It is difficult to open a newspaper without seeing the latest on the Wells Fargo scandal. As we all know, Wells Fargo employees opened over 2 million unauthorized customer accounts which resulted in 5,300 low level employees being fired and $185 million in fees along with loss of trust with the public and shareholders. So what happened here? What can we learn from Wells Fargo?
Based on the information that has been discovered so far, it is clear that there came a point where the core values of the company were pushed aside in favor of performance.
The emotional disconnection with the values of a company starts at the board level and trickles down to management and lower level employees – this is likely what led to the fraud that took place from 2010 to 2015.
So let’s talk about emotional connection and values vs. the fear for performance. As a board member with a fiduciary responsibility to shareholders, it is easy to say performance is the most important part of your role, but the truth is that performance should be closely tied to emotional connection and values. The emotional connection serves as the foundation for emotional safety. It is basically what gives board members safety when they have to work together. Values are what keeps the board on track.
The emotional connection to each other and the company allows the brain to stay calm and remain connected even in times of great stress. When we don’t pay attention to the emotional connection, we get disconnected and slowly move away from values. Our brains lose the safety of the group. Decisions become inconsistent, and panic sets in to protect self-interest becomes prevalent in the boardroom. All of this leads to poor performance. But when the brain is emotionally connected, we see better collaboration, more creativity, and better ideas which of course leads to better overall performance.
The way the board treats the emotional connection guides how the executive team approaches the values which moves down to management and all the way down to front line employees. When the board is disconnected, it loses sight of the mission, vision, and values, so does everyone else.
Emotional disconnection is often driven by fear.
There are certain basic fears that come up in all relationships – fear of abandonment and fear of rejection. If we look at fear that led Wells Fargo to the decision of committing fraud, there were four different relationships that were impacted by fear:
Wanting to stay connected by pleasing everyone is a natural part of being human. The fear of not meeting expectations often what get CEOs in trouble because they don’t know how to address their emotion with the board and the board does not know how to help them deal with that fear. Thus, CEOs obsession for performance turns into a tunnel vision – ignoring the values and emotional disconnection with the board. This laser like focus almost always ends poorly for the company.
In the case of Wells Fargo, performance became the focal point.
With terms like “Eight is Great” (referring to number of products per household), it is easy to see how focus got turned from their five values which include “what’s right for the customer” to “what’s right for me” performance.
The tragedy in all of this is that performance obsession happens to so many boards, and it is so hard for them to see it as it is happening. So how can you stop this from happening on your board? Or better yet, how can you tell if this is currentlyhappening on your board? It’s simple – bring it back to emotional connection. Ask your fellow board members if they can share their concerns openly and honestly on the board. Have a candid conversation about if and how you can create safety so that you can refer to values when making decisions. Ask your management if they know the values – chances are if they are not familiar with the values, neither are your front line employees.
If it is apparent that there is a disconnect between the people and the values, take some time to review. Do the values need to be changed? If you are not using the values, how are you making decisions? The most important part of this conversation is to reconnect the board emotionally with the company. Remind everyone why they joined the board in the first place – they care about the company and want it to succeed. Implementing values and speaking about them regularly is one of the best ways to maintain that emotional connection and prevent performance pressures from taking over.
What we can really learn from Wells Fargo is that even if you have a strong and competent board, it is all easily lost when fear and disconnection are introduced in to the boardroom.
Competence turns into incompetence and things that should be obvious are ignored or pushed aside as directors, CEOs, managers, and frontline employees stop focusing on the company’s values and start doing everything they can to protect themselves. Learning, understanding, and knowing how to work with emotion becomes essential in developing a culture where people feel safe and connected to protect the company together.
If you would like more information about creating an emotionally safe board or you would like us to consult on your board, contact us at [email protected].