It would be difficult to find someone, especially in our industry, who hasn't heard of the Wells Fargo scandal by now. In September, the CFPB fined the bank $185 million for opening 2 million fake accounts for customers without their knowledge. Aggressive sales goals and a flawed company culture have been blamed for the misconduct – both of which are most certainly part of the problem. However, there was another glaring issue with Wells Fargo — the company's leadership. Because of poor leadership by the company's executives, particularly (now former) CEO John Stumpf, a serious but manageable issue snowballed into a reputational crisis.
In light of this catastrophe, there are a few lessons credit union leaders can learn by taking action to manage a crisis from the executive level:
Communicate quickly and frequently. When news broke about the Wells Fargo fine, the company issued a statement indicating that 5,300 employees had been fired for opening fraudulent accounts and customers had been reimbursed for lost funds. The problem? The statement had no author, and the leadership stayed silent. When asked for comment, Wells Fargo declined. The company believed they could resolve the problem by issuing one statement and laying low — they were very wrong. Stakeholders needed consistent updates from leadership on how the company was addressing issues and compensating customers for their losses. By sending out a blanket statement and staying silent, Wells Fargo only fueled public outcry. During a crisis, it is imperative that a leader step up and keep an open line of communication with stakeholders and the media.
Be transparent. If you aren't honest with your stakeholders, you don't deserve their trust and you will ultimately lose it. Be open and honest about the crisis and what caused it. It was revealed that Wells Fargo had been firing employees since 2011 for misconduct, indicating that the company clearly knew about this problem long before the public. It would have been better for Stumpf and Wells Fargo to get out in front of the scandal, instead of waiting for the public to hear about it then releasing a statement. Stumpf should have been open about the issue from the beginning.
Take responsibility. In their statement, Wells Fargo said "we regret and take responsibility for any instances where customers may have received a product that they did not request." This effort to apologize to the public fell on deaf ears, because the leadership did not hold themselves accountable for their part in the scandal. No apology was issued from Stumpf until he was called before the U.S. Senate Banking Committee twice.
It has been alleged that Wells Fargo employees were fired for speaking up about concerns of widespread ethics violations and fraud. Former employees have filed lawsuits alleging they were either demoted, forced to resign or terminated for not meeting unrealistic quotas for opening new customer accounts. A company's culture and values should be modeled from the executive level. By putting company profit above everything else, Wells Fargo's leadership created a culture of silence and intimidation. Stumpf continuously shifted blame to his employees instead of taking responsibility for the company's cultural issues that created the problem.
Good leaders do not silence their employees — they give them a voice and an opportunity to grow, and view their input as a valuable contribution to the company. Although Stumpf was forced to retire and
Wells Fargo will likely be able to move on from this scandal, it will not be without some major bruises and reputational damage. The company has a long way to go before it is able to regain customers' trust. As leaders, we need act quickly, be transparent and take accountability when managing through a crisis. All leaders should learn from this event, because if we fail to do our jobs properly, there are dire consequences for our employees, customers and companies.
Robin Kolvek is Interim CEO at EPL, Inc., a credit union service organization providing technology solutions to the CU industry.
