Why Wells Fargo is Broken


Wells Fargo is broken and social and cognitive psychology can help you understand why this once respected bank needs a dramatic cultural shift.

Wells Fargo is broken and hemorrhaging public trust so fast that it could lead to a derailment of the banking behemoth.  So how did Wells Fargo get to this point and why is everyone upset?  To understand what is happening with Wells Fargo, one has to understand a little about social and cognitive psychology.

Let’s start with how Wells Fargo could systematically defraud thousands of customers.  Psychologist Albert Bandura, the father of Social Cognitive Theory, argued that there are ways to reduce moral agency through cognitive processes to justify offensive behavior like what we saw at Wells Fargo.  These justifications are often incubated in the culture of the organization and passed on through increasingly egregious behavior.  No one from Wells Fargo decided one day to just go into work and steal millions of dollars from hard working customers.  The behavior started slowly and increased incrementally with cognitive moral justifications.  And the shocker is – the people that did it are probably not bad people; they are more or less, just like you and me.  Here is how it happens.

Bandura highlighted six common cognitive moral agency justifications; (1) sanitizing language, (2) advantageous comparison, (3) removing personal agency through diffusion of responsibility, (4) attributing blame to another, (5) minimizing perceived harm to other, and (6) dehumanize victims.  When hearing the congressional testimony of chief executive John G. Stumpf, it is easy to pick out the moral justifications.  The high pressure to attain unrealistic sales goals for the benefit of managerial bonuses was part of the toxic cultural fabric of the organization that allowed the moral justifications to permeate and persist.  So why are people so upset?  It is not like big banks haven’t scammed us before.

To answer this question we look to social psychology.  Humans are social animals, no matter how much we try to deny our make-up we are driven and motivated by social instincts.  These social instincts and behaviors evolved out of a need to work together to survive.  In modern society, banks have a unique and central niche in our social trust and our sense and ability to survival.  We, as banking customers, believe that our banks share the same values and beliefs as we do.  Since we share the same social goal of survival, when we shake hands with the bank representative and hand over the deposit slip, there is a psychological social bond that is established – we trust them with our future.  Breaking that bond, like Wells Fargo did, undermines the social contract and psychological trust.  As social animals we ostracize and sanction those that break the social trust because that behavior will ultimately destroy the social fabric of shared values and beliefs.  In the case of Wells Fargo, without a fundamental change in organizational culture, these customer sanctions could prove catastrophic.

Let TierOne Performance Consulting help your organization develop a positive culture that engages employees and customers in a supportive trusting way.  Whether it is measuring your organizational engagement, conducting a cultural assessment, developing intrinsic motivational measures for your work team, or conducting emotional intelligence training, TierOne can help you accomplish your goals.

Remember – Put your mind on what matters!