Malcom Young died over the weekend. He was the rhythm guitar half of brothers who founded AC/DC, the great Australian rock and roll band. Not as flamboyant as his lead guitar playing brother Angus, Malcom was the cornerstone of the band’s driving style, which really never deviated over 40 years of being the spotlight. Dan Epstein, in a Rolling Stone article, entitled “Remembering AC/DC’s Malcolm Young, Band’s Unassuming Mastermind”, wrote “Malcolm never once allowed the band to deviate from its swinging, swaggering, riff-driven course. During Malcolm’s tenure, AC/DC’s recordings featured three different lead vocalists, three different bassists and five different drummers; and yet, the band’s musical aesthetic remained so stubbornly consistent as to make the Ramones look like flighty trend-jumpers by comparison.”
What was that sound? Malcom himself described it as “Rock bands don’t really swing … a lot of rock is stiff. They don’t understand the feel, the movement, you know, the jungle of it all.” That sound led to the second highest selling rock and roll album of all-time, Back in Black a tribute to their deceased co-founder and lead singer Bon Scott. But Malcom was the mainstay of the band and their sound. A rock guitar authority of no less than Eddie Van Halen once called him the “heart and soul of AC/DC”. He did all that while playing rhythm guitar.
Emily Glazer and Allison Prang, reporting in a Wall Street Journal piece, entitled “Wells Fargo Fires a Top Official”, wrote about the termination of a 23 year company employee, Franklin Codel, who was the head of consumer lending for the bank. Codel was terminated “over a disparaging remark he made about regulators to Greg Gwizdz, a senior mortgage official who worked under Mr. Codel and was terminated earlier this year.” His remarks “related to how so-called golden parachute payments had been limited at the bank because of its regulatory problems last year”.
One un-named source indicated, “Though it isn’t uncommon for bankers to make disparaging remarks about regulators in private, one person familiar with the matter said that given Wells Fargo’s position with a bevy of investigations, it felt the need to act.” This person noted that “Wells has to be very thoughtful and careful here. What others may do, they can’t.” The Bank’s Chief Executive Officer (CEO) Timothy Sloan, “said in a statement that as “difficult as this situation is, the decision reflects our commitment to our values and culture.”” The reporters added the termination “highlights the tense environment at the lender as it sorts through a variety of regulatory probes stemming from sales-practice issues in its retail bank.”
This is not the situation of a public comment violating an anti-disparagement clause in a settlement agreement but merely a negative comment about the terms of the resolution. Gwizdz reported the remarks to Wells Fargo and Wells reported the comment to regulators. It points up why such comments can be considered so divisive within an organization and perhaps to the reason that Wells acted so aggressively. Michael Lewis, in his book The Undoing Project, related a story from Houston Rocket General Manager (GM) Daryl Morey where he banned negative comments and even nicknames for prospective draft picks as such comments colored the perception of candidate.
The same is true when company employees engage in negative comments about a settlement agreement. I once worked in a company which was under a Deferred Prosecution Agreement (DPA) for Foreign Corrupt Practices Act (FCPA) violations. A large part of the employees’ time was spent complaining (internally) about the terms of the DPA and the requirements of the corporate monitor. At one point, the CEO was terminated for continued non-compliance with the terms of the DPA. One of the first dictates of the new CEO was to bar negative comments about both the DPA and monitor. By continually focusing on the business the DPA prevented the company from engaging in, employees lost sight of the business they could go after and garner. Simply put, if bad mouthed for long enough those negative comments become your truth. This can be particularly damaging when a company has agreed to a DPA and is trying to clean itself up going forward.
The issue for Codel was that Wells was restricted in its ability to give golden parachutes to employees who were terminated as a result of the fraudulent account scandal. Yet the termination also relates to the company’s attitude going forward. If company employees are going to complain about complying with the terms of the settlement; they will be less likely to focus on the solution they need to implement going forward. When you have a senior executive who makes such negative comments that a terminated employees reports it to his former employer, this is beyond the pale. Wells noted, “The dismissal was the result of Codel’s acting in a manner that was contrary to the company’s policies and expectations of its senior leaders during a communication he had with a former team member regarding that team member’s earlier termination.”
How does all of this relate to Malcom Young? Young did the spade work for the band in playing rhythm guitar. It was not flashy but it kept the sound tight and, most importantly for AC/DC fans, consistent. If Wells Fargo is going to change its culture of skirting the rules to make money and get itself in compliance; it must have the steadiness of the management team all moving the same way. That means a senior executive vice president such as Codel cannot be seen disparaging the terms under which the bank now finds itself. It is not under such scrutiny for following the law and not engaging in fraudulent conduct. Senior executives must take the lead to create a new cultural ethos. Whining, moaning, complaining and disparaging the terms a company is under for a corporate resolution is certainly not the way to do so.
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