When Culture And Values Fail – What Next?

core values

The fall of John Stumpf, long serving CEO of Wells Fargo makes good headlines. Some 5,000 or so employees fired for abusing the trust of the banks’ customers sounds good.  This seems to show  a management on the war path. Is this the top team riding to the rescue of their much admired financial institution?

Unfortunately not.  The reputation destroying actions of Wells Fargo reveal a blind, deaf and insensitive management. They ignored the implications of a company culture that had turned toxic.

Why? Because the management IS the culture. You are either part of the solution or part of the problem.

Values matter and when they’re ignored the consequences reverberate for months and years. It will take at least half a decade for Wells Fargo to restore the faith of users.

Wells Fargo staff faced intense management pressure to sell eight new accounts to each existing customer. Yet this still only partly explains the self-inflicted disaster.

The more fundamental issue is the same as in VW, or years back in BAE, or Siemens. Those in charge did not just miss what was going on, they connived at “doing what was wrong.”

Could it happen here?

It’s the CEO nightmare of any large company: “Could a VW situation happen here?” Too often the straight answer is “yes, it could, and may be already happening.”

In the VW scandal CEO Martin Winterkorn received a memo about the emissions scam a year before it became exposed. He did nothing. Too busy? VW

Missed the significance of the message? Waited for other senior managers to pick up the baton and run with it?

In all the above cases, managers at every level accepted or even encouraged damaging behaviour.  The culture was rotten and insensitive to what was happening to the organisation’s good name.

With all these scandals, who is accountable soon flashes in the media headlights.  Sometimes, as in Sports Direct, the owner or senior leader cannot escape the inevitable. When Mike Ashley declared his company had become “too big” for him to manage, he revealed not only accountability but a corporate culture that was both neglected and abused.

Many CEOs appear to under value culture and what it means for behaviour on a daily basis. Stumpf at Wells Fargo talked a good talk about how great the bank was. But this over paid leader had little understanding or interest in making sure the culture remained a positive one.

Instead, the company fired employees who raised concerns. As Senator Elizabeth Warren claimed in the recent Senate enquiry, Stumpf’s definition of accountability was “to push the blame to your low-level employees who don’t have the money for a fancy PR firm to defend themselves.”

In under 10 minutes, Warren destroyed the credibility of Wells Fargo’s CEO. His excuses for the wide-scale fraud occurred on his watch. She accused him of presiding over a scam, ripping off millions of customers. It also boosted the pay of senior executives like himself.

rotten applesWhen culture goes wrong it’s seldom a one-off event, or “a few rotten apples in the barrel.” The whole container goes bad and  the damage seeps into all levels.

Misconduct occurred in Wells Fargo over five to 10 years. It affected all layers of management.


In 2008 when new CEO Peter Löscher arrived in Siemens to clean house, he replaced 80% of its top-tier executives, 70% of its second tier and 40% of its third tier. Löscher’s team set out to change the entire culture of the firm. But employees who knew the most about the company’s bribery culture and methods were the same ones who were actually involved in it.

Changing Siemens’ way of doing business meant asking for help from those employees who had the most to lose. Which places a big question mark over Stumpf’s replacement in Wells Fargo. Senator Warren dismissed Stumpf with a devastating comment: “It was gutless leadership.” What can we make of his replacement Timothy Sloane? Will he have the guts to do what’s right for the Bank’s customers and the remaining employees?

Sloan has worked for the bank for around three decades. Is he going to be the clean hands who sorts out the culture?

Did he know nothing of the bad sales practices going on at the bank and if not why not, or what did he do about it?  From an outsiders’ perspective, this replacement CEO won’t cut it. He will not be seen by either customers or employees as guilt free. His selection by the Wells Board suggests they still don’t get it.

What the bank needs is a CEO untainted by association. A pair of clean hands whose reputation is not vulnerable from within or without. Mr Sloan may be an honest executive, but he’s just in the wrong job at the wrong time. Likewise the existing Board of the bank.

How do we know a CEO is in fact an ethical leader? There are many ways of finding out, but here’s a basic checklist which can help:

Test your ethical leadershipSources:

Watson, Siemens and the battle against bribery and corruption, Guardian, 18 September 2013

Neate, VW CEO was told about emissions crisis a year before admitting to cheat scandal Guardian, 2nd March 2016

Olen, Elizabeth Warren to Wells Fargo’s CEO: “You Should Give Back the Money That You Took”, Money Box, 20th September 2016

Mike Ashley admits Sports Direct has outgrown him -as it happened, Guardian 20th September 2016

Tim Sloan: The CEO Replacing Wells Fargo’s John Stumpf, Walls Street Journal, Oct 13 2016

Volkov, After Circling the Wagons: Wells Fargo’s CEO Finally Falls, Oct 17th 2016

Wells Fargo ex-CEO John Stumpf Resigns From Chevron and Target Boards, Oct 19 2016


Andrew Leigh
Andrew Leigh
ANDREW is author of Ethical Leadership, (Kogan Page 2013) and writes regularly at He believes business needs to re-discover the importance of ethics and integrity. As an expert on leadership Andrew writes regularly on ways to help managers be more effective as ethical leaders. His blog stays close to the zeitgeist with a unique perspective on many aspects of leading organisations ethically, including compliance, and engagement. Andrew is a joint founder in 1989 of Maynard Leigh Associates ( pioneers of using ideas from theatre in business. He was a hands-on practising manager for many years in the public sector, ending his time on the front line running a division with over 1000 staff. Andrew also spent several years as a business and financial journalist, including time at The Observer newspaper. He has written over 20 books on management, leadership teams and so on. Originally trained as an economist, he is a Chartered Fellow of the Chartered Institute of Personnel and Development. He is available for speaking engagements, interviews, feature articles and consultancy.

CHECK FOR TICKETS / JOIN OUR WAITING LIST! It's not a virtual event. It's not a conference. It's not a seminar, a meeting, or a symposium. It's not about attracting a big crowd. It's not about making a profit, but rather about making a real difference. LEARN MORE HERE