How to Help Your Organization Avoid a Wells Fargo Moment

BY Kathy Crosett
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Do you want to keep your company from having a Wells Fargo moment? You know that moment – the one where you are sitting in front of Congress defending your policies that pushed sales reps to achieve supremely high targets at the cost of ethical behavior? Avoiding that scenario might start with structuring the right kind of employee training and performance appraisal systems.

Researchers at Johns Hopkins University and the University of Baltimore have just published new research in the Journal of Business Ethics about the “balanced scorecard” employee appraisal system. This system was initially designed to help managers take all aspects of an employee’s performance into account. The goal in a BSC system is to emphasize ethics in the organization and to recognize contributions to the company’s social responsibility commitments. The study found that managers tend to favor employees who meet financial targets over those who meet softer targets, like those related to CSR during performance reviews.

The study was managed from several different perspectives. In some cases,  participants were told that the CEO and other senior managers particularly prized commitment to CSR involvement. This information did little to sway reviewers who showed a clear tendency to give better reviews and higher bonuses to top financial performers. In another scenario, some participants were selected with a CSR bias, while others were selected with a financial bias. They were then asked to evaluate two employees. One employee had done well on the CSR front, while the other had exceeded her financial targets for the review period. In this scenario, both types of reviewers also showed preference for the top financial performer in reviews.

Researchers concluded that using a BSC appraisal system as a way to change behavior in an organization may be ineffective, at least until other factors change. Demonstrated commitment to ethical behavior must come from the top down and be highly visible, every day, to employees. New employee training programs which emphasize the importance of ethics and regular communications about your organization’s commitment to CSR can shape the mindset of team members. A concerted effort over the long term might also change the way managers are evaluating employees regardless of the type of performance appraisal system they’re using.