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During the past week, it became public that more than 5,300 Wells Fargo employees, between 2011 and July 2015, created more than 1.5 million unauthorized bank and credit card accounts without customers knowing that these accounts were being created in their names.
Why? Policies limit behavior; culture drives behavior. This means that policies tells people what they cannot do, policies tell people what they must do.
Does anyone reading this blog believe that Wells Fargo did not have clear policies on the prohibition of creating bank or credit card accounts without a customer’s express written approval? Of course they did! Some may think, “Well this is just a problem with ‘a few bad actors.’” 5,300 bad actors? When so many people are swept up into bad behavior it is not a policy problem. It is not an employee selection problem. It is a culture problem.
Specifically, Wells Fargo has clearly used traditional business norms as the behavioral parameters for their culture. Business norms are all those things we associate with business, i.e. Quid pro quo, things are paid for in an agreed upon currency, and payment is expected at time of service. A much more successful alternative would have been to build a culture using Social norms. Social norms have a softer side. They’re what drives our behavior to give up our seat on public transportation for an elderly person, to open a door for someone, or to allow someone with a single item step in front of us in a checkout line when we have a basket full of items. Payment is often not expected, and if it is, it is typically not at time of service.
The difference is: Business norms drive more of the behaviors we don’t want; Social norms drive more of the behaviors we do want. Business norms drive much more selfish, self-directed, competitive behaviors. Social norms drive much more collaborative behaviors.
Business norms tend to use financial incentives to motivate competitive behaviors. At Wells Fargo, employees were incentivized to open as many accounts as they could, regardless of the impact on customers. If this sounds similar to the culture and behaviors that precipitated the financial crisis of 2008, that is only because it is identical. Many (but not all) banks have become a place that are so profit driven, that they will sacrifice benefits to their own customers to serve themselves. Some banks, those that use social norms, always ask this questions first, “Will this decision bring value to our customers?” Isn’t this the question that we should all be asking? Ultimately, it is our ability to create value for our existing and future customers that drives profit and long-term success.
Focusing on customer value is a social norm, not a business norm. This is just one reason why companies that build a culture using social norms are more profitable and more successful.
Keep cultivating your culture!