As the Wells Fargo saga continues to unfold, those of us who teach ethics in business schools are mystified. We know that we discussed fraud and misrepresentation—and their consequences. As those who responded to EthicsGame’s 2016 survey reported, teaching ethics is very important. So what happened?
The New York Times headline tells all: employees needed a paycheck. Under ordinary circumstances, many employees are honest and ethical. However, when the culture promotes unethical behavior and punishes ethical employees by firing them, people begin to do as they see, not as they’re told. And then, when the reporters and regulators start sniffing around, those in leadership claim innocence by pointing to the ethics training and not noticing their behavior.
Over a period of more than five years, Wells Fargo put aggressive sales metrics in place and fired people for failing to meet their numbers. At the same time, they spent thousands of dollars in ethics training telling people not to set up fake accounts and gave them a hotline to report manager’s misconduct. Employees reported the misconduct; nothing happened. Those low level bank managers and tellers who did not meet their numbers continued to be fired. One wonders exactly what the top management of Wells Fargo expected. Had they never studied the relationship between living into ethical values and the actions of leadership?
Our ethics classes tend to focus on helping individuals avoid unethical behavior such as falsifying signatures and participating in fraud. American businesses like to peddle the notion that unethical behavior is the result of one or two bad apples.
However, those who have studied ethical failures know that an unethical culture—unchallenged bad behavior on the part of leadership and a system that rewards unethical action—will trump all the ethics education in the world. People—especially those at the middle and bottom of the economic system—don’t want to risk their paycheck by raising ethical concerns. Economic fear quickly quenches any fervent flames of ethical desire.
As the dust settled for Wells Fargo, the former consumer banking chief, Carrie Tolstedt, who was in charge of the region with the most flagrant abuses, was allowed to retire with a $124.6m payout and praise from the company’s leadership. At the same time, the bank paid out $185m in fines. The regulations put in place after the latest financial crisis were supposed to stop this kind of behavior. But the reality is that without suspending business line licenses and holding the top executives to the same standards as the rank-and-file, change will not happen.
Yet, those of us who teach ethics, whether in a university or an organization, cannot give up the battle. Without us raising the possibility that both leaders and managers in organizations can be ethical and successful, the vision of an ethical organization will not be seen.
We can remind our learners who are or will become entry level employees that they are the ones who will take the fall for unethical behavior. They can then develop the moral courage and voice to overcome their fear of a loss of income. And, those of us who teach executives can help them strategize on systemic approaches for their businesses that will both meet the requirements of Wall Street and result in an ethical organization.
Finally, those of us who are watching can vote with our feet and our voices. As we let businesses know that we will not patronize companies that are unethical and will tell our friends and neighbors to avoid them, executives might pause before allowing unethical systems to fester and thrive. What we cannot allow is for unethical behavior to be unchallenged or tolerated as the status quo.