Jeff Judy

Jeff's Thoughts - October 5, 2016

Wells II: Mistakes and Opportunities

After Wells Fargo fired several thousand employees for unethical activities around their customers' accounts, the keen observers and commentators at Gonzo Banker wrote an "open letter" to Wells management. Now, they could've gotten away with a lot of Wells-bashing, recounting in lurid detail what went wrong and what it says about that organization.

But to their credit, their "letter" (source below) was more about looking forward than looking back. The big question was how the organization was going to change in its interactions with customers and employees. The real issue is whether anything is learned, whether the problems that arose will be addressed in any meaningful way.And that's largely a matter of culture, of mindset, of the institution's (and management's) approach to problems. From years of working in the financial services industry, I can suggest three common mindsets toward problems and mistakes:

  1. The Ostrich
  2. The Avenger
  3. The Learner

Legend had it that the ostrich buried its head in the sand rather than confront danger. It is also a surprisingly common approach to recognizing problems or acknowledging (and fixing) mistakes. In some organizations, it just doesn't pay to rock the boat. Certainly in the case of Wells Fargo, there must have been many opportunities to see what was going on, if only someone looked.

The problem with not rocking the boat is that problems have a way of festering, of expanding until they explode, possibly blowing a big hole in the hull of your boat.

The Avenger, by contrast, vigorously reacts to problems and mistakes by staff. But the reactions are strongly punitive, and there is a lot of blame-and-shame involved. (Some commentators feel that some members of the Wells management team have tried to put too much of the blame on individual employees, and not enough on the culture that management built.)

That doesn't do much for morale, of course. More importantly, as staff learn that they will be punished for their mistakes, they try to hide them. Nobody volunteers suggestions for, say, better procedures or systems for addressing certain problems. As far as the front-line employees are concerned, we're back to the ostrich approach, and we know how that turns out.

Yet there are institutions led by Learners, that want to know when things go wrong, so they can do something about it. That could mean a one-time fix for problem that cropped up when dealing with an individual customer.

But Learners are especially interested when the same problem happens a second or third time. That's when they know that they need to take action to eliminate the source of the recurring issue, whether that action is changing practices, providing additional training and communication, or changing personnel.

The problems that arise at most smaller institutions are typically different in type and in scale from those recently uncovered at Wells Fargo. But Wells Fargo also has the scale to ride this out, whether they learn from the situation or not. Smaller organizations can be taken down by one or two big problems.

So, don't let your small problems fester in the dark until they become big ones. Welcome discussion of problems as a shared learning experience, and you will build a considerable advantage over your ostrich competitors.