Recently John Stumpf stepped down as the Chairman and CEO of Wells Fargo. Tim Sloan will succeed him as CEO with Stephen Sanger taking over as Board Chairman.
Mr. Sloan has his work cut out for him. According to a Dow jones newswires article, Wells Fargo is reeling from a “sales-tactics scandal, which revealed that bank employees had opened as many as one million accounts without customers’ knowledge.”
Obviously, this constitutes huge legal and regulatory—as well as customer—issues for Wells Fargo. However, Mr. Sloan also will need to pay attention to the Wells Fargo employees who remain with the bank after 5,300 employees were let go.
Research by Daniels Professor Sung Soo Kim has shown that employee engagement plummets when employees perceive that their leaders have broken their trust. The Wells Fargo Vison says:
“The reason we wake up in the morning is to help our customers succeed financially and to satisfy their financial needs, and the result is that we make money. It’s never the other way around. Our time-tested vision will forever be what matters to Wells Fargo. We’ll never put the stagecoach ahead of the horses.”
This is a nice play on words as the Wells Fargo logo is a stagecoach being led by horses. However, it appears that the stagecoach did indeed, get ahead of the horses in the retail side of the business. Wells Fargo leaders have broken trust with the employees who have embraced and believe in their five core values: People as a Competitive Advantage, Ethics, What’s Right for Customers, Diversity and Inclusion and Leadership. This could lead to the loss of talented and previously committed and engaged employees. It can also affect the morale of those who remain.
A student in one of my classes was very sheepish about admitting that she works for Wells Fargo, and was quick to mention that she doesn’t work on the retail side of the business. I was moderating a roundtable for pharmaceutical executives. One of the participants was from Mylan. He was somewhat sheepish as he introduced himself. One of the other participants said, “You don’t have it so bad, my wife works for Wells Fargo.” This got a laugh, but it also shows the impact that corporate scandals have on employee engagement.
If I were advising Mr. Sloan, I would suggest that he focus on the Wells Fargo Vision and Values as a way to rebuild employee trust and engagement. I would urge him to convene focus groups that are a diagonal slice of the organization to discuss what the Vision and Values mean in everyday practice and how they can truly become a part of the fabric of the Wells Fargo organization.
As the new CEO, the job of reestablishing the trust of Wells Fargo’s remaining 264,000 employees. Renewed trust will lead to renewed engagement which, in turn, will lead to better service for customers and higher profits for the bank.
Bud Bilanich, PHD is an Adjunct Professor in the Department of Management at the Daniels College of Business. He also teaches courses for the Executive and Professional MBA Programs at Daniels.