Consequences of Culture: How the blinkered focus on numbers is destroying financial services brands

“You should resign. You should give back the money you took while this scam was going on and you should be criminally investigated.” Ouch. Imagine if that was a public official leveling such a charge at you, the CEO of a heretofore well-respected financial services institution. Think of the damage done, not only to your personal reputation, but to the brand value of your company and the morale of your people. Yet this is exactly what John Stumpf, CEO of venerable Wells Fargo Bank, had to endure at the hands of Senator Elizabeth Warren this week. This Senate hearing came on the heels of a scandal in which bank employees, under reportedly intense pressure to cross-sell products to make their numbers, fraudulently opened new accounts for customers without their permission. To make matters worse, Stumpf appeared to blame the proverbial “few bad apples” for the trouble, although it appears as though the number of apples fired as a result was somewhere north of 5,000 and none of them, oddly, were executives. Senator Jeff Merkey of Oregon called Stumpf out, “You say you ‘accept responsibility, and it was the fault of those 5,000 people.’” He then charged, “That’s not accepting responsibility…you are scapegoating the people at the very bottom.” Even the normally reserved Comptroller of the Currency, Thomas Curry, felt compelled to weigh in, saying “These practices … undermine the fundamental trust that goes to the heart of the bank-customer relationship.” 

Lest you think the senators and comptroller were being unkind, take a look at the values that Wells Fargo claims on their website, as of Sept. 21st, 2016, prefaced by this stern statement: “All team members should know our values so well that if our policy manuals didn’t exist, we would still make decisions based on our common understanding of our culture and what we stand for. Corporate America is littered with the debris of companies that crafted lofty values on paper but, when put to the test, failed to live by them.” Immediately following that public scolding is the list of values that the company ironically seems to have failed to live by:
  • People as a competitive advantage
  • Ethics
  • What’s right for customers
  • Diversity and inclusion
  • Leadership
    What we don’t know for sure is whether the statement and the values were there before the scandal broke, or after the team of horses left the barn. Either way, they certainly ring hollow now.

Not surprisingly, the stock market also took notice of the scandal’s pervasiveness, and has begun meting out its own form of justice. Of course, corporate scandals are nothing new, but while brands in other industries generally seem to be able to overcome them in time, financial services brands that step in it have a hard time shaking it off. Consider HSBC, which, in addition to the financial crisis of 2008, followed up that bad event with revelations in 2015 that it had been trading in blood diamonds and helping dictators launder money. The stock price has yet to significantly recover. Certainly, some of the continued weakness in a compromised financial service brand’s stock price can be attributed to quantifiable business factors. But just as certainly, we believe, a fair amount can be attributed to the more subjective loss of trust among investors, customers, and workforce that Comptroller Curry referenced. In short, the Wells Fargo brand may have been irredeemably damaged because the culture was focused more on the bottom line than on core values or the brand promise. One can imagine that at Wells Fargo and all the other institutions that have squandered staggering amounts of brand value in addition to more tangible depositor dollars, there are posters on the wall proscribing the brands’ missions, and the CEOs likely open and close their speeches with a proclamation of how their brands’ core values of honesty, integrity, and caring for the little guy are their guiding lights. So what happened? Why wasn’t the mission upheld, or the core values adhered to?

According to an article in The New York Times, “The biggest problem, the former employees say, has been Wells Fargo’s aggressive sales culture, which was nurtured and honed over decades at the bank’s highest levels.” Writing for the DealBook column in the paper, William D. Cohan noted the irony of the Wells scandal: “Before this behavior was widely publicized earlier this month, Wells Fargo, based in San Francisco, was one of the most respected financial institutions in the country, viewed as a kindly, exceedingly well-run neighborhood-oriented bank with only modest aspirations for the rough-and-tumble world of Wall Street investment banking.” He also noted that the financial gains from the scandal were so minimal as to be completely irrelevant to the company’s bottom line, and came to this conclusion: “The best thing you [Stumpf] can do for your company, your shareholders and your country is to resign. You have presided over a poisonous culture where, incredibly, 5,300 employees thought it was perfectly fine to cheat their own customers to get themselves a bigger bonus.” 

If you recall, what is now Wells Fargo is the result of the acquisition of the brand by the then-larger Norwest Corporation. Note I said acquisition of the brand, because I have it on direct authority from a person involved with the transaction that a large part of what Norwest was after was not necessarily the deposits or the operations of Wells Fargo & Co., but the optimistic,  determined, pioneer spirit that it possessed. There was no way Norwest was going to make a successful play at becoming a national brand with its regional name and reticent persona. They weren’t drooling over the bricks, the mortar, or the online portal — they wanted The Stagecoach. In the end they got it, they’ve driven it off a cliff. From my point of view, this was a case where a strongly acquisitive, aggressive corporate culture overtook the old Wells Fargo brand and culture, a legacy brand so powerfully upstanding it attracted the likes of mega-value-investor Warren E. Buffett’s Berkshire Hathaway and the eternal do-gooder Vanguard Group, both of which purchased significant stakes in the brand. How much of that value has now been lost, permanently, in damage to the brand? What could have been done to avert this destruction?

Core values, when they are realistic and true, and where there is distinct clarity and alignment of the culture behind those core values, act as a binary for employee decision-making. If an employee can ask “Is what I’m about to do in line with our core values?” and “Would others in the company support my decision?” then that employee can make autonomous decisions that benefit the customer and ultimately the brand. If there is low awareness, understanding, appreciation and acceptance of the primacy of a brand’s core values, or if the culture as a whole tends to treat them as throwaway slogans, then it doesn’t matter if the CEO invokes those core values in his annual letter to shareholders. Because if this is the case, the culture will not be able to uphold those values, will not be able to make decisions using those values, and will not be able to confer any of the benefits of those values to shareholders or customers. So the brand will ultimately fail, and suffer a loss of brand value, as it has in the case of Wells Fargo.

This means that an organization’s leadership need to author and commit to a concise brand  strategy that includes realistic and true core values. The team has to be hired and fired according to those values or, in the case of leadership, be willing to resign when it’s clear they’ve failed to uphold them. 

What’s more, and what’s usually missing from these conversations and the programs that come out of them, is that the clarity and alignment of the team behind the brand strategy have to be anonymously and continuously measured by a neutral, third party. This is especially true for the mission, vision, essence, and yes, core values expressed in that strategy. And no, your annual employee survey and management-worker “one-on-ones” are not going to tell you what you need to understand here. Finally, leadership must institute a program of continual conversation about, education around, and involvement in, that brand strategy and the culture that works every day to support it, again facilitated by an outsider.


Do this for your organization, and it will go a long way towards keeping the stagecoach that is your brand from veering off the trail and into the abyss.

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