MBA Alumnus John Stumpf Called to Resign Amid Wells Fargo Scandal

Creating responsible leaders in the wake of the Wells Fargo scandal

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Revelations hit the front pages this week with Wells Fargo CEO and Carlson MBA alumnus, John Stumpf, testifying, albeit reluctantly, that he was aware of the US bank’s ‘improper tactics’ back in 2013. Wells Fargo has now fired 5,300 of its employees for creating as many as 2 million fake customer accounts in a squeeze to hit sales targets. It was revealed that the first 1,000 employees had been sacked in 2011, leaving the Senate Banking Committee reviewing the case to ponder how this could have escaped the CEO’s attention.

With his company embroiled in scandal, there now seems to be a certain degree of irony to the advice Stumpf shared as keynote speaker at his alma mater, Carlson School of Management, last year. “There's a difference between knowledge and wisdom. The way you get experience on the way to earning wisdom is to make mistakes. Fall in love with mistakes. Find them, share them, don't repeat them, and learn from others' mistakes—you're not going to live to be old enough to make all the mistakes yourself," he said. Falling in love with this mistake is likely to prove challenging.

Reports of fraudulent practice have become part and parcel of the media landscape with billion-dollar corporations and banks routinely making the headlines. Since the collapse of Lehman Brothers in 2008, our ears and eyes have been trained on screens and broadsheets that announce what appears to be an unrelenting stream of fresh humiliations. Be it Enron or Starbucks, Volkswagen or Barclays, cries for greater financial regulation and accountability abound. Leading these mammoth organizations are high profile executives, a good proportion of whom will have jumpstarted their careers with an MBA. With more leaders of industry under scrutiny than ever before, the eyes of rebuke inevitably fall on the institutions molding these global frontrunners, questioning the veracity and integrity of the principles being taught in their curricula.

The MBA Oath: The small HBS campaign that went global

Business schools offering an MBA specialization in corporate responsibility, or courses in ethics are commonplace since the post-recession media backlash. Be this flurry to provide such courses a means of appeasing the critics, or based on a genuine intent to reassess business education and inject a moral component, the upshot is that these changes are at least a move in the right direction.

Back in 2008, Harvard Business School (HBS) professors asked their MBA students to evaluate how management education had changed over time, and how it would continue to change and be relevant in the years to follow. With the financial crisis playing out in full, it was clear to all, including the students assigned with the task, that many MBAs were involved in the poor decision making that was leading the world into recession. The question as to why business school professors hadn't sounded the alarm in advance of the crisis was also cause for concern.

By the spring of 2009, a cluster of these HBS students, spurred both by their assignment and the existing political and economic climate, launched the MBA Oath initiative. Their aim - to encourage current and graduating MBAs to take a voluntary pledge to, “create value responsibly and ethically.” The goals of the oath were (and still are) threefold: "a) make a difference in the lives of MBAs who take the oath; b) challenge other MBAs to work with a higher professional standard, whether they sign the oath or not; and c) create a public conversation in the press about professionalizing and improving management."

Since 2009, the MBA Oath has been embraced by MBA students and graduates representing over 250 schools worldwide. In the long term, the creators of the oath conceive a future where the field of management is regarded as a 'true profession', one in which MBAs are respected for their leadership, professionalism and, crucially, integrity.

The all-too familiar call to hold top executives accountable

“Given the ambient uncertainties with which we now live, MBA students now more than ever want work that is meaningful to society as well as personally fulfilling,” Rakesh Khurana, a leadership development professor at HBS and one of the advisers and mentors on the initial MBA Oath project, wrote back in 2009. His view is that, as doctors, lawyers and teachers are obliged to continue their professional education beyond graduation, so too should MBAs. “Certainly corporate boards and executives should understand the complexities of the financial transactions they manage and the symptoms and dynamics of bubbles,” he adds. Khurana also suggests implementing a governance system where, similar to doctors and lawyers, MBAs receive certification that can be revoked should they be charged with severe misconduct.

As it stands however, there is no such certification, only the call for it, nor is there a ratified system of governance which holds all executives to account. Many believe that the law itself should be more robust, and that the Wells Fargo case is one where illegal practices were evidently in play. On Tuesday, Hillary Clinton wrote an open letter in response to the fake accounts scandal. Calling for enhanced accountability she stated that, “executives should be held individually accountable when rampant illegal activity happens on their watch... (and) they must face appropriate legal consequences if they break the law."

One solution might be to stress the values of integrity and ethics in business from the moment an MBA candidate sets foot on campus, with the aim of creating a mindset where responsible leadership and professionalism are prized. Pledges like the MBA Oath can also be good beginnings for an MBA's career, with the student or graduate choosing to set themselves on the straight and narrow. Today there are in fact 6,000 signers to the MBA Oath, including those representing top business schools, such as the Wharton School, London Business School, ESADE and MIT Sloan School of Management. Moral rectitude on the MBA landscape does appear to be shifting, not seismically, but hopefully in the right direction. Regardless of whether or not John Stumpf proves to be a bad apple in the MBA barrel, he certainly doesn’t need to represent, nor spoil the future of the MBA.

Karen Turtle
Written by Karen Turtle

A content writer with a background in higher education, Karen holds an MA in modern languages from the University of St Andrews. Her interests include languages and literature, current affairs and film. ​

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