When The Bottom Line Goes Through The Heart

Like me, I’m sure you’re following the Wells Fargo story in the news right now.  In the days since the story broke on September 9th, their share price has fallen by about 10 percent, with no reason to think that won’t continue. On a year-long graph, it looks like stepping off a cliff.  That cliff represents ordinary peoples’ investments – their retirements, their college funds, their life savings.

Sometimes it can be fun to ridicule the “touchy-feely” and the “soft skills” in a workplace as something worthless that’s done only to placate people or to check a box.  And of course, we all know bosses who really believe that team ethics and group dynamics have nothing to do with the bottom line.  Sometimes, and often after a particularly worthless training session, we even agree.  But then I think of the family whose investments just tanked by ten percent in ten days, and who now can’t afford to send their daughter to college.

In the late 1960s, American sociologist Donald Cressey invented the “Fraud Triangle” as a way of explaining the erosion of personal and team ethics.  In Cressey’s model, there are three moving parts.  First, PRESSURE to commit fraud, for example unrealistic sales targets.  Second, OPPORTUNITY, for example access to somebody’s private bank account.  Third, RATIONALIZATION, the old “everybody’s doing it” argument we used to use on our parents.

Following the Enron collapse in 2001, the Sarbanes-Oxley Act of 2002 was introduced to combat the Fraud Triangle.  Looking for a way to tackle team ethics, the Securities and Exchange Commission (SEC) developed PCAOB Audit Standard 2 of 2004 from Sarbanes-Oxley, quoting as the only offered example of good compliance a document called the COSO Framework 2013 in which the first of 17 stated ethical principles is “Lead by Example”, defined as “the organization demonstrates a commitment to integrity and ethical values”.

And so, at last, the “touchy-feely” idea of team ethics and values became a cornerstone of the hard-nosed financial system at the heart of the legendary “bottom line”.  An idea like this is revolutionary.  Who’d have thought that the tough old SEC would step away from mechanistic systems and procedures and instead embrace the human being at the center of it all?

The truth underlying Sarbanes-Oxley and the new SEC regulations is that all systems will be gamed for as long as the proper group dynamics and common value sets are not there.  When the holes are fixed, the holes themselves will be gamed, and the giant merry-go-round will continue for as long as the calliope plays.  It’s time we stopped referring to teamwork and leadership as “soft skills” or “a matter of opinion”, because in fact there’s nothing harder – and opinion turns out to be everything.  A share price is nothing more than an opinion, which is where we came in.

It’s tempting to think that we can solve problems in systems with more and better systems, and typically that’s the response from unprepared executives in crisis mode, desperate to keep the share price up and their jobs held down.  But as anyone who has ever tried to put an unwilling two-year-old to bed can attest, for every “doing it” way of doing something, there are half a dozen “not doing it” ways.  We don’t lose these skills as we age; we just get more subtle and covert at doing the same things.

If the hard-nosed SEC recognizes an investment in team dynamics as essential to the bottom line, that should be good enough for all of us.  Invest in people, invest in team and leadership development, invest in values, or the game never ends.

Just ask Wells Fargo.

About John Kolm

Team Results USA's CEO John Kolm is an innovator of 21st century team productivity programs, a best-selling author, and a former intelligence officer. Originally from Australia, John formed Team Results in 1996 with retired business partner and decorated veteran Peter Ring as the end result of an experiment that began in 1993. Driven by frustration with the team development options then available to business and government, and with encouragement from early clients, they applied their academic training and practical leadership experience to build the unique approach to team productivity improvement that eventually became Team Results. The company grew rapidly, expanded to a wholly US-owned branch in the United States in 2005, and now operates as a very successful business in both hemispheres. In 2004 John and Peter wrote the global bestseller “Crocodile Charlie and the Holy Grail” (Penguin, available on Amazon.com), consolidating ten years of work with peak clients into a compelling story about team productivity, leadership in business and government, and happiness at work. The book has been re-published in seven languages and fourteen countries, and a sequel is in the works. John is also the author of numerous articles and papers on team dynamics in the modern workplace, some of which can be found in the News Room at www.teamresultsusa.com . John is qualified in Psychology from the University of Melbourne, and in mathematics and statistics from the U.S. National Cryptologic School, where he also taught on the faculty. Email him at John.kolm@teamresultsusa.com .

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