Wells Fargo

Federal Reserve Board Suggests Terrifying Action

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In one of the most terrifying and perplexing moves to date, the Federal Reserve Board proposes to relieve banks’ boards of directors of “excessive regulatory duties,” which makes no sense at all. Although I am not a proponent of over regulation, boards must be held accountable and provide oversight on important bank decisions that influence the long-term sustainability and reputation of the bank.

At a time when Wells Fargo is under intense scrutiny, and for good reason, Donald Trump is attempting to lessen accountability rather than increase it. How is a board expected to effectively fulfill their fiduciary responsibility, including advocating for a psychologically healthy, safe and fair workplace, if it is kept in the dark about the inner workings of their organization? Toxic cultures are perpetuated when boards are uninformed or misinformed about important organizational actions. When the board is kept in the dark about such actions, their ability to function effectively ceases to exist.

I maintain that if the boards of directors of Wells Fargo and Uber had been better informed earlier, the companies’ gross mistakes in judgement could have been avoided. As it now stands, both companies are in great peril and their very survival hangs in the balance.

In my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, I discuss the importance of good board governance and the dangers associated with its demise. Without supporting bank boards to improve their oversight capabilities, the Federal Reserve Board is essentially removing a basic and essential tool from their proverbial toolbox.

Photo credit: BIGSTOCK

 

What to Do When Your Boss Asks You to Compromise Your Ethics

Employees being asked to act immorally by their boss have become far too common. The dilemma is—what to do? And how to do you weigh the price that whistleblowers usually have to pay such as lack of advancement, alienation and even reprisal? Daniel Victor in the New York Times’ Smarter Living column explored this question recently and based on my research forFrom Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, I disagree with some of the advice he offers.

I agree with Victor that employees should first make sure that they didn’t misunderstand their supervisor’s request. There are times when things are poorly stated and it’s imperative that this isn’t misinterpreted. But let’s say that the request was crystal clear—what do you do next?

 First, determine if this request restricted to just this manager in this department, or is it something being enacted throughout the organization? Second, forego human resources, which in my experience is usually part of the problem, and send an anonymous note to the audit committee of the Board of Directors apprising them of an ethics issue and request an investigation. In your note indicate that if there is no response within a set limit of time you will seek external recourse with legal representation, the media, or both.

Under no circumstances would I recommend following Victor’s advice to expose the situation internally—this could be fraught with danger. Had the employees who went from victim to villain at Wells Fargo exposed the scandal in the manner I advocate, their story would have had a far happier ending.

Photo credit: BIGSTOCK

UnitedHealth and Corporate Wrongdoing: Triple Jeopardy for Employees

It’s no coincidence that the business model behind the recent revelations of UnitedHealth Group defrauding Medicare is eerily familiar. They have managed to combine the toxic demand to succeed at all costs found at Wells Fargo with the heartless teachings of shareholder over stakeholders from the Harvard Business School. Meanwhile, Republicans in Congress look to gut the Affordable Care Act citing increased costs, never realizing what is contributing to those rising prices. There’s just one word for that—sick.

Benjamin Poehling, the former finance director at UnitedHealth, alerted the Justice Department to this when he realized that billions of taxpayer dollars have been stolen by big insurance companies that have been bilking the system. Now the Justice Department is suing his former employer, UnitedHealth Group, and plans to investigate other companies who are also Medicare Advantage participants.

Medicare Advantage, which is the program that’s been swindled, was supposed to be the solution to the $13 trillion funding gap in Medicare.  It was instituted by Congress to fix the gap by turning it over to the insurance companies with the expectation that they provide better care for a lower price. At this point the only ones benefiting are the insurance companies. According to the New York Times, UnitedHealth has reaped some $3 billion in profit over five years from Medicare Advantage. We still don’t know how much other insurance companies may have stolen.

As in all of these whistleblower cases, this puts employees in a terrible position. Comply and you become a crook and if caught, will be fired and possibly prosecuted. Refuse to comply and you’ll be fired. Become a whistleblower and risk your career and possibly your health and well-being. You’d think an insurance company would recognize behavior that puts people at risk. 

Why Being a Revolutionist is Critical Now

The image may forever be seared into the collective consciousness—Republican members of the House boarding buses to the White House to have a beer to celebrate passage of the American Health Care Act of 2017. Never mind that the AHCA has an enormous list of pre-existing conditions that unconscionably includes cesarean section and PTSD brought on by sexual assault, or that it makes it possible to charge people over 50 more than five times the rate of younger people, or that it included an exemption for Congress. And ignore that in their zeal to defeat the national healthcare safety net created by an African-American president, many Republicans admitted to never having read the thing or that they refused to wait for the cost estimates from the Congressional Budget Office. Just remember this: This may be the moment when the average American becomes a revolutionist.

As someone who has been a revolutionist for psychologically healthy, safe and fair workplaces for almost a decade, it gives me hope to see Americans fired up. It’s this energy that I hope to direct to employment issues, which differ from your rights as a citizen in an important way—the freedom of expression that you are guaranteed under the Constitution does NOT apply to the workplace.  This is why keeping an eye on workplace issues is extremely important—the man currently in the White House wants to run the government like one of his workplaces.

Examples of how employees lack rights abound. Donald Trump’s friends at Fox News continue to be in the headlines with new lawsuits and federal investigations due to sexual harassment and gender discrimination allegations. Most of the women who were harassed had no recourse at work. One of the most pernicious aspects of the culture at Fox News is the practice of human resource departments to encourage employees to come forward then use that information to facilitate retaliation. As I discuss in From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, this is far from unusual. I would even argue it’s the norm; in toxic workplaces human resource departments are part of the problem, not part of the solution. Far too often they suffer from what I call “Sean Spicer Syndrome”—zero credibility, zero courage.

One of the most egregious examples of employees lacking rights at work come from Wells Fargo. I’ve written a lot about the bank’s improprieties and I’m not fooled by the assurance of its new CEO, Timothy J. Sloan, that retaliation against whistleblowers won’t be tolerated. Or, according to a recent New York Times article, that it’s “critically important” that all employees feel safe at Wells Fargo. It does nothing for the employees who were fired for reporting the bank’s abuses and then show up only as a footnote in a 110-page report by an outside law firm. In order for there to have been abuse at the levels that took place and the whistleblowers silenced, the exploitation by Wells Fargo had to be deep and systemic.

That is why I take being a revolutionist so seriously and you should, too. Fighting on against depressing odds is difficult, but we don’t have the luxury of sitting back. Trump has tried to silence the press, boost religious extremists and roll back protections for the LGBT community, in addition to that outrageous bill that masquerades as health-care reform. But it’s not over. Not only does the AHCA still need to pass in the Senate, but 2018 midterm elections are coming up quickly. Use your anger to fuel your resolve to resist. Record donations yesterday poured into sites that will fund Democratic candidates in 2018. There are marches planned, including the June 11 Equality March for Unity and Pride in Washington, DC. I predict we will see record crowds for Pride around the world this year. As my 98-year-old mother, a veteran of the Dutch underground during World War II told me, “you don’t want to feel as you grow older that you should have done more.” Take action now.

Photo credit: CSPAN

  

 

 

 

 

Liar, Liar, Bridge on Fire

One of the traits that mark an adult bully is his tireless efforts to deflect blame onto others, most frequently subordinates and coworkers. That is certainly the case with New Jersey Governor Chris Christie whose former deputy chief of staff, Bridget Kelly, and former ally, Port Authority executive Bill Baroni, have been sentenced to prison for their roles in the 2013 George Washington Bridge lane closures that led to days of traffic gridlock.

Christie, an early supporter of Donald Trump who at one time seemed poised for a position in the new cabinet, appears to be back in the administration’s good graces. It is a bitter irony that at the same time his scapegoats were convicted of public corruption thanks to a mission of political revenge on Christie’s behalf against Mayor Mark Sokolich of Fort Lee for not backing the governor’s reelection.  Christie showed his support by being in Washington while the pair was sentenced.

While Christie may have escaped unscathed, others aren’t fooled. According to an article in the Wall Street Journal, Judge Susan Wigenton said, “It’s very clear to me that the environment in Trenton created a culture of either you’re with us, or you’re against us.”

The response from a Christie spokesman wasn’t surprising. He tried to explain away the judge’s comment by saying that her “ill-advised remark is based on the perjurious testimony of three convicted felons.”

Not unlike the case with the executives at Wells Fargo, Christie feigned ignorance and threw others under the bus. There is no scenario in which this conviction exonerates Christie; either he was lying and corrupt, or he was inept and refused to hear what was going on around him. Either way, he reveals himself as the worst type of bully boss. It amazing it took this long for him to get back into favor with the Bully-in-Chief.

Illustration credit: Chip Bok/Bokbuster.com

Human Resources: A Dismal Profession?

In all the discussion about Wells Fargo in the wake of their sham accounts scandal, there’s been no real mention of who or what was the direct architect of their corporate culture. In my opinion, human resources should be responsible for the integrity of an organization’s culture just as much as the CFO might be responsible for the integrity of that organization’s numbers. I’ve worked in HR – early in my career, I was an HR professional, and throughout my career, I’ve worked with HR roles within my portfolio of responsibilities – and I think it’s safe to say that HR needs to be held accountable for the cultural makeup of a company. They’re the team that develops incentive programs like the ones that allowed 5,300 employees at Wells Fargo to lose their jobs for following their culture’s status quo. They’re the team responsible for ethics training, handling whistleblowers, and helping employees deal with the strain of impossible sales quotas. In my new book (out in January) and in previous blog posts, I’ve compared workplace cultures to ticking time bombs, which go off when a company’s leadership neglects the reality of a workplace structured for scandal. When a culture is a ticking time bomb, HR is almost always part of that problem, either in the form of discouraging whistleblowers, creating programs that don’t truly address interpersonal conflicts associated with sales goals, or creating a veneer of caring about customers and employees that’s entirely false. I suspect much of this went on at Wells Fargo – just look at the HR gobbledygook on their website (which hasn’t been updated since 2015) for evidence of this. However, as much as HR can be part of the problem with workplace culture, they can also be part of the solutions to fix those problems – if only HR professionals had the courage and honesty to stand up, acknowledge cultural issues, and inform leadership in order to make actionable changes needed to avoid disgraces that harm customers as much as they harm the organization’s reputation. 

Photo: Getty Images via Wall Street Journal 

Being Wells-Fargoed Should Keep Top Executives and Boards of Directors Up at Night

The news broke this morning that Wells Fargo’s board has decided to revoke compensation valued at $41 million from the company’s CEO, John Stumpf, in relation to the sham customer accounts created by employees to fluff sales numbers. Additionally, Wells Fargo’s former head of the community banking division that is the source of the scandal, Carrie Tolstedt, has also been financially penalized. I was surprised to hear that these two were being reprimanded for the scandal by Wells Fargo – but then, it occurred to me just how similar this was to the Volkswagen scandal. As I’ve written about before in Directors & Boards Magazine, both companies initially found that a swath of employees were to blame, before moving up the chain to management-level employees who were turned out only after it became increasingly clear to the public just who was to blame for their respective breaches with the public trust. In short, Wells Fargo is scrambling, just the way VW did when the emissions scandal broke.

I’ve said it before, and I’ll say it again – CEOs need to be aware of what is going on in their businesses. Transparency is the name of the game here – not just with handling scandals in the public eye, but in managing employees in every sector of business. Firing scapegoated lower-level employees and revoking the huge payouts to executives is fundamentally a band-aid approach to fixing the problems that lead to scandals. Firstly, Tolstedt should not have been allowed to retire peacefully with a few penalties imposed on her severance package – Wells Fargo should have made a point of firing her. Additionally, if it is revealed that Stumpf was fully aware of the sham accounts and covered up for them, he should also be dismissed publically. However, before either of those two steps could be taken, the most important course of action for Wells Fargo (and any similarly scandalized corporation) is to conduce a full, comprehensive and objective investigation into the root causes of the wrongdoing that occurred. Having a complete picture is essential to actually curing the problems present in any organization – and it makes a more convincing argument to the public whose trust those organizations are trying to regain.

 

At the end of the day, Wells Fargo’s behavior is yet another stain on the already-tainted US banking industry. The pervasive nature of short-term goal oriented cultures will almost always result in similar scandals that further erode the public’s trust in those institutions they have no choice but to invest in. It’ll be a long time before those 5,300 employees let go for their “rogue” behavior will be able to get a job again, just like it will be a long time before the employees let go for whistleblowing will feel comfortable standing up for their principles again. Depending on how far this particular scandal goes, perhaps the entire board will need to be replaced before anyone is willing to give Wells Fargo their money again. 

Image: Stumpf on Capitol Hill last week. Image Credit: Gabriella Demczuk for NYT