It turns out the bogus account scandal at Wells Fargo(WFC) - Get Report actually comes with an upside: The public may finally catch on that those saccharine tributes to "most admired" and "best" companies and their executives are mostly a waste of time.
Exhibit A is John G. Stumpf, the former Wells chief executive who abruptly retired from the bank last week and resigned from his board seats at Chevron(CVX) - Get Report and Target(TGT) - Get Report on Tuesday.
Stumpf was a business rock star before the Consumer Financial Protection Bureau hit Wells Fargo with a record fine in September for opening as many as 2 million unauthorized customer accounts. But after Stumpf bungled his testimony before two Congressional committees looking into the CFPB's findings, he shifted from business hero to corporate bum.
Time was that business magazines and research organizations were heaping accolades on the Wells CEO.
More recently, Morningstar named him "2015 CEO of the Year" in January. In a press release, the investment research provider said Stumpf had "shunned activities that put profits ahead of customers," suggesting that Morningstar either never did a basic Google search to unearth a 2013 Los Angeles Timesinvestigation that substantiated just the opposite, or discovered the article and regarded it as immaterial..
Wells itself has basked in tributes, too: just this monthGlobal Finance magazine picked it as "Best Bank in North America." In 2015, Banker magazine chose it as Global Bank of the Year, while the Ponemon Institute, which conducts research on privacy and information security policy, ranked it tied for third place in its annual study of "Most Trusted" companies in retail banking.
Fortunesaid earlier this year that Wells was the 25th most-admired company in the world. When the bank took first place on Fortune's "most-admired" list of global banks in 2014, the magazine noted that Wells "has a knack for hooking its customers." Apart from the quibble that customers may not always know they've been hooked, who could take issue with that?
For anyone truly interested in understanding whether Wells or Stumpf deserved any of the slobbering praise they collected over the years, details of the scandal described in the CFPB complaint had been hiding in plain sight for years.
Employees posting on the job website Glassdoor.com began to blast the company's ethics in the spring of 2008, with one complaining of "too much product-pushing," and another suggesting it was the right place to work "if you have no ethics." By 2014, a Wells employee was writing that there was no upside to reporting cases where customers were tricked into opening accounts they didn't need. Any employee who did that "would be ridiculed and publicity humiliated by management," the writer said.
If the employee reviews weren't enough, that investigation three years ago by the Los Angeles Times should have been on the radar of anyone truly interested in evaluating the bank. Reporter E. Scott Reckard meticulously outlined the ethical breaches and customer complaints at the bank, describing the forging of signatures, the ordering of credit cards without customers' permission, and even a case where a homeless woman had been talked into opening six checking and savings accounts that came "with fees totaling $39 a month," Reckard wrote.
Timothy Sloan, who at the time was chief financial officer, told Reckard "I'm not aware of any overbearing sales culture." I'm guessing Sloan was too busy tallying up the profits from cross-selling to have the time to read his own employees' tales of ethical hell on Glassdoor. Sloan took home $8.8 million in compensation in 2013, according to company filings. Last week, he replaced Stumpf as CEO.
It isn't just the "best CEO" or "most-admired" lists that fall short in showing whether honorees are really "best" or deserve to be admired. Lists of the best places to work for women have in the past featured companies whose women have filed suit for gender discrimination and sexual harassment. Lists of the best stockbrokers regularly include people with horrendous regulatory records.
The misguided lists endure in large part because publications can sell advertising against them. Who doesn't want to buy a little space to brag about their stockbroker who just landed on a "top" adviser list? Or their HR policies that provide a utopian workplace for mothers?
For the rest of us, the corporate beauty contests are a waste of time. Unless, of course, you're looking for a contrary indicator.
Consider who the winners were of Fortune's most-admired securities firm list in the year before the 2008 financial crisis. No. 2 in 2007 was Bear Stearns, which was on the brink of bankruptcy when it was rescued by JPMorgan Chase (JPM) - Get Report on March 16, 2008. No. 1? None other than Lehman Brothers, which collapsed six months later.
"Most admired?" Give me a break. "Most useless" is more like it.