Archive for the ‘Leadership’ category

The Week in Ethics: Wells Fargo Culture Lessons 8 Months Later

May 21, 2017

After eight months of headlines, with likely more to come, Wells Fargo’s consumer fraud (affecting at the very least two million customers) echoes so many other corporate crises….what some of us did isn’t who we are. The drama playing out at the bank underscores the importance of companies regularly addressing how their values and actions align.

Wells Fargo certainly isn’t the first company in crisis where leaders have justified their efforts, defended their culture and blamed a few bad employees. Or been dropped from the list of most admired companies. Their approximately 235,000 employees and 70 million customers suggest they knew the check list of Leadership 101 as well as anyone, including: respect your customers, reinforce your code of conduct, make it safe for people to give you bad news, ask the right questions and expect answers.

And yet, it didn’t happen. Yet another company with a values statement that if followed would have avoided crisis. Touting values and ignoring them when making business decisions invites crisis.

In April 2017, Wells Fargo’s independent directors released the findings of an internal Sales Practices investigation report on the consumer fraud; it placed blame on specific leaders’ failings, organizational decentralization, sales integrity issues, and made a case for how the board was misled. The report identifies 10 corrective actions done or underway. While risk measures and having the ethics function report to the board twice a year is included, absent is the role of values in helping reshape culture.

The report pointed to culture chaos using a variety of descriptions: “culture of strong deference to management,” “sales culture,” “cowboy culture” and “insular culture” along with “company culture.”

Culture failures are hugely embarrassing. Changing leaders doesn’t ensure a culture regains health and purpose, especially if values have been passive, more marketing slogans than actually defining a culture. The report indicates that as early as 2002, there was evidence that sales goals couldn’t be met without “gaming” the system to the detriment of customers. The commercial bank unit had at least 14 years operating in conflict with the bank’s stated values which impact the spirit of the entire culture.

For years, Wells Fargo’s values statement has said: “We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. This is more than just doing the right thing. We also have to do it in the right way.”

This standard now needs to move from platitude to practical application. It needs to be looked at with humility and fresh eyes –no matter how long someone has been on the board or worked at the bank.

Questions the board and leaders should ask themselves and each other include:

  • What specifically (in behaviors and actions) do we want striving for integrity and principled performance to look like in 2017 and beyond throughout the bank?
  • What does respect for customers mean at every level and how will we demonstrate accountability in delivering it?
  • How do we expect leaders to show up in ways all leaders did not before?
  • How will we re-earn employee trust and inspire them to live (with us) the bank’s values?

There is distinction between aspiring to the highest operating standards and holding employees accountable to unattainable sales goals. The report indicated: “In many instances, Community Bank leadership recognized that their plans were unattainable….” Those goals were demoralizing and incentivized unethical behavior. While striving for the highest standards of integrity and principled performance can transform an organization.

In the words of Thoreau’s Walden “If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.”

The report likely won’t change the minds of opinion leaders angry at the harm caused to customers in their community. Short of extraordinary measures, the bank’s explanation of what it’s doing to right wrongs won’t generate quickly the trust Wells Fargo wants regained. That was evident last month at Wells Fargo’s annual Shareholders’ meeting by the “tepid” re-election of board members. The board chair’s defense “…the board took the appropriate actions with the information it had” falls short. However, a focus on the ethical implications of the report findings offer a direction to identify what integrity and principled performance will mean going forward.

Three additional lessons grow out of the Wells Fargo experience that address culture:

Wells Fargo’s report indicated direct reports and others recognized former CEO/chairman John Stumpf  disliked conflict and receiving bad news. This weakness impacts what is shared, held back and received by the board. CEOs often won’t see themselves as conflict or bad-news adverse, winning at any cost or not aligning business strategy with company values. Even when CEOs have the dual role of board chairman, (now separated at Wells Fargo) independent directors create success when they clarify leadership attributes expected, discuss areas of potential concern and ensure CEOs receive developmental support when falling short.

A board should monitor regularly, with HR facilitation, how company leadership shows up in feedback (surveys, town meetings and ethics hot line etc.) to enable a more complete picture. The Leadership Circle’s Leadership Culture Survey is one of the outside assessment tools available. It looks at the health and effectiveness of organizational leadership and measures the balance between creative and reactive leadership competencies.

Given the huge internal, reputation and financial costs of ethical failures, board members should consider recommendations in “The Ethics Officer as Agent of the Board” to leverage ethical governance capability. In addition to walking the talk themselves, they create focus when they reinforce organization accountability to live up to its stated values.

Gael O’Brien, May 21, 2017, The Week in Ethics

Gael O’Brien, a Business Ethics Magazine columnist, is an executive coach and presenter focused on building leadership, trust and reputation. She publishes The Week in Ethics and is a Kallman Executive Fellow, Hoffman Center for Business Ethics, Bentley University.

Additional Wells Fargo columns: Where Wells Fargo Goes From Here (December 2016) and Wells Fargo’s Next Move? 10 Suggestions (September 2016)

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The Week in Ethics: How Owning Purpose Tames the Unexpected

December 30, 2016

Benjamin Franklin was brilliant, but in 1789 he forgot to include an essential element in his famous remark, “…in this world nothing can be said to be certain except death and taxes.” He should have said “nothing can be certain except death, taxes AND dealing with the unexpected.”  leadership definition photo from istock

We use religion and spirituality to deal with death. CPAs with taxes. However, what helps us deal with the unexpected – the obstacles, setbacks and disappointments that throw our professional (or personal) world into chaos? The unexpected can paralyze. It can ruin our best intentions and shut us down faster than a Nor’easter blizzard.

We should never allow the unexpected to get in the way of making real our best intentions. After some soul searching, here are three questions I use to guide me through the unexpected:

What do I stand for? What can I count on about myself? What can inspire me to move forward in spite of problems the unexpected is causing?

I first remember using these questions when the unexpected challenged my new business.

When I started my business, a timely introduction enabled me to get work from a new VP at a global company in Boston. I was a very small fish, living in Columbus Ohio. The new VP was facing his first management committee meeting where he would pitch the project I was helping him create. I developed the materials he needed and emailed them. However, on the morning he replied asking for some additional elements — that would require a lot more research — it was only two days before his meeting and I’d just returned from the doctor. My nagging cold had raged overnight into a severe case of bronchitis. If I went back to bed (so tempting) I wouldn’t make his deadline. I knew there wouldn’t be more work from him once he got acclimated into his new company’s resources. And the money, while needed, was not as vital then as going to sleep. So I rationalized, surely someone at his company could take over. But then, I turned to my three questions.

What do I stand for? (My response was helping leaders succeed.)

What strengths could I count on here? (When I was healthy, I cared about my work and I had the skills to do what he needed.)

I struggled with what could inspire me to do the work feeling so sick. I visualized him walking into his meeting unprepared but that didn’t move me. Then I visualized his having convincing materials, winning approval and using what I’d done to make a difference at his company. That inspired me. I cared about creating that outcome enough that I was willing to spend the next 8 hours at the PC. I sent back the plan. His project was approved. I felt a sense of exhilaration that my purpose was real. Knowing that distracted me from how sick I felt.

How do we deal with the unexpected? By being recharged by our purpose. So as 2017 is ready to launch, if you haven’t discovered your purpose yet, take time to think about what you stand for/believe in that creates meaning in your work and gives you great satisfaction. A sense of purpose creates its own inspiration, producing a lot of positive energy.

Leadership expert Simon Sinek, in his TED talk “How Great Leaders Inspire Action,”  says purpose is the WHY behind what we do. It is what inspires others to follow us.

Most companies have mission or purpose statements. However when leaders’ actions don’t inspire employees in how they demonstrate it, we can’t let that stop us from taking our own and the organization’s purpose seriously. Research indicates that having a deeper sense of purpose creates engagement and satisfaction with one’s job. Everyone deserves that and we control the ability to have it.

Starbucks’ mission, for example, is “to inspire & nurture the human spirit – one person, one cup, and one neighborhood at a time.”  A Starbucks I visit often has amazed me with how its employees show up. A barista called “hello Gael” after only my 3rd visit. Another barista, I didn’t remember waiting on me more than once, recited my drink order specifications when I reached the counter before I could order to see if she had it right. These simple acts created a sense of being part of a community there, something I’ve never experienced in any other Starbucks. No matter what unexpected problems might be going on in their personal or work lives, these baristas consistently make me (and others) feel valued, which is the essence of nurturing the human spirit.

When in our jobs or personal lives, the unexpected throws up roadblocks consider the power of your answers to these three questions.

What do you stand for? And what does your organization stand for?

What can you count on about yourself?

What can inspire you to move forward in spite of problems the unexpected is causing?

Then visualize the best that can happen when you own your purpose. Visualize the positive impact you can have on your team, company, customers or community.

And then feel the magnificent energy when you commit to making your purpose real.

The Week in Ethics

Gael O’Brien, December 3o, 2016

Gael O’Brien is an executive coach, presenter and leadership columnist. She publishes The Week in Ethics and is a columnist for Business Ethics Magazine where her December column  is Where Wells Fargo Goes from Here

Please follow The Week in Ethics FB page which provides ongoing updates of news items with ethical implications.

The Week in Ethics: What We Can Learn About Optimism & Leadership from Simon Sinek

December 13, 2016

“A good leader doesn’t only inspire us to have confidence in what they can do. A great leader inspires us to have confidence in what we can do.”  Together is Better: A Little Book of Inspiration (Simon Sinek, 2016)

The adage “what we focus on, we get more of” is as true in leadership as anything. And, conversely,  when we don’t focus on the right things, crises inevitably occur.

Leadership expert Simon Sinek refers to himself as an optimist. He studies and writes about what makes great leaders. He talks about vision, purpose, service and the “why” behind leadership: perhaps best known for his 2009

TED Talk “How Great Leaders Inspire Action” (which has had over 29 million views so far).

The cautionary tales of leadership gone wrong, like Wells Fargo’s current ethics crisis, are very troubling but don’t necessarily inspire us to be better leaders. Perhaps because we don’t see ourselves making the same choices. (And yet, too often those choices are made.) Sinek, in his new book, Together is Better, offers a fable of how optimism is possible — for leaders who want to make their leadership count as well as anyone seeking more meaning in their professional and personal lives.

The story line is simple and mirrors workplace challenges. The one or two sentence observations on life and leadership often fit the number of characters in a Twitter tweet. For example, “A team is not a group of people who work together. A team is a group of people who trust each other.” This wisdom may be dismissed as obvious. However, not so obvious to the number of leaders who talk about their people as a team (as former Wells Fargo Chairman and CEO John Strumpf did in his testimony before The U.S. Senate Banking Committee) when their team doesn’t trust each other or the company. Also consider how often leaders don’t realize trust is absent because they aren’t focused on ensuring trust is earned and present.

The leadership fable has nearly 50 Sinek observations that invite deeper consideration. He’s integrated and distilled themes from his work — including finding a vision, innovation, passion versus stress, success and what inspires — and put them into a tale that demonstrates how to take a leadership journey together rather than alone.

The vision, he explains in the preface, that drives him (and the fable) is that people working together “… build a world in which the vast majority of us wake up every single morning inspired to go to work, feel safe when we’re there and return home fulfilled at the end of the day.”

“What good is having a belly if there is no fire in it?” Sinek asks. “Wake up, drink your passion, light a match and get to work!”

The end of the year, and the beginning of the next, offer another window for self-reflection. An opportunity to turn the focus to our own leadership and consider what we stand for and what we are doing about it. Sinek’s fable and observations invite a focus on what enables our leadership to be more open to inspiration from those around us, as well as being more inspiring to others. It’s a catalyst for optimism.

The Week in Ethics

Gael O’Brien, December 13, 2016

Gael O’Brien is an executive coach, presenter and leadership columnist. She publishes The Week in Ethics and is a  columnist for Business Ethics Magazine where her December column  is Where Wells Fargo Goes from Here

Please follow The Week in Ethics FB page which provides ongoing updates of news items with ethical implications.

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

September 22, 2016

Update: See my 12/10/16 Business Ethics column on Where Wells Fargo Goes From Here .

Update: In October 2016 Timothy Sloan replaced Chairman/CEO John Stumpf, becoming CEO and President. The chairman role was split and given to independent lead director Stephen Sanger.

Update: September 27, 2016: Wells Fargo Independent directors 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/CEO John Stumpf to forfeit $41 million unvested equity awards and “will forgo salary during the investigation.” The U.S. House Financial Services Committee will hold a hearing on bank’s “unauthorized customer accounts” on 12/29/16.

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, 2016Gael 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.'”

Please follow The Week in Ethics FB page with ongoing updates of short items in the news with ethical implications.

 

 

 

 

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.”