Lessons from the FDIC

What can we learn from the Cleary Gottlieb Steen & Hamilton report on the FDIC? We know a few things:

  1. The 234-page report made public May 7 validates serious workplace culture problems reported by the Wall Street Journal last November. 
  2. The report offers a list of 10 “root causes” for the problems, among them: Lack of accountability, insufficient prioritization of workplace culture, and lack of clear guidance.
  3. The report is so damning that FDIC Chair Martin Gruenberg has offered to step down, albeit only after “a successor is confirmed.” 

Although the problems identified in the report involve a number of managers in addition to Gruenberg, an organization’s culture starts at the top, making Gruenberg’s departure essential for any credible cultural reform at the agency. Reform of the FDIC’s hostile work environment, which includes repeated incidents of sexual harassment, must begin immediately. Even Democrats who initially circled the wagons in Gruenberg’s defense, eventually called for his resignation. 

More than 500 of the FDIC’s 6,000 employees used the law firm’s hotline to phone in complaints during the investigation. The sheer number of comments speaks to the depth of the issues at the FDIC. Reform is going to be a big job. The Cleary Gottlieb report calls for protecting victims, holding leadership accountable, policy changes and greater transparency, among other reforms.

The suggestions represent a good start, but I think the issues go much deeper than procedure. The FDIC has workplace policies in place now and they haven’t been followed. My question is, what kind of person — regardless of the workplace policies enforced at their job — harasses colleagues in the first place? Character is the issue here. 

Fortunately, most of the employees at the FDIC are professional, knowledgeable and respectful. Most of them are people of character and know how to act. The trick will be clearing out the bad actors and working hard to bring people of strong character into the agency in the future.

This is why I have generally been in favor of hiring for the person and training for the skill. In other words, you want people of character in your organization. The purpose of a job interview is to figure out who the candidate is more than what they know. It doesn’t do any good to have an organization full of people who know how to do their job but have no idea how to get along with each other.