How Ethical is Your Organization?

by | Mar 10, 2020

ethical organization

In September 2016, Wells Fargo made headlines when allegations surfaced that its employees created more than 1.5 million fake deposit accounts and half a million fake credit cards while under pressure to increase sales numbers. Then in March 2017, it came out that the actual number of fake accounts was nearly twice what was originally reported.

How did this happen? Employees at Wells Fargo were strongly incentivized to grow their numbers regardless of how that impacted their customers and the customer experience. The organization as a whole became overly focused on a single, narrow metric (this many new accounts). People didn’t stop and think about the unintended consequences of having such a narrow focus.

The directive to focus on this metric came from the top, the leadership. Employees did what they thought they needed to do in order to meet leadership’s expectations. The expectation to generate the maximum number of new accounts was clear, and employees took this as an at any cost directive—right or wrong.

And when Wells Fargo was caught in the act? Rather than its leaders taking responsibility for having set these expectations, they fired the employees. All 5,300 of them. Firing the employees was not the right response, in my opinion.

This wasn’t a case of one account manager going rogue; it was a failure of leadership and organizational culture that led these employees to believe that the only way they could meet leadership’s expectations was to ignore ethics. Unfortunately, this is an issue that needs to be addressed in many businesses—not just at Wells Fargo.

Projecting the right values

Wells Fargo is a perfect case study for the importance of cross-checking leadership. If people in the top tiers of leadership at an organization don’t take values, culture building and ethics seriously then the rest of the organization will follow suit—for better or for worse.

Whatever a leader does or doesn’t do, employees are predisposed to notice that and have it influence their behavior. As an organization, culture and society, we need to think more about what we can do (if anything) to ensure that people at the top are more likely to make and model ethical choices.

Demonstrating ethics in your organization

One way to cross-check is for leaders themselves to consider organizational decisions and actions through the lens of the organization’s values and ethics policies. You can’t write a policy that will account for every possibility but you can stop and check yourself to ensure a directive won’t be misunderstood.

Another option is to consider what you’re doing as a leader and an organization to equip employees to find their own north star. How do they know how to make decisions, like the one the Wells Fargo employees ultimately made? Is there a way to communicate your vision more clearly so they choose a different route the next time?

Business is inherently competitive. Organizations need to hit numbers and that has a trickle-down effect on teams. But there needs to be more proactive discussion behind the scenes of what that looks like and how employees should behave. It’s imperative that we operationalize decision making in a way that helps the entire organization live and breathe the it’s core values and uphold the ethical behavior your customers expect.

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