In 2018, the Federal Reserve placed an asset cap on Wells Fargo — a punishment so unusual that it had never been applied to a bank of that size before. The cap wasn’t triggered by a credit event, or a market loss, or a failure of technology. It was triggered by culture. Specifically, a culture of impossible sales targets that led employees to open over two million unauthorised customer accounts.
That cap remained in place for seven years. It was lifted in mid-2025, after one of the most extensive governance overhauls in modern banking — new leadership, restructured accountability, rebuilt compliance systems, and a painstaking process of regaining regulatory trust.
Seven years. That’s not a footnote. That’s a generation of strategic constraint imposed by a culture problem that nobody measured until it was too late.
Culture as a governed asset
Every financial institution has systems for governing its financial balance sheet. Capital adequacy is monitored daily. Liquidity ratios are stress-tested quarterly. Risk appetite is documented, debated, and signed off at board level. These are not treated as “nice to haves.” They are governance obligations, subject to regulatory scrutiny and public disclosure.
Culture has no equivalent framework. And yet the evidence that culture drives financial outcomes — for better and worse — is now difficult to argue with. The Wells Fargo case is the most dramatic example, but it’s far from the only one. Conduct risk failures, mis-selling scandals, and operational breakdowns are, almost without exception, culture problems before they become regulatory ones.
By the time a culture problem appears in the financial results, it has usually been visible in the people data for months. The question is whether anyone was looking.
The difficulty, of course, is that culture feels hard to measure. It lacks the precision of a balance sheet. You can’t audit it the way you audit a loan book. But the notion that culture is unmeasurable is, I think, increasingly outdated — and I say that as someone who spent years relying on exactly that excuse.
What a culture balance sheet looks like
I’m not suggesting organisations produce an actual balance sheet with culture assets and liabilities. What I am suggesting is that culture should be governed with a discipline that resembles how we govern financial risk: leading indicators, regular reporting, clear accountability, and board-level visibility.
In practice, this means a small number of metrics tracked consistently. Not an engagement survey once a year. Something more like: internal mobility rates, voluntary attrition by business unit and level, time-to-fill for critical roles, and employee confidence in speaking up — measured not by whether people say they feel safe, but by whether they actually report concerns. The gap between those two numbers is one of the most telling metrics in any organisation.
On the risk side: concentration of departures among high performers, declining participation in discretionary activities like mentoring, rising grievance rates, and patterns in conduct incidents that suggest systemic issues rather than individual lapses.
38% of major company boards now include a director with human capital expertise — up from less than 10% a decade ago. Boards are recognising that culture is a governance issue, not just an engagement one. The question is what they do with that recognition. — Conference Board, 2025
None of these metrics alone tells the whole story. But together, tracked over time, they create a picture that is far more useful than an annual engagement score — and far more likely to catch a problem before it becomes a headline.
The regulatory direction of travel
This is not purely an internal governance argument. Financial regulators are paying increasing attention to culture as a determinant of conduct, resilience, and consumer outcomes. The question is no longer whether regulators care about culture. It’s whether your organisation can demonstrate it governs culture with the same seriousness it brings to capital and liquidity.
For Chief People Officers, this creates an opportunity. The CPO who can build a culture measurement framework the board trusts, the regulator respects, and the leadership team actually uses is not running a support function. They are providing the governance infrastructure that protects the institution’s most valuable asset. And if you’re going to argue that culture is a governed asset, you need to be willing to be measured on how well you govern it. That’s a higher bar. But it’s the right one.
Wells Fargo spent seven years under a constraint that cost it billions in growth and required an almost complete rebuild. The cause wasn’t a financial failure. It was a culture failure that nobody was measuring. I don’t think every organisation needs to learn that the hard way. But I do think every organisation needs a culture balance sheet — even an imperfect one — that gives the board visibility into what’s happening beneath the financial results. Building it may be one of the most important things we do.
Domi Alzapiedi is a Chief People Officer in banking, focused on the intersection of people strategy, organisational design, and commercial performance. She writes about the questions that keep leadership teams honest.