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When Leaders Fail

All business leaders, no matter the industry or size of their companies, set the tone for their staff. Attract and reinforce the right values, and provide employees with the tools and support to perform at their best, meet company objectives and serve their customers effectively, and success won’t be far behind. But should a company leader set the wrong example, a chain reaction of negativity and poor results will cascade throughout the organization. The impact of failed leadership is significant and far-reaching; jeopardizing the trust of shareholders, customers and employees alike and doing irreparable damage to the company brand.

In contemporary media, perhaps there is no better example than Wells Fargo, in which employees created millions of ghost bank accounts and credit cards for customers to meet up-selling quotas – without their knowledge or consent. Although the bank was hit with $185 million in fines for its inexcusable actions and fired more than 5,000 employees responsible, these actions are far too little and too late to repair the trust of its customers.

How does something like this happen? It all comes down to poor leadership, as set from the top. Under immense pressure to hit sales targets or be fired, thousands of Wells Fargo employees and managers compromised their own professional integrity and created these ghost accounts to boost their numbers. Not to defend those employees, but they were following the directives set up by leadership. The same leadership that established a culture where it was acceptable and even encouraged to do anything to get ahead and protect their jobs, stooping so low as to forge signatures and commit identify theft.

As Senator Elizabeth Warren pointed out during a senate hearing on the incident, it was those low-level retail bankers who faced repercussions for their actions, not company leaders. In a video from the hearing, we see Warren grilling Wells Fargo chairman and CEO John Stumpf, who sheepishly admits that none of the senior bank executives who created this culture of corruption were fired. Warren accurately defines this as “gutless leadership.”

Strong leadership, on the other hand, is when leaders show that they have their employees’ best interests, and those of their customers, at heart – instead of setting them up on a collision course with either failure or felony. And good leaders will take accountability for their actions, not pin the blame on those employees who were merely following their poor example. After all, it wasn’t just Wells Fargo customers who were betrayed, but the bank employees themselves whose jobs and financial security were impacted.

Companies with good leadership encourage their employees to do the best work possible; and with reasonable goals, they will be eager to advance professionally and help achieve the overall company mission. Those with gutless leadership set unreal expectations, encourage negative behavior and, in turn, struggle to retain their staff. And employees and customers will notice.

Although Stumpf has finally taken accountability and resigned from Wells Fargo, it remains to be seen if new CEO Timothy Sloan can right the ship and replace Stumpf’s gutless leadership with good leadership. The bank’s customers will be the ultimate judges, and needless to say, they will be watching.