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The Journal Gazette


  • Jennifer Jordan
September 14, 2016 2:57 PM

Leaders should set standard for integrity, professor says

LISA GREEN | The Journal Gazette

Company goals are good, but they shouldn't create a conflict with character.

That seems to be what happened at Wells Fargo, the San Francisco-based bank in the spotlight the last week, a leadership and organizational behavior professor at a well-known business school in Switzerland suggests.

Wells Fargo was fined $185 million in connection with sales goals that led employees to open more than 2 million accounts, some of them revenue-generating, without customer authorization.

The sales targets have raised questions about culture, accountability and leadership in the bank company.

The CEO for the financial services company is expected to appear next week before the Senate Banking Committee to talk about the aggressive sales goals, which Wells Fargo on Tuesday announced plans to eliminate Jan. 1.

Jennifer Jordan teaches at the International Institute for Management Development in Lausanne, Switzerland.

"Companies set targets without being mindful of how those targets might elicit unintended unethical behaviors – behaviors that are inconsistent with their core values," Jordan wrote in a commentary shared via email.

"Regulators are blaming the bank for not having tighter controls and oversight on employees’ behavior. But I seriously question if loose controls were the culprit," Jordan said. "It seems like what was lacking was values-based leadership at the helm of this Wall Street behemoth."

Lee Ellis, author of "Engage With Honor: Building a Culture of Courageous Accountability," said character and accountability are crucial.

"Without a consistent commitment to character, our sense of duty, accountability and honor fades away," Ellis, a former POW, said in an email. "When we lose that, our culture slips into chaos."

"Engage With Honor," which we highlighted in July, addresses topics including character and courage, despite difficult circumstances.

Wells Fargo CEO John Stumpf has been on the defense, saying the company's retail bankers are "always focused on the best interests of customers."

About 5,300 employees lost their jobs because of the unauthorized accounts, blamed at least partly on a "cross-sale ratio" system to promote each customer having six products or relationships with the bank.

One program was even called go for "Gr-Eight," promoting more than eight products per household. Critics suggest the sales goals were not realistic.

Some managers were included among those who lost jobs. But media reports have pointed out that the executive who ran Wells Fargo's consumer banking division is scheduled to retire at the end of 2016 with about $125 million in compensation in a mix of stock, salary and stock options.

The best leaders are those who not only emphasize meeting goals, but also emphasize integrity in the process, said Jordan, who teaches on the Orchestrating Winning Performance and Building on Talent programs at IMD.

"For a values-based leader," Jordan said, "a goal is only important to the extent that the company’s values are upheld in the process. Yes, setting goals is important for keeping employees motivated. But if those goals are achieved at the expense of the company’s values, then the achievement is more than shallow -- it’s a major blemish to the company’s public image and trust."

lisagreen@jg.net