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Wells Fargo Case Study 3

Wells Fargo faced a massive scandal in 2016 when it was revealed that bank employees had opened millions of unauthorized customer accounts in order to meet unrealistic sales goals. The aggressive sales targets put pressure on employees to engage in fraudulent behavior like opening fake accounts, forging customer signatures, and issuing credit cards without consent in order to keep their jobs. Senior management was aware of these illegal practices but did not address the unrealistic goals or monitor how they were being achieved. This scandal damaged Wells Fargo's reputation and customer trust, showing that having ethical values means little if a company does not ensure they are followed in practice.

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174 views3 pages

Wells Fargo Case Study 3

Wells Fargo faced a massive scandal in 2016 when it was revealed that bank employees had opened millions of unauthorized customer accounts in order to meet unrealistic sales goals. The aggressive sales targets put pressure on employees to engage in fraudulent behavior like opening fake accounts, forging customer signatures, and issuing credit cards without consent in order to keep their jobs. Senior management was aware of these illegal practices but did not address the unrealistic goals or monitor how they were being achieved. This scandal damaged Wells Fargo's reputation and customer trust, showing that having ethical values means little if a company does not ensure they are followed in practice.

Uploaded by

iopasdc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Wells Fargo: The Stage Coach Went Out of Control

Wells Fargo is a bank which had a rich history of providing good financial services to its

customers. However, the massive scandal that the institution faced as of September 2016 came to

surface, its consumer confidence and its integrity hit a rock bottom. According to the case study,

it is clear that this situation raised primarily due to its short-term sales strategies. As the book

mentions, the strategy which is call the Sales Incentive Program started off as a legitimate

strategy. Overtime the Sales goals issued by the upper level management became more and more

unrealistic as the corporation became aggressive in topping the Industry. The strategy was to

establish sales of credit and debit cards coupled with rather traditional services such as car and

home loans. However, when the Sales goals were almost impossible, the branch managers and

employees resorted to fraudulent activities such as opening up unauthorized checking accounts

which reached a colossal two million. This would create the illusion that the employees were

meeting their sales goals and the senior executives were content. When digging deeper we also

see that not all employees personally liked carrying out these acts. As per the case study, it is

evident that branch managers and employees were in the risk of being fired if these sales quotas

were not met. This added huge pressure to employees which in turn created a hostile work

environment. Since they were uncomfortable in terms of their job security, their next alternative

was to engage in fraud. Whistle-Blowers were also punished by termination. This implied that

the fraudulent activities were being executed with the full knowledge of upper level

management.

Wells Fargo fails to uphold its value statement of “We value what’s right for our customers in

everything we do”. Due to the firm’s scandal, Wells Fargo’s business practices fails to align with

the firm’s underlying values. The actions committed by Wells Fargo is unethical and illegal. All
corporations undergo the phase of setting goals as a part of its business practice, however when it

comes to Wells Fargo the senior management fails to address the feasibility of the goals that they

set. Since accomplishing goals are performed at the operational level in an organization, the

senior management have also failed communicate effectively in using appropriate practices when

achieving these short-term goals. In addition to that I believe that the senior management strived

to top its industry without any prior knowledge on customer behavior or what the situation is like

at the operational level. Had they communicated effectively with lower and middle level

managers they would have been able to formulate better feasible short-term strategies that would

adhere to ethical practices. Since the goals were unrealistic and since there were no proper

monitoring established to make sure that employees were using ethical appropriate practices

when reaching these goals, the employees turned to commit the fraudulent activities due to the

company pressures and on the instinct of saving their jobs. As a financial institution, customers

are bound to place their confidence and trust on the firm in regard to securing cash and other

valuables. However, Wells Fargo turned down these values of honesty and customers’ trust by

fostering a hostile culture when unethical and illegal practices were deemed acceptable and

justified. As portrayed by the book Wells Fargo had issued credit cards failing to get customers’

authorization. This implies that the firm misused the concept of assumed consent. The firm also

is guilty of forging customer signatures which without question falls under fraudulent behavior.

Due to senior management’s negligence and unnecessary aggressiveness in topping the industry,

the firm suffered 43% decrease in checking account openings and 55% decrease in credit-card

applications.

As seen in the case of Wells Fargo, Ethical values are useless unless these values are properly

implemented. Wells Fargo does have its ethical values stated to act in the best interests of its
customers but failed to practically implement this value. When the upper level management fails

to put effective policies and rules in place to make sure that the employees comply with the

organization’s ethical standards, fraudulent and illegal activities bound to occur. The firm must

also consider its ethical values when setting its short-term goals so that these goals can be

accomplished by ethical means and not through fraudulent and illegal means in the hope of

receiving incentives. The firms must also monitor as how goals are achieved in the firm. In this

way the firm would be able to effectively reinforce its ethical values.

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