After a thirty-one-year career (including two as the chief executive officer) at Wells Fargo, one of America’s largest banks, Tim Sloan hang up his coat, much to the surprise of his investors (Cao, 2019). This early resignation came as a surprise as he had received Warren Buffet’s full confidence. Sloan took over Wells Fargo after a previous ethics scandal in 2016 where the sales work force was revealed to have opened millions of fake bank accounts just to meet quotas (Cavico & Mujtaba, 2017). The banks, therefore, had high expectations of Sloan to clean up the fake accounts scandal and lead the bank to greater heights.
Law enforcement and regulators, however, were doubtful of this trust as they believed that in his former position as the Chief Operating Officer, Sloan had played a significant role in enabling the fake account scandal. It was, therefore, no surprise that Sloan retired after Wells Fargo revealed that he received a $2 million bonus for its abuse of home and auto loans. This came after the banks was also fined $1 billion for the same scandal (Liberto, 2019).
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It was, therefore, no surprise that Sloan was under intense pressure from the regulators, especially the Office of the Comptroller of the Currency. In a statement to the bank’s investors, Sloan said that “ I could not keep myself in a position where I was becoming a distraction,” a message he later reiterated by saying that “It has become apparent to me that our ability to successfully move Wells Fargo forward from here will benefit from a new CEO and fresh perspectives” (Cao, 2019). Shortly before his retirement from the bank, Sloan had testified before Congress over the 2016 scandal that involved fake accounts where he assured the committee that Wells Fargo had made steps to improve and it was a better bank that it previously was.
Given that Wells Fargo has been found ethically wanting by regulators twice in three years after which the bank had to pay steep fines, it becomes clear that the problem is not Wells Fargo’s business practices but its leadership’s strategic planning, especially with regards to the integration of ethics in business practices at all levels (Egan, 2016; Witman, 2018). This statement is echoed by Ochs who claimed that “, the executive team and the board of directors were remarkably slow to see the breadth and gravity of this fraud, and to address it effectively” (2016, p.2).
Wells Fargo’s problem with strategic planning is, therefore, not with its chief executives, who get replaced after a scandal but with the people who remain with the bank after every scandal. An effective strategic plan would be a massive overhaul of the bank’s culture to one that exemplifies proper conduct and ethical behavior. If the employees learn that being ethical is part of working at Wells Fargo, then such scandals can largely be avoided. This is strategic as company culture is perpetuating and sustaining, ensuring that new employees fall in line with company policy and ethical guidelines. If Sloan had embarked on such a strategic plan when he took the position of CEO in 2016, he would have achieved something that showed his efforts to improve the bank’s conduct.
References
Cao, S. (2019). Embattled Wells Fargo CEO Resigns Hours After Warren Buffett’s ‘100 Percent’ Endorsement . Observer. Retrieved 14 August 2020, from https://observer.com/2019/03/wells-fargo-ceo-tim-sloan-retires-warren-buffet-endorsement/.
Cavico, F. J., & Mujtaba, B. G. (2017). Wells Fargo's fake accounts scandal and its legal and ethical implications for management. SAM Advanced Management Journal , 82 (2), 4.
Egan, M. (2016). I called the Wells Fargo ethics line and was fired. CNN Money , 21 .
Liberto, J. (2019). NPR Choice page . Npr.org. Retrieved 14 August 2020, from https://www.npr.org/2019/03/28/707738077/wells-fargo-ceo-quits-in-wake-of-consumer-financial-scandals.
Ochs, S. M. (2016). The leadership blind spots at Wells Fargo. Harvard Business Review , 10 .
Witman, P. D. (2018). Teaching Case:" What Gets Measured, Gets Managed" The Wells Fargo Account Opening Scandal. JISE , 29 (3), 131-138.
