John Stumpf, former CEO and Chairman of Wells Fargo, one of the biggest banks in the United States, was fined hundreds of thousand dollars for the sales scandal that occurred under his leadership. This case study will analyze the effect of Stumpf’s leadership style on his employees and the consumers of Wells Fargo products. Key to this discussion is the question of ethics and the potential for ineffective leadership decisions to have negative impacts on others. As Matthew W. Seeger and Robert R. Ulmer argue in their analysis of leadership failures that resulted in the Enron scandal—which shares many of the same dynamics as Wells Fargo’s—key to any discussion of ethics is the concept of responsibility. Their framework for critiquing Enron’s demise, by focusing on the failure of leaders to meet basic communication-based responsibilities, can be applied to Wells Fargo’s fake account scandal as well.


Wells Fargo employees created about 1.5 million accounts and another half-million credit card accounts for the bank’s existing customers—which in the words of the Wells Fargo Consent Order with the U.S. Consumer Financial Protection Bureau “may not have been authorized”—charging those customers fees for accounts they didn’t know they had. Wells Fargo is now refunding those fees.

Stumpf was grilled by angry lawmakers in Washington during hearings by the U.S. Senate Banking Committee and the House Financial Services Committee for opening two million bank accounts without the consent of its customers. Wells Fargo employees were pressured to participate in these unethical practices for the purpose of meeting ever growing sales goals. During his testimony on Capitol Hill, Stumpf said he planned to forfeit $41 million in pay in an apparent attempt to atone for his role in the scandal. Stumpf resigned in October 2016 in the wake of growing public anger and outrage over the scandal.

Theory Inflected Analysis

Seeger and Ulmer identified three main communication-based responsibilities of leaders: (a) communicating appropriate values to create a moral climate; (b) maintaining adequate communication to be informed of organizational operations; and (c) maintaining openness to signs of problems (59).

Prior to the revelations about the fake accounts and Wells Fargo’s high-pressure sales program that spurred it on, one might have seen creating a moral climate by communicating appropriate values as something of a personal mission of Stumpf’s. In a 2015 guest commentary for Fortune, Stumpf wrote, “…one key to building the culture you want is to hire people who aren’t afraid to demonstrate that they care about customers and about each other.” There are many examples of interviews with and speeches by Stumpf in which he  stresses how he seeks to bring the work ethic and values he first learned on his family’s farm to Wells Fargo. “We are in the habit of doing the right things,” he wrote in Fortune.

In light of the scandal, such remarks seem either comic or calculated. But whether his communication efforts to foster a moral culture were effective or not, it is hard to claim that Stumpf completely failed to recognize or act on this communication-based leadership responsibility. At the same time, Stumpf’s prescriptions were so vague and removed from the practices and programs in which his team members ‘behaved’ that they had to influence. They rang as hollow platitudes in Wells Fargo’s actual culture in which hard selling was valued and Seeger and Ulmer’s other two communication-based leadership responsibilities were deliberately ignored and actively undermined.

In his testimony to Congress, Stumpf admitted to his (communication) failure to be informed of organizational operations. When Rep. Keith Ellison ask how the sales goals program was implemented, Stumpf replied, “Congressman, I don’t know that level of detail.” Seeger and Umber say that particularly in instances of wrongdoing, leaders may seek to create conditions where they can claim plausible deniability in an effort to avoid having to take responsibility for it.

The third communication-based responsibility, maintaining openness to signs of problems, was clearly another major failure in the case of Wells Fargo. Team members were reporting suspicious sales behavior for almost a decade. Whistle blowers were fired after utilizing the company’s official channels for reporting wrongdoing. Over 5,000 employees had been terminated in connection to the high pressure sales program. Yet that program was still in place at the time of Stumpf’s first appearance before Congress well after these details were revealed to the public. These actions send a chilling message to anyone trying to point out problems, question the status quo, or do the “right things.”


Leadership responsibility failures can lead to simple mistakes or life-changing circumstances for the people involved.  In this case, John Stumpf failed. He failed for claiming to create a moral climate based on doing the right things, though behind closed doors–hard selling was valued. He failed to be informed of organizational operations, though whether that was a simple mistake is up for debate. He failed to take corrective action when faced with whistle blowers. In fact, these whistle blowers were terminated–over 5,000 of them. These actions or lack thereof created life-changing circumstances for those involved. Both the customers who were the victims of this wide-ranging fraud and those who actively worked to report this fraud suffered due to the failures of Stumpf. The question remains as to whether Stumpf perpetuated this scandal purposely. Those who view this scandal from the outside might say Stumpf would have had to have known what was going on – if he did, we would have to accept the fact that leadership was used to manipulate, not lead.

This case study offers the reader a chance to learn from the scandal presented. The false narrative that John Stumpf created, the complete lack of critical review of policies, and the active intimidation of whistle blowers read as a bullet-point list of what not to do in leadership. The question regarding intent should be investigated in this case. It is incredibly difficult to look at this scandal and not believe some malfeasance on the part of Stumpf – either through purposeful avoidance or by active defense against being outed.  We can take with us the understanding that leadership encompasses all participants in the paradigm, not just the leader. Moving forward, a good practice would be to not allow yourself, as a leader, to be too far from your front line.  Leadership can sometimes require a narrative, be sure yours is true to your leadership philosophy.  Ask questions to those who institute new policies and those who are affected by those new policies. Finally, a responsible leader never actively blocks opposition. Responsible leaders should face opposition head on, regardless of the severity of the complaint.

Works Cited

Hartung, Adam. “Wells Fargo CEO Stumpf Is Gone: Is This The Beginning Of Wholesale Leadership Change?” Forbes, http://www.forbes.com/sites/adamhartung/2016/10/13/wells-fargo-ceo-stumpf-is-gone-beginning-of-wholesale-leadership-change/.

Loftus, Geoff. “Four Awful Leadership Lessons From Wells Fargo.” Forbes. Forbes Magazine, 5 Oct. 2016. Web. 03 Dec. 2016.

Seeger, Matthew W., and Robert R. Ulmer. “Explaining Enron: Communication and Responsible Leadership.” Management Communication Quarterly, vol. 17, no. 1, 2003., pp. 58-84doi:10.1177/0893318903253436.

Stumpf, John G. “How Wells Fargo’s CEO built the team at the world’s most valuable bank.” Fortune, www.fortune.com/2015/07/23/john-stumpf-culture/.