So, I’ve been reading about the Wells Fargo situation, and it was recently announced that two of their senior executives were put on leave. Now, that’s not that surprising, given the events which transpired at the bank…thousands of accounts opened fraudulently in the name of sales goals,  employees terminated for not making quotas.  The  response  was to launch an ad campaign which seemed woefully inadequate and didn’t address the fundamental question of “how could this happen?”

So what surprised me? The OCC  sent individual letters to the two people expressing concerns about their failure to oversee problems at the bank. The WSJ article said:  “It is rare for individuals to receive such letters, the people said.” Typically, regulatory agencies let companies deal with their own employees. My interpretation? The OCC’s message was  “You just don’t get it.”

So what do I think happened? The two things which will guarantee that the smartest, nicest, best-intentioned people will fail.

1. Arrogance: it comes in many forms..but basically, it’s when you start believing what people are telling you. When you’re a leader, people are rarely honest. It’s not in their best interest. So you hear a lot of flattering comments. The problem is when you start believing it.  Everyone has weaknesses. The best leaders are confident, but are also self-aware.
2. Complacency: You stop doing the work. You stop asking the questions, you don’t pay attention to the metrics, you just assume someone else is looking at everything with a critical eye. You take comfort in the organizational structure. You stop being paranoid, you stop pushing. You keep the same people in the same jobs for years.  You’ve brought the issue up, but it keeps getting ignored so you stop.

It’s terrible when things like this happen.  It’s not just the $1B in penalties…it’s the destruction of a culture by people who honestly thought they were doing their job.