Reviving Values: Why Wall Street Culture Really Goes Awry, And How To Bring It Back

By Kyle Hubbard, Ph.D., Assistant Professor of Philosophy | June 2, 2017


On April 28, Susan Ochs, the founder of the Better Banking Project at the think tank New America, delivered the final talk in the 2016-2017 academic year for the Ethics in Governance Speaker Series. Ms. Ochs drew on her extensive industry and regulatory experience to support her argument about why financial firms have massive ethical failures. She focused on the recent scandal at Wells Fargo as a case study, but she was clear that the Wells Fargo situation is not unique in the industry. Plenty of firms have business practices that might backfire in the way Wells Fargo's did.

Ms. Ochs began her talk by distinguishing between the culture of an organization and the organization's behavior. We often focus on bad behavior, but behavior is the result of an organization's culture. Ms. Ochs laid out the three components of a company's culture: vision, structure, and, most importantly, mindset. The vision includes the guiding principles of the organization often encapsulated in vague and lofty mission statements or lists of core values. The structure of an organization is composed of the tangible processes, procedures, and metrics the organization uses. While both vision and structure are important, Ochs argued that they do not determine the health of the organization by themselves. Wells Fargo had a great vision statement and adequate structures in place, but there were still serious failings. The main problem at Wells Fargo, she argued, was a problem of mindset. They failed to implement the values at all levels of the firm.

By an organization's mindset she meant the mental models or cognitive shortcuts that our minds use that influence and determine the choices we make. One example of a mental model is confirmation bias, where we tend to notice facts or events that confirm our preconceived notions and tend to ignore information that opposes our prejudices. The major problem at Wells Fargo was a failure by the leadership to recognize some of the key blindspots they had concerning company culture. For years they failed to recognize the cultural failings at the organization, instead blaming the problems on a few (thousand) bad apples. The leadership did not see the harm in violating customers' privacy because they were only focused on the lack of financial impact to their customers. Additionally, they had a decentralized organizational structure with a lot of deference shown to individual branch managers and division heads within the company. The structure along with the cultural mindset of not questioning leaders caused the company to take a long time to recognize the problems in the organization.

While much of her talk focused on what went wrong at Wells Fargo and at other institutions, she concluded by focusing on the positive, i.e. how organizations can improve and build a better culture and maintain the core values at all levels of the firm. Her suggestions included pursuing values for their own sake and encouraging an open discussion at the organization around the core values and how they should be implemented. She argued that too many organizations have great values statements that the senior leaders discuss, but they fail to pass on those values to others in the organization.

The Ethics in Governance forum is committed to helping organizations act on their core values. One way you can do this is by attending the next Excellence in Governance Certificate Program for board members of non-profit organizations. If you would like more information about other events, please see our website.