Do the Right Thing: How Wells Fargo and the Slippery Slope of Lies Shows Us that Cash Isn’t Always the Best Motivator

What makes us lie, cheat, and game the system when we’re otherwise decent people?

Our culture often uses money to incentivize behaviors we want to see in others. Think about these common exchanges:

• Cereal-box sweepstakes (“Give us your email to win $1,000 and a new TV!”)
• Giving a child $1 for every A they receive on their report card
• A salary and a bonus in return for work

But money isn’t always the best motivator when you want an honest outcome. Cash incentives can backfire. Take this adorable story, for example:

Growing up, Kevin Zollman’s family lawn was overrun with dandelions, so his parents decided to pay him for pulling the weeds out. He knew the right way to do the job. “But I was old enough to figure out that if I pulled them up by the roots, there would be fewer dandelions for me the next week,” says Zollman, now a professor of philosophy and a game-theory researcher at Carnegie Mellon. “So I engaged in the sustainable harvesting of dandelions. I would just pluck off the flowers and turn them in for money so that they’d be there again the next week.” (PsychologyToday)

Luckily, the damage to Kevin Zollman’s parents stayed limited to their front lawn.

But what happens when these “entrepreneurial instincts” stop being cute? What happens when people game the system for financial gain, but more is at stake and more players are involved? When you introduce money into an incentive structure, are humans wired to cheat?

One example of insidious dishonesty on a large scale is the Wells Fargo scandal that came to light in the fall of 2016. Over 2 million phony new bank and credit cards accounts had been opened over several years without customer consent. Over $5 million dollars were wrongly charged to people mostly under the radar..

It’s important to note that the scandal wasn’t the doing of a few “bad apples” or one corrupt team. Over 5,300 employees were fired as a result of the scandal.

How could so many presumably good people be involved? How did this happen at such a well-known, long-established bank?

There are certainly many factors at play that must have contributed to these widespread instances of fraud, cheating, and lying. In the case of Wells Fargo, there was a toxic and high-pressure work culture where the cost of missing unreasonable targets could be being fired from one’s job. But one cannot ignore the fact that these employees had financial incentives to open new accounts.

Wells Fargo is far from the only instance of widespread dishonestly stoked on by money in otherwise ordinary people. In the 1990’s Sears issued $46 million in coupons in an attempt to right the wrongdoings of employees in the automotive repair division who lied to customers in order to sell unnecessary repairs. And the world’s largest insurance broker, Marsh Inc., allegedly steered business toward certain insurance companies and received financial kickbacks in return.

Again, the common thread is financial incentive. This is something worth examining more closely, and a recent study is the first to empirically demonstrate how people’s little lies slide into big lies, especially when monetary incentives are involved. It’s important to note that this took place in a lab — a low-stakes scenario where no jobs were at risk.

Participants in the study played a game where they and a partner needed to guess how many pennies were in a jar. Some of the participants were told they’d get a monetary reward if their partner guessed too many pennies (the higher the better), and the participants were then able to either help the partner guess honestly or cheat by subtly influencing the guess to fall high.

Sure enough, those who were financially incentivized to lie did so more often. What’s more, the lies increased over the course of the 1-hour study. What started as little lies turned into bigger, repeated lies, and the effect was more pronounced when more money was involved.

“You can think of this as a slippery slope with what begins as small acts of dishonesty escalating to much larger ones,” said study author Neil Garrett. “It highlights the potential dangers of engaging in small acts of dishonesty on a regular basis…”

The researchers also put 25 of the 80 participants into an fMRI machine to see their brain activity. When a patient lied, an emotion center called the amygdala lit up. But it lit up less each subsequent time the patient lied. It was as if these participants got emotionally desensitized to their dishonesty, much in the same way someone who just moved into an apartment next to train tracks might get less sensitive to the startling sounds of a train passing. Perhaps the shame, fear, or guilt that we get when we first tell a lie calms down over time. This leaves less in the way to stop us from telling more severe ones.

In the same way, our Wells Fargo employees may have escalated their dishonest behavior, starting with minor ethical gray areas (like convincing a customer to open an account they don’t need) then taking baby steps over time, eventually opening accounts for people without asking them. “As soon as the account manager gets away with the first unethical act, it’s not a big step to the fraudulent ones. The justification moves from ‘it’s legal’ to ‘no one is harmed’ to ‘no one will notice,’” commented the co-founders of ZS Associates, a global business consulting firm, on the Wells Fargo incentive structure.

So if you’re a CEO of a company or CEO of your children, take a close look at the behaviors you’re encouraging if you use cash incentives.

And the good news is that money isn’t the best motivator anyway. There are plenty of better options. Focus on intrinsic motivation like autonomy, mastery, and purpose. Recognize people publicly and structure achievements so people will be seen as “doing the right thing.” And make good behaviors the norm. After all, we all want to try what the cool kids are doing.