While we are avid readers of successful entrepreneur’s auto-biographies/manifestos, we also look out for setback stories within their memoirs. This allows us to avoid going down a similar path. Understanding the path of those you admire or people in positions you aspire enables you to tailor your trajectory based on their previous experiences. Consider each life story as bestowing upon you a lifetime worth of learning.
Last time we brought you the Cheerios story, today, we’ll be delving deep into the corporate world of banking- Wells Fargo’s Scandal. Hope you learn a thing or two.
WELLS FARGO: A LESSON IN BLAME SHARING
In September 2016, one of the largest and most trusted financial institutions in the world, Wells Fargo experienced what we’d like to call the worst crisis of the year–and bungled it entirely. This was way bigger than a barrage of backfiring tweets–it went straight to the heart of the bank’s business practices, and wreaked havoc.
The PR pandemonium broke loose when word came out that the bank was being fined $185 million for opening 2 million fake customer accounts. In response, CEO John Stumpf immediately laid the blame the 5,300 employees and allowed consumer banking head Carrie Tolstedt (the man who oversaw the unit responsible for the fraudulent behavior) to “retire” with a $125 million payout. And that was just the beginning of the national drama that followed congressional hearings and all.
Lesson learned: Stumpf’s first mistake was putting all the blame on the company’s workers instead of holding himself and other senior management accountable for these actions. The employees claimed they were pressured into doing it due to unrealistically high sales goals. Clearly, the problem was rooted deep in Wells Fargo’s culture, and the only way to fix it was to take a close examination of its corporate practices.
His second mistake was that he was slow to apologize, and when he did, it was while appearing before the Senate Banking Committee. By refusing to admit fault and blaming others while showing little concern for its customers, Wells Fargo put its credibility and reputation in serious jeopardy.
While new CEO Tim Sloan appears to be handling the fallout much more transparently, it will be a long road ahead for the company to regain the trust of both its employees–some of whom are now suing the bank over their retirement saving plans–and customers. But like many big brands before it, Wells Fargo can pull through if it learns from its mistakes and takes effective steps to prevent them from recurring.
In the corporate world, we need to recognize that it’s not a matter of if a crisis will occur, but what happens when it does. Virtually every brand, no matter how big or small, will one day experience trying situation, while each crisis can ultimately prove a teaching moment, the best first step any company can take is to be prepared.