The past few weeks have been rough for Wells Fargo. The Bank, which is embroiled in a phony accounts scandal, has recently settled a $185 million penalty payment to federal regulators and is preparing to be investigated by the Department of Labor. What was once one of the world's most valuable banks, is now deep in a crisis that has had huge reputational as well as financial consequences.
John Stumpf, the Bank’s CEO, is largely being blamed for causing the scandal that saw 5,300 Wells Fargo employees out of work as a result. He claimed he led a company founded on decency and integrity but unfortunately, that didn’t translate into the Bank’s actions. As a result, Mr. Stumpf found himself in the hot seat at a Congressional hearing two weeks ago and at a Senate Banking Committee gathering last week. He was grilled on the role he played in developing the bank’s sales practices and how he and his leadership team are being held accountable for the fall-out. His perceived reluctance to take responsibility for the scandal has only served to fuel the flames of public discontent.
As a result, the Bank has experienced a fall in stock price after J.P. Morgan downgraded them, causing it to lose billions of dollars in market value. The relentless media coverage continues to be negative and biting. And so far, it seems he has adopted a more defensive rather than offensive position, which has caused significant brand damage. So what can communications professionals learn from this situation?
Well, the first step in mitigating a crisis is to acknowledge the wrong. The sooner you take responsibility, the quicker you’ll be able to move onto the next stage of brand repair. Attempting to downplay your role, defend the indefensible or refute any wrong doing, will certainly create unwanted animosity and will prolong the media spotlight.
Then, be the first to address it. Controlling the story is half the battle and ensuring others aren’t able to distort the truth or frame the situation in an unfair light is vitally important. At the same time, it’s crucial to ensure the whole organization is briefed and all employees know the messaging and stick to it. Contradictory messages coming out of the firm will only serve to raise additional questions and prolong the media investigation.
Next is to right the wrong and do what you can to make amends. In this case, John Stumpf was strongly criticized for laying off thousands of employees and potentially walking away with millions. However, as of last week the Board voted to claw back $41 million in his unvested stock awards, which will certainly be perceived as a step in the right direction.
Finally, proactive and public reassurance to all corporate stakeholders that measures have been put in place to ensure a similar situation never happens again is critical. Equally, ensuring brand values are adhered to from top to bottom and fair compensation is agreed to for those who have been wronged, will surely support further brand repair.
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