By Brandon Lewis
John Stumpf, former CEO of Wells Fargo, was caught in a large banking scandal on October 12, 2016 when employees opened two million credit card and deposit accounts without customers’ knowledge.
The scandal continued to gain momentum when the company uncovered up to 1.4 million more fake accounts. With each new discovery, customers realized the bank’s issues were far worse than they previously admitted to almost one year after the initial allegations.
The PR anarchy began when Stumpf blamed some 5,300 employees and forced consumer banking head Carrie Tolstedt to ‘retire’ with a payout of $125 million.
The bank crisis is credited to a sales culture where employees were pressured by unrealistically high goals. Stumpf made the mistake of passing the blame, when in reality, he and other senior management were also responsible.
Wells Fargo put its credibility and reputation in serious jeopardy by not admitting fault, blaming others, and having little concern for their customers. Now, new CEO, Tim Sloan, is in charge of cleaning up the aftermath of what seems like never-ending bad press.
Whether leading a large corporation or a small startup team, leaving mistakes unclaimed will hurt the morale and culture at your company. In fact, the harm is arguably greater for entrepreneurs and startups. Because you’re working side-by-side with your team, trust is a major player in employee experience and engagement.
Here are just three examples of where business leaders went wrong and how you can avoid the same fatal errors:
Roger Ailes: Be Intentional with Communication
Intention is everything, especially when it comes to communication. Sometimes, though, great leaders end up in the ‘gray area,’ overcast by scandal and poor judgement.
This is where Roger Ailes, former CEO at Fox News, found himself after being caught in the midst of an alleged sexual harassment lawsuit in July 2016.
CNN Media reports Gretchen Carlson filed the suit on July 6, 2016. Since then, at least 20 women have come forward with allegations against Ailes. Ailes voluntarily resigned amid charges.
Fox News contributor Julie Roginsky claimed in the suit on April 3, 2017 that her promotion to co-host The Five was contingent upon having a sexual relationship with Ailes.
These sexual harassment claims at a top-rated network sheds light on the fact that women still aren’t treated equally in the workplace.
If the focus had remained on each woman’s capabilities and not their appearance, Ailes could have supported women’s equality in the workplace, and Fox News would have remained a trusted news giant.
What to avoid: Advocate that all genders have an equal opportunity in the workplace. For example, evaluate diversity and inclusion in the hiring process. Ask yourself: how does the company communicate inclusivity and demonstrate organizational goals and practices that support different backgrounds, genders, and beliefs?
That means considering all professionals alike, and assuring hiring and promotional processes are fair. Avoid giving any special treatment because of gender, and definitely don’t suggest anything in return. Award positions to the most qualified candidates, based on professional credentials rather than personal attributes and favoritism or biases.
It’s important to create training opportunities to help staff recognize an unfavorable situation, and know how to properly address it. Empower informed and committed leaders who openly support gender equality in the workplace. Provide them with dedicated resources that focus on education and best practices for their teams.
Additionally, encourage shared responsibility and individual accountability in staff to be sure they are part of the solution. Understanding the issues at large and how they affect the outcome will allow you to better ensure your company proves equality in the workplace.
Heather Bresch: Represent Clear Facts
No one should dictate inflation of profits against life-saving medicine. Heather Bresch, CEO of Mylan, has frequently been in the midst of controversy.
First, Bresch had her MBA revoked from West Virginia University after an independent panel concluded the university changed its records and granted the degree despite incomplete graduation requirements.
She came under fire again for EpiPen price-gouging, with an increase of nearly 500 percent occurring over a nine-year period — from $100 in 2007 to $608 in 2016. The life-saving, single-user auto-injector is used by 3.6 million Americans alone.
The EpiPen price gouging made a huge uproar and brought to light the problem that so many Americans were facing with medical charges. If the focus had been on the customers, Mylan would have remained a leader during a positive shift in health care.
What to avoid: Avoid misrepresenting the facts. This is especially true with an extreme cost increase of a product. Be sure everyone who may be affected by a price increase or some other major change is informed.
Send out several notices through a variety of methods detailing to clients how much a price has increased, why the decision was made, and what the increase is intended for.
This might mean sending out emails, hanging up flyers where the product is sold, or making phone calls. However, this helps to avoid backlash because clients won’t assume you are hiding the facts. In the end, trust is built and you’re better able to maintain satisfied clients.
Mike Pearson: Research Opinions
Getting a second opinion is solid advice, especially when profit and loss sounds too good to be true. This might have helped Valeant investors before they accepted inflated profits reported by Mike Pearson, previous CEO of Valeant.
In his early days at Valeant, Pearson formed a partnership with Hedge fund billionaire Bill Ackman, who backed Pearson figuratively and financially.
Pearson was initially brought on for his overwhelming ability to sell pharmaceuticals. His tenure proved a very steep rise and fall; the company stock had risen more than 4,000 percent during his era. Shortly after the price inflation scandal was announced, stock prices dropped 90 percent.
Pearson used controversial, rapid-fire acquisitions along with unfavorable accounting practices to inflate profits. The deal also made Ackman huge profits, spurring allegations of insider trading.
The Valeant brand is now perceived as subpar since falling under Pearson’s leadership. Had Pearson focused on the ‘real’ numbers, he could have found a way to legitimately improve the company — not run it to the ground.
What to avoid: Don’t just take anyone’s word for it, especially if it sounds too good to be true. Ronald Reagan said it best with his famous dictum, “trust, but verify.”
Trust what investors and mentors have to say, but be sure to verify their truths.
Start by always doing your research first. Even if an investor’s options or a mentor’s suggestions are tempting, always research what works best for your company and team. After all, you know your company and its mission and vision best.
Don’t hesitate to also consult with your team. Discussing options with them will not only help you make an informed decision, but will also cultivate a culture of trust. As a result, you’ll be more confident in your final decision and better able to follow through with your company’s mission.
The world is a conscientious result of the choices everyone makes, and it would absolutely be different if these leaders were not driven by greed and self-service. Instead, they should have used their high-profile positions to pioneer change and inspire employees to do the same.
Brandon Lewis is the president and CEO of Win More Patients.