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A Story of the Year and an Instant Case Study

October 13, 2016

Aside from the presidential election, the scandal at Wells Fargo was one of the major stories unfolding as we were going to press with this issue.

According to published reports, Wells Fargo has claimed that 5,300 employees, who were later fired, acted alone in opening up 1.5 million false bank accounts and 565,000 fraudulent credit cards on behalf of its customers. Federal regulators have ordered the bank to pay a fine of $185 million and restitution to its victims.

The late-summer revelations that these alleged actions occurred to meet sales targets may reflect a corporate culture that encourages unethical behavior, experts claimed. Wells Fargo demonstrated “a classic case of systemic bullying,” Andrew Faas, founder of the Faas Foundation, an organization that seeks to create psychologically safe workplaces, told Fast Company on Sept. 29.

John Stumpf, the company’s chairman and CEO, has forfeited $41 million in unvested equity awards and his 2016 bonus, and will not take a salary during an upcoming independent board investigation.

Stumpf denied that the company’s culture was obsessed with nonstop selling that ran amok. “Could we have done more, faster, better? Of course,” he said. (On Oct. 12, the company said Stumpf will retire effective immediately in the wake of the scandal.)

Melissa Agnes, president of the crisis management firm Agnes + Day, said that their “communications have been constant and well crafted.” However, there’s a much bigger picture here.

“The fact is that this crisis is a result of a major systemic failure and thus is a crisis of corporate culture,” Agnes told The Wall Street Journal on Sept. 19.

Wells Fargo is a likely candidate for a year-end review of 2016’s biggest business stories. Similarly, in this issue, Dick Martin, former executive vice president of public relations for AT&T, talks about the annual top-10 listicle that’s a staple for so many publications.

“It’s Groundhog Day every year, as we all hash and rehash how some hapless company or institution screwed up,” he writes. “But few stories about last year’s PR disasters will focus on the real problem: Almost every PR crisis starts as an ethical lapse of some kind. In each case, the crisis occurred because someone cheated, failed to consider the consequences of their actions, didn’t take adequate care of operations or tried to game financial disclosures.”

As of this writing, it’s far too early to assess the possible long-term impact of the Wells Fargo controversy. Beyond a 2016 recap, this is likely a case study that students and practitioners will examine for years to come.

John Elsasser

John Elsasser is the editor-in-chief of Strategies & Tactics. He joined PRSA in 1994.

 

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