After intense scandals, boards have a limited time to regain their composure and start rebuilding trust. This is certainly the case for Wells Fargo.
Their recent scandal has left shareholders, employees, investors, the government, and the public with a bad taste in their mouth (to put it lightly).
Some effects have been immediate with business going down, but the long-term effects will be much more severe if they do not take internal actions to prevent this from happening again.
Recently the new CEO, Tim Sloan apologized to employees for the pain that was caused by the scandal. This is a great first step, but will not change the culture of the company.
Wells Fargo (and any board dealing with a broken trust) needs to drill down to the core emotions that caused the disconnect that led to the company to such poor decisions.
We have determined five ways based on the Board Dynamics Process the board can act to get back on track and reconnect.
- Board directors need to speak about their emotional state as openly and simply as possible. Staying focused on how it feels for them to lose trust and be part of the board that missed the fact their company committed a fraud. Board directors need to resist blaming employees, the management, or any one individual. The focus should be on identifying the steps in the decision-making process that led them to miss the signs of fraud.
- Stay emotionally present, acknowledging each director’s emotion and their part in the disconnection. Talking about the fear of not meeting expectations and how it played out for them in the decision-making process is important. If directors do not get a sense of how this event has hurt them, they will not be able to depend on each other to repair the bond they need in moving forward.
- Take ownership of disconnection and validate everyone’s emotions. The board needs to express understanding for the concerns that each member has by saying something like, “Your concerns are valid and we were too afraid of not meeting expectations that we missed the red flags and could not comprehend that we were going down a wrong path”. This is crucial to acknowledge.
- Each director identifies what they need right now to start rebuilding the connection with the board and heal the board relationship trauma. They need to ask directly for these needs to be met. For example, it could be a reassurance to know that everyone is in this together. They might also ask to revisit core values, talk about revising them, or identify how and what was missed.
- Every director needs to take responsibility for the long-term success and emotional connection of the board. Each person needs to say actively work to be more accessible, responsive and engaged.
It is important to remember that even though the consequences are damaging to the company’s credibility, not everything about Wells Fargo is bad and how they deal with that trauma can change how strong they come out of this in creating a better future.
Another important point to make is that if the emotional disconnection is not addressed, we will see these problems continue in the future. Simply changing the people on the board will not solve the problem – these issues are much deeper and integrated into the culture. The current board needs to work together to identify the emotions responsible for the disconnect and repair it.
Injuries and traumas never disappear but they become integrated into board’s attachment stories as part of their renewal and connection.
Wells Fargo has a long way to go to regain the trust of the public, but they need to start internally with their board. Building a strong emotional connection is the only way to ensure long-term success.
If you would like to learn more about improving board dynamics and emotional connection, please contact us at [email protected].
Part 2: Dismantling a Lock-In in the Boardroom: An Emotionally Focused Approach to Board Effectiveness