Why Business Scandals Go Viral


Just when it seems to calm down, another news story breaks. The ‘fake account’ scandal continues to have financial impact on Wells Fargo with checking account openings down 41% and credit card applications down 45% year-over-year in November. Quarterly results were also negatively impacted, although it is hard to determine the exact impact. 
  
The Scandal Spreads
In December, the scandal spread to Prudential Insurance because it was revealed that Wells Fargo employees had faked customer purchases of Prudential insurance policies. It appears that Prudential executives should have or may have known. Some employees who were investigating the connection were allegedly retaliated against and have filed a complaint. 
  
With all of the lawsuits brought against Wells Fargo by consumers, employees, and shareholders combined with the investigations underway by multiple agencies, we will continue to see the stories in the news. 
  
The most recent catalyst for news was caused when Glassdoor.com published a list ranking Wells Fargo as #6 on a list of “11 Awesome Companies Hiring Now.” The response to this article has predictably gone viral with bloggers and the media challenging Glassdoor’s methodology if not their prudence in adding Wells Fargo to the list. 
  
According to a 2016 Gallup report, before the Wells Fargo scandal, American consumer confidence in banks dropped by 46% in the last ten years. This drop in trust has not just affected banks, it has impacted most institutions that the poll has measured. And, it has spread across society.
 

Related Content: Conversations About The Complete Experience - How Customer Experiences Go Viral 


Trust Continues to Decline 
A research paper by Jean Twenge and collaborators from San Diego State University and the University of Georgia shows that in 2012 only 33% of Americans agreed that, “most people can be trusted.” The only institutions that have the trust of a majority of Americans are the military, small business and the police. It seems that we are experiencing a massive decline in social capital—the type of social capital that enables financial capital to flow more freely. 
  
Trust fuels economic growth according to neuroeconomist Dr. Paul Zak. His research shows that countries with a higher proportion of trustworthy people are more prosperous. There are more economic transactions, this creates more wealth and alleviates poverty. He has tracked the biology and neuroscience of trust to the molecule oxytocin. The same chemical that creates feelings of bonding between mother and child, lovers and strangers who have certain shared experiences.
  
When an alleged scandal erupts, and we decide to believe the reports, we are wired to pull back from the connection and to protect ourselves. Our alliances shift and we turn against the threats and toward perceived safety and security. This is never more clear than when we look at the effect of the Wells Fargo scandal. It has had a real impact on the financials of the company and the willingness of people to become customers. 
  

Why Does The Scandal Keep Going Viral? 
The virality of a scandal is caused by how we are wired and programmed. When threatened, humans follow their evolutionary programming and quickly identify those individuals they can align with to protect themselves against the threat. In addition, some will reach out to help protect those who are unaware of the threat. While there are other motivations for sharing in today's world, like news ratings and clicks, this latter group of individuals is responsible for much of the viral sharing simply because they want to protect others. 
  
Wells Fargo will continue to be in the news and will continue to go viral until we become desensitized to the thoughts and emotions that trigger the desire to read about it and share it. Or, it will fade away when the next more salacious scandal hits the news. 
  


What can businesses learn from this scandal? 
Virality will happen. It is deeply wired within the human consciousness to share. And, we will use the most advanced technology possible to share the news faster and farther than ever before. From smoke signals to the telegraph to your Facebook page, the reach of your social sharing continues to expand. 
  
Company leaders should not fear virality. They should embrace it. Here is how: 

  • Build practices into your daily routines to focus on the mission, vision and core values of the organization 
  • Make it acceptable to question policies and practices (including incentives) that appear to be causing behavior that violates the core values 
  • Encourage the desired behaviors and results by providing stories that exemplify how the right behaviors lead to desire results  

Shifting the focus to behaviors that lead to results will help everyone in the organization live more transparently from the core values. It will enable a culture that challenges wrong motivations. Customers will be helped while the company generates a healthy profit because the organization believes in and operates with trust.


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Tony Bodoh and Kayla Barrett co-authored and published the #1 best-selling book, "The Complete Experience: Unlocking the secrets of online reviews that drive customer loyalty." Learn more about the coaching, consulting and services they offer at www.TheCompleteExperience.com.

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