By Professor Jennifer JordanJennifer Jordan. The Wells Fargo fake-accounts scandal led to $185 million in fines, the resignation of CEO John Stumpf, and the firing of some 5,000 employees. Anita Richardson, Bob Mabbitt, Christina Wixson, Joey Petriches. Align performance targets with what is achievable and supported. According to the materials offered in week one, the element of servant leadership operates in … Multiple levels of leadership at Wells Fargo were perceived to be averse to bad news. He failed to be informed of organizational operations, though whether that was a simple mistake is up for debate. But the actions of leadership belied their commitment to responsible behavior. The story is all too familiar by now. They rang as hollow platitudes in Wells Fargo’s actual culture in which hard selling was valued and Seeger and Ulmer’s other two communication-based leadership responsibilities were deliberately ignored and actively undermined. Leadership Style Analysis. “We are in the habit of doing the right things,” he wrote in Fortune. This is a type of leadership where the workforce feels the leader is not all about him, but focuses on the interests of the employees. In light of the scandal, such remarks seem either comic or calculated. This case study will analyze the effect of Stumpf’s leadership style on his employees and the consumers of Wells Fargo products. Those violators were fired, but no effort was made to understand why they violated the rules. Ethical leadership takes courageous action—not merely words, but actions that encourage employees to do the right thing, voice concerns about cultural problems, and report perceived wrongdoing. The predictable effect? Team members were reporting suspicious sales behavior for almost a decade. Wells Fargo is now refunding those fees. The question remains as to whether Stumpf perpetuated this scandal purposely. In fact, these whistle blowers were terminated–over 5,000 of them. Moving forward, a good practice would be to not allow yourself, as a leader, to be too far from your front line. In bold letters under the heading, “Vision and Values”, Wells Fargo CEO, John Stumpf, states on the company website, “Everything we do is built on trust. None of the materials provided on/in this website/publication/document may be used, reproduced or transmitted, in whole or in part, in any form or by any means, electronic or mechanical, including photocopying, recording or the use of any information storage and retrieval system, without permission in writing from IMD. She teaches on the. Key to this discussion is the question of ethics and the potential for ineffective leadership decisions to have negative impacts on others. The false narrative that John Stumpf created, the complete lack of critical review of policies, and the active intimidation of whistle blowers read as a bullet-point list of what not to do in leadership. Values-based leadership means that values are not just words but are translated into actions – actions including how targets are set and monitored. Helping a Nonprofit Prevent and Recover from Fraud, Understanding to Whom and to What Nonprofits are Accountable, Nonprofit Research, Theory & Practice Blog, Three Leadership Lessons From the Wells Fargo Scandal. Leadership responsibility failures can lead to simple mistakes or life-changing circumstances for the people involved. During his testimony on Capitol Hill, Stumpf said he planned to forfeit $41 million in pay in an apparent attempt to atone for his role in the scandal. Wells Fargo, like many organizations scarred by scandal before it, talked about ethical behavior. It seems like what was lacking was values-based leadership at the helm of this Wall Street behemoth. ... Wells Fargo Survey: small business optimism grows despite difficulties. They make all or most decisions, rarely rely on employee feedback, and remain tightly in control. “Wells Fargo CEO Stumpf Is Gone: Is This The Beginning Of Wholesale Leadership Change?” Forbes, http://www.forbes.com/sites/adamhartung/2016/10/13/wells-fargo-ceo-stumpf-is-gone-beginning-of-wholesale-leadership-change/. He failed for claiming to create a moral climate based on doing the right things, though behind closed doors–hard selling was valued. Ltd South Beach Tower 38 Beach Road #17-11 Singapore 189767, IMD Chemin de Bellerive 23 PO Box 915 CH-1001 Lausanne Switzerland Tel: +41 21 618 01 11 [email protected] www.imd.org, Copyright © 2006-2020 IMD - International Institute for Management Development. Stumpf, John G. “How Wells Fargo’s CEO built the team at the world’s most valuable bank.” Fortune, www.fortune.com/2015/07/23/john-stumpf-culture/.
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