Wells Fargo is firing 5300 employees in response to their fraud of illicitly opening millions of customer accounts in the division Ms. Tolstedt leads. CEO John Stumpf claims the fraud was not systemic or due to the culture of the company and CFO John Shrewsberry claims “a few” employees were underperforming and trying to meet their sales performance targets.
I would not classify 5300 employees as “a few”. As an organizational change expert I do not accept that fraud is not part of the Wells Fargo culture. Corporate culture is largely determined by two factors – leadership behavior and performance compensation systems. When that many people are breaking the law for years there exists a culture of corruption and a compensation plan encouraging unchecked illegal behavior.
Indeed, Wells Fargo recognizes and is eliminating part of the problem by axing sales targets from the pay plan. But what does it say to employees when low-level workers are fired and the executive accountable for the division repeatedly breaking the law gets to walk away with a $125 million reward?