Human Resources Issues for Senior Management
Issue link: https://digital.hrreporter.com/i/747024
30/CANADIAN HR STRATEGY COLUMNS w e have seen it before — toxic corporate sales cul- tures that give rise to disasters such as the VW diesel emissions cheating scandal or the accusa- tion that Amazon oppressively monitored em- ployees with unrealistic and harsh expectations. Now we have another major example of what can happen when corporate culture goes horribly wrong — the Wells Fargo debacle. As much as CEO John Stumpf in his testi- mony before the U.S. Senate Committee tried to explain away the unethical behaviour of so many Wells Fargo employees, many feel he should be the one held accountable. Yes, he red about 5,300 employees for creating unauthorized and bogus ac- counts. But most nancial analysts agree it was the corporate culture he created that failed, not just those employees. Corporate culture matters a lot, for good or for ill. Culture accounts for 40 per cent of the difference between high- and low-performing organizations in terms of revenue, margin and employee engagement, according to research of 410 companies across eightindustries by LSA Global. An aligned culture can support a company's success because employees are positively engaged; they operate with mutual respect; they live the company values and care about what they do. The opposite is true in an unaligned corporate culture. Em- ployees simply check in and out, with little allegiance to the company or brand; they lack respect for their leaders; they do not aspire to high ideals or feel encouraged to practise them. There are three major factors that contribute to a toxic cul- ture and all three appear to have been present at Wells Fargo prior to the scandal: An unrealistic and unreasonable expecta- tions of employee performance; minimal accountability for questionable practices or behaviours; and an atmosphere where employees fear repercussions for speaking openly. Any one of these factors can quickly and systemically spread poison through the workplace through unaligned corporate be- liefs, norms, assumptions and artifacts. UNREALISTIC EXPECTATIONS If the news reports are true, it appears Wells Fargo had unreal- istic and unreasonable expectations of employee performance that contributed to employees secretly selling services to un- suspecting customers. When it comes to expectations, high- performance cultures ensure employees understand exactly what is being asked of them, believe the performance expecta- tions are fair and achievable, have the support they need to de- liver on those expectations and know how they are performing compared to those expectations. MINIMAL ACCOUNTABILITY It also appears Wells Fargo's culture created minimal account- ability for the practice of unfairly taking advantage of custom- ers to meet sales targets. Corporate culture and values dictate how employees behave and what happens when unethical be- haviour occurs. Getting caught creating over two million phony and unauthorized accounts to hit sales targets and receive bo- nuses screams of a serious leadership and culture problems. It appears results (hitting sales targets) greatly outweighed two core corporate values: "ethics" and "what's right for customers." ATMOSPHERE OF FEAR Lastly, employees only report questionable behaviour when they have faith there will not be retaliation for speaking up, according to a survey of more than 5,000 companies by LSA Global. The same lack of trust plagued VW. If you want em- ployees to be a positive force for change, make sure they trust leadership to set the right course, model the ways things should get done, and demonstrate integrity. Then, ensure manage- ment encourages constructive dissent and listens to and takes employee ideas seriously. Wells Fargo's website statesm "Culture is the attitude we bring to work every day — the pattern of thinking and act- ing with the customer in mind. It's the habit of doing the right things, and doing things right." If the company had followed its espoused corporate culture, it may have avoided the sizeable penalty of US$185 million. Take a close look at your corporate culture. Can you honestly say it's aligned with your strategy and a positive force that does not risk being poisoned by one of the three factors above? Be sure. Few organizations can survive the kind of scandal Wells Fargo has just experienced. Tristam B. Brown is the chair and CEO of management consul- tants LSA Global in Redwood, Calif. WELLS FARGO AND TOXIC CULTURES "IT APPEARS RESULTS GREATLY OUTWEIGHED CORPORATE VALUES." Tristam Brown