legacy of so many others who died in service of peace demand that leaders at every level start by acting on their wisdom to rout out intolerance in their own spheres crippling governments, workplaces, families, and communities, and then advance the conversation to act globally.

Intolerance is poison. The lyrics of “You’ve Got To Be Carefully Taught” in the iconic 1949 musical South Pacific (which Rodgers and Hammerstein adapted from James Michener’s Tales of the South Pacific) continue to resonate through Broadway revivals and community theaters. It reminds us of what we have yet to undo:

“You’ve got to be taught to hate and fear….You’ve got to be taught before it’s too late, Before you are six or seven or eight, To hate all the people your relatives hate, You’ve got to be carefully taught.”

Gael O’Brien July 13, 2013

The Week in Ethics

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. Gael is also a columnist for Business Ethics Magazine; her June 2013 column looks at leadership vulnerabilities of departing OSU president Gordon Gee.