Wells Fargo Scandal: What Was HR’s Role?

For most of my long HR career in service industries, my colleagues and I believed our role to be an advocate for the employee. Those who spent their HR career in a collective bargaining environment may feel they advocate for the employer.

In Repurposing HR: From a cost center to a business accelerator, I highlight the role of advocate as one of eight “StopOvers” on the “RoadMap” – the process for becoming a business leader rather than a service provider. Here’s how I explained it:

The HR profession struggles to emerge from the “people person” image. Many of us went into the field because we liked working with people. The reality is that human resources plays two advocate roles, which often conflict:

  1. HR is an advocate of the organization. Are the people decisions the best decisions to be made for the organization?
  2. HR is also an advocate of the employees. Are we treating our employees consistently and fairly? If we are not, it will have a detrimental impact on the organization.

Fast forward a couple years. Let’s make it really powerful – we are fast forwarding beyond a time in US business  history for which we should have been exceedingly embarrassed and learned the hard way about organizational ethics – the scandals of Enron and Worldcom, which set the stage for the 2002 Sarbanes-Oxley Act  which, among other things, protected whistleblowers.

But we didn’t learn from that apparently because only a few years later, we find financial monkey business in the mortgage arena, which ultimately leads to the great recession.

An indictment of HR

Okay, enough history and back to the point of this article. Now we have Wells Fargo. After reading about the tales employees are telling now that the whole world knows about yet another scandal, I can really only shake my head. When an employee says something like this,

“That’s really scary when you’re with a big corporation like this and HR doesn’t have your back,” said the current employee, who wished to remain anonymous so as not to get fired as well.

it is an indictment of my profession and one that calls into question the role of HR as an advocate.

It is easy to get complacent in one role or another. As an employee advocate, HR can slip into dysfunctional enabling and destroy accountability. As an advocate for the employer, one can become deaf to the plight of the workforce.

Advocacy isn’t that simple, and it rarely is one or the other. Let’s take this explanation of the aim of advocacy:

Advocacy in all its forms seeks to ensure that people, particularly those who are most vulnerable in society, are able to:

  • Have their voice heard on issues that are important to them.
  • Defend and safeguard their rights.
  • Have their views and wishes genuinely considered when decisions are being made about their lives.

In the case of Wells Fargo, it appears that HR did not do this well and leaned way too far into advocacy for the employer. I am blessed to have had a 40-year career in HR where I never felt pressure from my organization to do anything that violated my personal values. I would like to think I would have been strong enough to resist, had that occurred.

So what should HR do?

HR must do what’s right, what transcends any unilateral focus. HR must be an advocate for the employee and the organization by understanding clearly that allowing something that is not right to transpire is bad for both.

The Wells Fargo CHRO has 23 years at the organization, moving into the top role via compensation and benefits.  (Technically she is Senior Executive Vice President, Chief Administrative Officer, and Human Resources Director, so has a scope that is broader than HR.) As an HR executive who came up through the compensation ranks, it’s difficult to believe that she didn’t know what was going on with the pressure to sell alone. The CNN article also says that employees wrote “several notes to HR” and many called the ethics hotline.

On the page with her bio, there is also a link to the Code of Ethics and the Vision and Values.

A new way to think of HR advocacy

So that balance of advocacy for the employee vs advocacy for the employer is perhaps confusing. What if we simplified it by saying that the HR advocacy role is simply to ensure that the actions of the organization are in alignment with the stated values and ethics?

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I can’t imagine any organization being so stupid as to publish a set of values or code of ethics that allow wiggle room in honesty and integrity.  Vision, mission and values statements are aspirational and usually public, so they will espouse what the organization wants everyone to think they are.

Assuming that is the case, can HR take up the mantra of helping the organization to live the stated values and ethics?

What that would have meant to Wells Fargo

The company offers a simple formula to follow:  “We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. This is more than just doing the right thing.  We have to do it the right way.”

Here’s what Wells Fargo’s ethics code says:

Wells Fargo ethics decision tree

Had HR sought to ensure alignment with the policies in place, perhaps the situation would have been caught before 5,300 employees lost their jobs for violating policy.

Does it make sense to simplify HR’s advocacy role to say “ensure that the behavior of leadership and the workforce aligns to the vision, values and code of ethics of the organization.”

That is a little easier. But it takes courage. Real courage.

I can’t believe that the CEO and CHRO didn’t know. That makes me sad and angry.

Carol Anderson is the founder and Principal of Anderson Performance Partners, LLC, a business consultancy focused on bringing together organizational leaders to unite all aspects of the business – CEO, CFO, HR – to build, implement and evaluate a workforce alignment strategy. With over 35 years of executive leadership, she brings a unique lens and proven methodologies to help CEOs demand performance from HR and to develop the capability of HR to deliver business results by aligning the workforce to the strategy. She is the author of Leading an HR Transformation, published by the Society for Human Resource Management in February 2018, which provides a practical RoadMap for human resource professionals to lead the process of aligning the workforce to the business strategy, and deliver results, and writes regularly for several business publications. Contact Carol at carol@andersonperformancepartners.com.

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6 Comments on “Wells Fargo Scandal: What Was HR’s Role?

  1. The BBB has removed Wells Fargo’s accreditation status, Thank you BBB. The stagecoach just lost another wheel.
    Please evaluate my plight wholeheartedly at WFHurtMe.com

  2. What was HR’s role in all of the banks? Hey, why stop there? Where was HR in the pharma mis-selling scandals? Where was HR at Nestlé when slavery was discovered in the supply chain? Where is HR in the UK’s National Health Service that has dedicated doctors going on strike? The answer is plain and simple – HR is nowhere. HR is a bystander. HR has no power or influence. HR has no capability for dealing with large organizational issues. HR is not even professional – go look at the entries on TLNT – what percentage are based on evidence? That’s why we set up a professional institute that is starting to clean up HR’s mess – the Maturity Institute – we don’t focus on HR we focus on the immature organization’s they inhabit. http://www.maturityinstitute.com

    1. I disagree with you that HR is not professional. I disagree with you that HR is a bystander, has no power, has no influence and is nowhere. Are there examples of organizations that choose to disregard the advise of the HR teams? Yes. As can also be said of organizations that disregard the advise of their legal counsel, their financial teams, their quality control teams, etc.

      More importantly, there are thousands of organizations that DO take the counsel of their HR, Legal, Finance, QA/QC, and other teams that help organization be profitable AND operate in an ethical, beneficial manner.

      So I challenge you to provide evidence where your new institute, 1) is professional, and 2) would have genuinely prevented the problems in the organizations that make the deliberate choice to do the wrong thing. Right now, you’re positing a theory and I wish you well. You may find that you need to partner with HR to actually turn your theory into reality.

      1. Professor Jeffrey Pfeffer seems to be on my side of the argument – he wrote this foreword for my book ‘Professional HR’ (2013) – “That’s the state of play in human resources today, mindless imitation of what others are doing.”

        1. A foreward in a book is not evidence. With all due respect, you’re pitching your business which is perfectly fine. I simply take issue with the assertions you made in presenting your pitch.

          Which leaves the challenges of my post unanswered.

  3. Thanks for this discussion Paul and TNoebel. What concerns me, Paul, is that you are laying 100% of the blame for “HR’s mess” on HR. Where we are today has evolved over the 40 years I have been in the profession, most of the time at an executive level, and (IMHO) evolved primarily because leaders treated employees unfairly for years, legislation enters the picture, then leaders tell HR to clean it up without taking accountability. Are there HR teams that are not helpful – as TNoebel says, those unhelpful areas exist throughout organizations, not just in HR.

    Like you, my firm helps organizations improve at the systemic level (at least I hope that’s what you mean by your description). But at the end of the day the consultants leave and there has to be someone who can champion the people part of the business. That’s HR. When we work with organizations, we work through the HR team rather than around them because changes to organizational culture, process and climate require a thorough look at all of the people programs to ensure alignment. Most of those programs belong to HR and if they don’t have the opportunity to learn, grow and find a way to add value, you’re allowing mixed messages to confuse the organization.

    I’ve been in the trenches with HR professionals who want to help. The change has to come at the organizational level to understand that everything in the organization happens through people, and, if done right, HR can be their best hope.

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