There is an overriding lesson from this series of posts about Wells Fargo. First, though, here are the final three culture characteristics that I think explains their success.
6. Their recipe for growth: Wells Fargo CEO Stumpf: “there are only three ways a company can grow. First, earn more business from your current customers. Second, attract customers from your competitors. Or third, buy another company. If you can’t do the first, what makes you think you can earn more business from your competitors or from customers you buy through acquisition.”
7. Growth through acquisition: Wells Fargo pursues a unique formula for growing by acquisition. In the acquisition of Wachovia, which doubled Wells Fargo size, they assigned Wells Fargo “buddy bankers” to infuse culture and best practices into every one of Wachovia’s 4000+ branches. Only 1.5% of Wachovia’s r workforce was eliminated. Very rare!
8. Who’s number one?: The Forbes reporter summarized Wells Fargo’s performance in contrast to the leaders in that industry and commented, just as with market share, it seems the less you care about stock price, the higher your stock will go. Stumpf: “this may surprise you, but we believe stock shareholders come last.”
Now, back to our lead-in question above. So what is the overriding lesson from this series of posts featuring the humanity of Wells Fargo? It’s this: they understand that performance only happens when people are engaged. And here engagement is not by command. People are engaged at Wells Fargo in response to leadership that places purpose and values over profit. Examples? First, people are team members to be invested in … their 37 page playbook explains how to treat customers … people who work there understand and take pride in their Pony Express roots … there is no puffed-up leadership here and no doors … grow by earning business from existing customers first, then competitors, then by acquisition … finally, team members first, stockholders last.
In summary, not all CEOs understand that people are inspired by purpose (beyond profit). No super-strategy here. But Stumpf “gets it” when he admits, “a good strategy perfectly executed will beat a great strategy poorly executed every time.”
In other words, in my opinion, get the humanity part right and strategy works.
Tags: inspired employees, leadership character, performance through people
In our last post, the first of three, I wrote about Wells Fargo and how their attention to their employees and culture first … then their strategy … has resulted in superior performance. How superior?
Mortgage foreclosure rate: Wells Fargo, 7.6%, Citi, 8.3%, JPMorgan Chase, 11.5%, BofA, 13.5%.
Stock Price decline, past 12 months: Wells Fargo, 6%, JPMorgan Chase, 18%, Citigroup, 39%, Goldman Sachs, 35%, BofA, 50%
So in addition to those highlights covered previously: (1) team members are to be invested in, not employees as an expense to be managed; (2) a 37 page guide for employees about how to treat customers, and; (3) their intentionally-designed museum displays tell their history – a source of pride for all – here’s two more:
4. Leadership Humility: the reporter’s description of John Stumpf’s executive office: “it seems trapped in the 1970s down to the orange brown carpeting and tired looking upholstered chairs. The CEOs credenza is cluttered with banking tchotchkes and family pictures and despite his trophy-driven industry his office is noticeably devoid of plaques or Lucite deal toys.”
5. Leadership Access: John Stumpf’s offices are also devoid of something else: doors. In fact there are no doors on the executive floor. Stumpf: “we learn how to disagree without being disagreeable. There is no tolerance for being passive-aggressive or for having sharp elbows around here”
Starting to get the picture? Wells has a good strategy and is conservative, which probably accounts for their unconcern about higher flying behaviors around risk taking. For example, foreign loans ( think PIGS here ) are only 5% of their portfolio. And how many bank CEO’s would say this?,”We believe shareholders come last. If we do what’s right for our team members, customers and communities ( remember our last post on their “Home Preservation Workshops”? ), then – and only then – will our shareholders see us as a great investment”.
In our final post in this series, we will share more details of their emphasis on their people and culture … and summarize how all of this results in their great performance.
Tags: caring leadership, leadership attributes, performance through people
My experience with the banking industry is making deposits, car loans, mortgages and checking accounts. When I look at that industry on a macro level, I just “see” bundles of paper and money moving through the economy … lots a strategy, modeling, forecasting, leveraging, risk management and process improvement. You know – the MBA stuff ( think Bank of America, Citibank and J.P. Morgan Chase ). The industry requires the best and brightest people and a high leadership competency. Can you imagine what it’s been like and that industry since the financial calamity of 2007 – 2008 … that continues today?
What a contrast, then, to read about the inside story of a bank success that results in a different set of principles and competencies then just moving money into the highest returning buckets.
Considering the current mortgage–default–foreclosure crisis: who would think to stage 51 “Home Preservation Workshops” over the last three years?
Answer: Wells Fargo. In the process of helping people stay in their homes, they forgave customers a total of $4 billion. Why? The reporter for Forbes magazine article (February 13, 2012 issue) wrote, “rather than hiring PR firms to spend its way out of the mess, the overriding business mission is keeping customers in their homes and regaining the trust of their customers, one by one, face-to-face.”
In my view, a successful enterprise starts with a vision and mission to serve the customer. And, at an even higher level, to serve humanity. Here, in Part 1 of 3, are a few highlights from the article, confirming that servant leadership inspires performance.
1. CEO John Stumpf, on his people: “we call our employees team members, not employees. Employees denote an expense to be managed. Team members are an asset to be invested in”.
2. Vision and values: the company has a 37 page team member guide signed by Stumpf, full of warmed-over prescriptions for how to behave, treat customers and, above all, increase revenue.
3. History: Wells Fargo invests in their legend and lore by creating and maintaining family-friendly Wells Fargo museums in 11 of its biggest markets. Stagecoach images and models fill every empty space and link to the frontier history that Wells is happy to exploit for propaganda purposes (it was started by the two founders of American Express 1852 to provide banking services for the California gold rush, and quickly took over the western half of the Pony Express).
In our next blog post this week, we will continue our review of leadership practices that propel Wells Fargo’s success. How successful? Stay tuned!
Tags: heart of leadership, leadership character, performance through people
I like to borrow from the elements of theatrical performances that require a cast and script and audience … and apply the specifications of a great production to business. For this post, let’s suppose we want to produce a new show that will be a box office success, receive standing ovations and even win awards!
The producer of the show then has a vision and purpose for this and next builds a framework around “how”. For example, she will decide how the story will be told, how the parts will be played and how the sets and staging will carry the show. Each of these considerations is a value judgment that emanates from her own character, personal beliefs and principles. To me, you fuse those traits together and you wind up with a precious pour they can be cast into a value-like ingot.
I think the values of a theatrical producer or the leadership of a major corporation are like a “true north” to people who do any work that matters. Here’s a short video that speaks to a value story at Starbucks.
In Part 1, we advocated that the most impactful program architecture features challenging performance criteria that allow all employees to be eligible.
Here’s Part 2: The real power of an informal mechanism is elevated when the random or scheduled presentations are personally delivered by the CEO and members of the senior leadership team! When you, as the employer, start showing that you’re going to reward good work at the time, and not just according to a calendar, employees are inspired to be thanked by you again! This leads to increased productivity – all because employees know that the “big boss” values their work. Leadership approval from someone held in high esteem is inspiring.
These types of employee performance awards can be a variety of physical mementos and, this is important, they do not need to be expensive tokens of appreciation. The key is that the token is not token. What I mean is that it is important to pre-design a set of custom crafted mementos that are symbolic of the behavior or achievement – and, that they allow for progressive stages of improvement
In some cases, just a simple pat on the back and “job well done” are enough to remind employees that you care. Really, employees just want to know that what they’re doing is being noticed and appreciated by those above them. Letting them know you were impressed by the way they just handled a particular customer complaint or helped a customer find a certain product really does mean a lot to employees.
Formal programs to award employees for outstanding performance are a great way to boost productivity, and profits! These recognition programs always give employees a fun and exciting goal and incentive to look forward to, and all companies should include some sort of formal recognition program into their personnel policy. But, formal programs aren’t the only way to reward employee performance and often, it’s those small gestures just to say ‘thank you’ that really mean the most.
There are many types of formal recognition and award programs that you can create within your company to honor desired employee performance, for example, on an annual basis. But if your own recognition program hasn’t gotten off the ground, or you plan to reward employee performance all year round, think about a strategy of attributes that can be bestowed informally very soon following the employee act.
It’s true that formal award programs can increase employee performance because employees know that at a certain time, an award will be given out to the best individual performer or team. And while these programs can do wonders to increase revenue and employee morale, they also have their downsides. One of those is that this positive increase in employee performance is often short-lived, and is only seen during the time the program is up and running. Once the program is finished, it’s then easy for people to look for the next prize. Because there’s no longer an incentive program, there’s no longer a similar incentive to excel.
But informal awards for employee performance can change that … with two caveats. Number one, please develop performance criteria and eligibility requirements that create openings for all employees to be praised! Very few achievements are solo accomplishments. There is always a supporting cast that serves top performing sales representatives. Honoring all deserving contributors raises the esprit de corps across several functions.
That’s the Real Prize, Part 1. Stay tuned for Part 2, tomorrow.
As kids, on those occasions where 3 to 4 of us knew you were taking a car trip somewhere, one or all would yell out “I call shotgun” ! The negotiation the followed saved the driver from deciding. In the workplace, however, the driver decides who gets and stays in the car (or, in Jim Collins’ view, who gets on the bus).
National studies have shown that one-third of all employees … good employees … are actively looking for their next job. Further documentation reveals that typical cost for rehiring replacements is 35% to 50% for hourly workers and as high as 125% for professionals. Besides the expense, but not only are these valuable employee resources lost, but newer employees generally don’t have the same rapport with vendors and customers; and they aren’t as familiar with all the ins and outs of the company. And when problems arise, experienced and knowledgeable employees are going to be a much bigger help than someone who just started six months ago.
It has been said that people take a job for money, but leave for more recognition. The mistake that some firms make is linking recognition to prizes, trips and trophies. Much more significant to employee loyalty is the culture of the company that has been crafted by the senior leadership team. For example, do you think Southwest Airlines, SAS or Apple have employee loyalty issues? Of course, they have turnover as people may outgrow their positions … but that’s a natural evolving of business evolution and personal career choices. In those cultures there is not a one-third of the “student body” wanting to escape.
Actually, loyalty is not dead, thank goodness. In fact, we are naturally attracted to loyalty by our innate human desire for belonging and affiliation. So the key ingredients for loyalty is genuine attention by company leadership to honoring employee contributions … and relating those stories of achievement to the greater purpose, values and vision of the organization.
Q: Loyalty … who calls it?
A: The company CEO and senior leadership!
Tags: caring leadership
Recently there was a comprehensive story in the Houston Chronicle that tallied the philanthropic activities of Houston corporations and foundations. The article was a typical special edition that opened up the opportunity for these organizations to place ads… some full page color … touting their local outreach. The piece was well done, but I just thought how easy it is to miss the real power of corporate giving.
When you read about a major local philanthropic couple like Sue and Lester Smith giving $30 million here (Baylor College of Medicine Human Genome Sequencing Center), $15 million there (Harris County Hospital District ) and $16 million there (Texas Children’s Cancer Center) … you think, “that’s nice of them”. And that’s probably a typical reaction to corporations, celebrities and wealthy individuals who donate time and treasure. However, it is a welcome contrast to the malfeasance and selfish greed on the part of some corporations and wealthy executives.
As a recap of the story, there was the temptation to total up all the donations covered in the story and make an impressive fiscal statement. But, more impressive I believe, is the real “bottom line” on the humanity side of the ledger:
- individual giving: those with wealth have been blessed and they value helping others… a side benefit: their headline examples inspire others to give $25 to feed a child.
- foundation giving: foundations are generally endowed by private family wealth – generated from for-profit legacy businesses.
- corporate giving: maybe we question the motive as goodwill or PR, but corporate philanthropy feeds the hungry, protects abused women, builds homes, lodges children with cancer, advances cancer research and cures, cleans highways and beaches and mentors students. Those acts can’t be faked and all employees who work there, not just those who volunteer, take pride in working for the company leadership and perhaps are inspired to give back themselves.
I’ve always admired the prestige of the Academy Awards in honoring the annual achievements for excellence in the artistry of crafting motion pictures.
Being in the business of honoring achievements, I’ve always respected the annual event, held for the 84th time this past Sunday. Years ago I toured the factory of R. S. Owens in Chicago, who make the Oscars®. And, I began to wonder: where is the Academy Awards for business and industry?
Meanwhile, back at the ranch … or closer to home, as in your own enterprise, there are several “Oscar” facets that can enhance any organization’s tributes to employees and their achievements.
Here are my six:
- categories – like the Oscars, create multiple categories of achievement … my belief is that it is just as important to honor “supporting” as “leading”.
- presentation – during the ceremony as praise is bestowed to employees, show their work ( Oscar’s used movie clips ).
- create your own Oscar – create your own design the symbolism that is unique to your organization.
- staging – add your own lights and music … and hire Billy Crystal. Even better, your CEO!
- every year – yes, if your excellent performance categories are important this year … they will be next, and the next!
- winning criteria – design your criteria around three categories: key result areas (hard numbers), creativity (innovation and risk-taking) and loyalty ( i. e., lifetime achievement).
Leadership admonition: give credit to others … with great criteria, meaningful symbols and executive ownership, including presentation.
Tags: art of tribute, award design
The February 6th issue of Fortune magazine issue listed the 100 Best Companies to Work For and, in that issue, they profiled Salesforce.com and their CEO, Marc Benioff. There was a key sub-story that piqued my interest. When Salesforce acquired Rypple, a human resources software applications startup for millions less than the other suitors, one of two co-founders of Rypple, Daniel DeBow, explained that Marc Benioff, Salesforce’s CEO, “was the kind of person we could deliver our company and employees to… that we entrepreneurs could be up part of their family“. Family?
To me it looks like Salesforce.com leadership has mastered the elements that distinguish a family culture. From my perspective a few highlights:
- products are “cutting edge”… result: employee pride of winning and contribution.
- philanthropy … result: people work for a cause beyond their paycheck. The Salesforce Foundation has provided $30 million in grants, to date, to youth, education, poverty and employee volunteer projects.
- their own internal Facebook called “Chatter”… Outcome: reduces one-way info flow – all employees have a voice, customers are included.
- Benioff’s “a beginner’s mind” … result: no stone unturned, innovation flourishes.
- Company’s Chief Love Officer, Benioff’s 12-year-old golden retriever … result: have fun at work.
How would you like to work there? It’s a family: everybody pitches in to take care of business, community and each other. And who embodies these attributes? Answer: Benioff, who upon learning of an employee’s need for a bone marrow match from their “Chatter” media, sent out his own Tweet for donors. Result? 350 responses to the matching registry. The employee is back at work today.
