Wells Fargo is a diversified financial service company that offers retail, corporate and commercial banking services using its banking stores, offices, internet and other channels. The company serves its customers in the 50 states, Washington DC and other countries. The bank also provides other financial services through its subsidiaries which are engaged in different business operations. Some of the primary services offered by the bank include wholesale banking, mortgage banking, consumer finance, commercial finance, leasing of equipment, securities brokerage, agricultural finance, investment banking among others. Wells Fargo has three reporting segments used for management reporting. The three include community banking, wholesale banking and wealth and investment management (SEC, 2017). The purpose of this term paper is to explore the management practices in Wells Fargo a leading company in the financial sector.
Brief History
Wells Fargo has been in business for the past 166 years and has maintained a strong reputation in the market. The company is the oldest bank in the west having established high standards of service, reliability and honesty. It was formed by Henry Wells and William Fargo in 1852. The company move from the gold rush through the early 20 th century, depression, war and prosperity after the great battles. It has also undergone social change and a changing landscape driven by information communication technology. The company's attention to the needs of its customers has contributed to its growth to the current status. Wells Fargo has gone through different economic conditions including depressions and recessions (SEC, 2017). However, its sound management has significantly contributed to its ability to overcome the challenges. Similarly, the company faced negative publicity that attracted substantial public outcry due to unethical practices. Wells Fargo weathered the storm and emerged stronger and focused on meeting its corporate goals.
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Wells Fargo ranks number 7 on The Forbes List of America's Largest Public Companies the company did not start that way. Wells Fargo's history takes us back over 166 years where the founders met as expressmen. These lone expressmen delivered mail, parcels, gold and exchanged bills across the east. These lone expressmen travelled by horseback, mule or foot blazing trails, crossing streams, facing encounters with wild animals & sometimes robbers. As the gold rush in California was underway the need for express mail grew. During this time, 1850, many businesses formed, consolidated and dissolved. Here is where American Express emerged. Henry Wells operated as the president and William Fargo served as the secretary. News spread of the gold rush and railroads started to expand west. Wells & Fargo recognised the need to move west. They approached the board members with the idea of broadening west but were denied.
In 1852 Henry Wells and William Fargo partnered up with some investors to form Wells Fargo & Co., a joint stock company. Wells Fargo & Co. was primarily running out of New York but swiftly expanded to the west. As trust grew in the company, Wells Fargo & Co. established a global business taking their services overseas. Before the year ended, Wells Fargo & Co. had 12 offices in operation with many faithful messengers. These faithful messengers guarded iron chests filled with gold travelling between the eastern and western states. Wells Fargo & Co. was known to stop at nothing to deliver gold, parcels and even newspapers. The trust in this company was so immense that some also used Wells Fargo & Co. to transport their wives and children across the country in their signature stagecoaches. As Wells Fargo began using railway and ships their express service flourished.
Around the start of WWI Wells Fargo & Co. served 10,000 offices in the United States and many more in Japan, Australia, Hong Kong, Central & South America along with many European countries. As WWI continued, it brought about change in the states. The federal government nationalised all express services leading to the nation's four leading express mail companies to merge into one; The American Railway Express. This left Wells Fargo & Co. with one line of business, banking and their office in San Francisco. Overall, for the past 100 plus years, Wells Fargo & Co. has remained steady and very much an essential financial institution across the country. The history of Wells Fargo and its current ranking needs to be evaluated from the company’s management style by looking at its planning, leading, organising and controlling functions that have led to its current status.
Planning Function at Wells Fargo
Planning is an act of deciding what needs to be done in future and generating plans of actions. Wells Fargo maintains different programs for its operation with the most notable being capital plans that deal with dividends and share repurchase issues, staffing plans, risk management plans and strategic plans (Campling, 2008). The company's plans ensure that future operations are anticipated, and any negative impacts are dealt with in their early stages, therefore, reducing chances for ad-hoc decisions.
The current company’s strategic plan 2016-2021 highlights the operation plans that the company engages to achieve its vision and mission. The company identified five-year long-term goals to be pursued in the five years. The plan identifies five strategic priorities that form the basis for other business decisions. The five priority areas include a focus on the customer, enhancing risk management, managing performance, strengthening financial performance and building the best team (Wells Fargo, 2018). The strategic plan ensures that the company can achieve its long term plans while formulating strategies that can be used to address the five priority areas.
All other plans are geared towards the strategic plan and reinforce the company’s desire to serve its customers better and to meet their financial needs. The marketing plan, for example, aims at showcasing Wells Fargo strengths and leadership position in the market. Marketing campaigns focus on the customers and aim at creating loyalty (Wells Fargo, 2018). Similarly, they are aligned with the long-term plans and focus on achieved the mission and vision of the company. Financial planning is also another critical area that the company engages in to ensure that it conducts timely financial projections and allocate adequate resources to achieve the desired outcome.
Staffing plans are yet another critical area that the company focuses on with the aim of ensuring that appropriate employees are in place at the right time. Similarly, the plans provide that the company is aware of its human resources needs (Wells Fargo, 2018). Such efforts enhance the formulation of employee development plans in addition to supporting initiatives like layoffs, replacement and retirement planning.
Leadership at Wells Fargo
Leadership are the individuals mandated to oversee the operations of a company. Similarly, it is an act or ability to lead an organisation or a group. Leaders are responsible for establishing the vision of a company, set its tone and steer it in the right direction. They also share the view of the company with the employees so that they can willingly follow them. Leaders are also responsible for availing information, methods and knowledge that can be used to achieve the vision (Campling, 2008). They also coordinate and balance conflicting interests of the different stakeholders. The leadership of Wells Fargo is credited for the success of the company.
The leadership has built a reliable company that has remained a preferred investment option for potential investors and a trusted organisation by the customers. Historically, Wells Fargo has continued to generate high returns for its investors something that can be credited for its leadership (SEC, 2017). The leadership has also stepped during challenging and in crisis to address some of the issues affecting the company. The top management acted creatively during the recent turmoil like the over two million accounts scandal that raised eyebrows over the integrity of the company and its intentions to remain competitive in the marketplace.
The most recent scandal involved the opening of 2.1 million accounts without the knowledge of the customers. The employees were determined to meet high targets established by the company to record improved performance. Some of the employees became crafty and decided to open accounts with the sole objective of achieving their sales targets. The number of reports began was staggering, but the leadership stepped in to address the issue preventing further negative publicity that could otherwise have affected the bank.
The leadership reacted by taking several measures including conducting a thorough investigation into the scandal, firing employees who were engaged in the scandal and making critical top management changes. According to an article by Gray (2017) published in the Financial Times, Wells Fargo hired Betsy Duke to the chairmanship position to replace Stephen Sanger. The writer points out that Sanger was to leave the company earlier than expected having encountered severe challenges in his effort to clear the company's name from the fake accounts scandal. Similarly, the company fired two other directors, and new directors were hired. The bank also replaced chairs and members of several board committees
The leadership of the company determines its ability to retain is reputation as a leader in integrity and principled performance. The top management has complied with the regulatory environment and believes in doing the right thing and the right way (Wells Fargo, 2018). Similarly, the leaders are guided by ethics in the in undertakings and strive to ensure that the bank retains its leadership position and continues focusing on its customers.
Organising
This is a management function that involves the synchronisation and combination of the resources of an organisation to achieve the desired outcome. Companies combine their human, physical and financial resources to produce the desired results (Campling, 2008). Wells Fargo has offices distributed in all states and other countries around the world. Similarly, the company employs employees in its branches around the world making it difficult to coordinate all the activities of the company. The company uses a divisional structure with each chapter having its organisational structure that includes a bank manager, their assistant, supervisors and tellers (Wells Fargo, 2018). The company also engages in a functional structure having different functions that are mandated to meet the objectives of the bank. The major functional areas include marketing, finance, human resources and operations.
The operational structure of the bank focuses on the customers, geographic area, marketing and other services. The board under the leadership of the chairman oversees the operation of the bank. Similarly, different committees are responsible for undertaking assigned roles to ensure that the bank operates according to the requirements and also meets the varied needs of its stakeholders. Wells Fargo has a strong organisational structure that has enhanced its global performance making it a leading financial service provider (SEC, 2017). The scandals that have recently emerged have only strengthened the current position of the and ensured that it achieves its short-term and long-term goals.
Controlling
Controlling is a critical function in any organisation. It is used by organisations to foresee potential actions that should be taken by a company to retain or enhance its current position (Campling, 2008). Wells Fargo establishes the desired standards that need to be met in daily operations. Similarly, the company measures the actual performance against the set criteria to determine whether the requirements have been met or not. Actions are then taken to correct the current situation depending on the performance of the company.
Recent sham accounts scandal can be attributed to the controlling function by the management. The company had earlier set high targets for its sales team. The employees were required to open a minimum number of accounts, and their performance was measured against the number of reports began. Employees could not achieve the set target and opted to open minds without the knowledge of the customers. However, the practice was detected, and the board discussed it earlier even before the media started covering the case. However, recent uncovering of foul practices has led to the company realigning the way they plan, direct, organise and control.
References
Campling, J. (2008). Management . Milton, Qld.: John Wiley & Sons Australia.
Gray, A. (2017). Wells Fargo shakes up the board, appoints Elizabeth Duke as new chairman | Financial Times. Retrieved from https://www.ft.com/content/652fab03-451c-3325-b63c-3af3c852d53f
SEC. (2017). Wells Fargo and Company. Retrieved from https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/sec-filings/2016/10k.pdf
Stein. (2017). Wells Fargo Corporate Governance. Retrieved from https://casestudies.law.harvard.edu/wells-fargo-corporate-governance/
Wells Fargo. (2018). History of Wells Fargo – Wells Fargo. Retrieved from https://www.wellsfargo.com/about/corporate/history/
Wells Fargo. (2018). Vision, Values & Goals - Wells Fargo. Retrieved from https://www.wellsfargo.com/about/corporate/vision-and-values/
