Founded in 1852, Wells Fargo had built itself a good reputation for 165 years until the fake accounts scandal. In its early days, the firm was known for provision of undisputable financial services by Pony Express and the railroad, telegraph, steamship and stagecoach. Wells Fargo was involved in services such as the sale of gold, offered money orders, transfer of funds, and traveler checks (Cavico & Mujtaba, 2017). By maintaining its ground on consumer banking, auto and home loans, and lending to small businesses in the West, Well Fargo survived the financial crisis during the Great Depression and World Wars. As such, the bank had a full grip of people’s trust and confidence in them over the years. In 2016, however, things took a turn for Wells Fargo amid allegations of fake bank credit accounts for their customers without their consent and knowledge. Six years earlier, Yesenia Guitron had been fired for whistleblowing regarding the fraud at Wells Fargo. The scandal cost the job of the CEO and over 5000 employees. Since the scandal, the organization has taken a number of steps to fix their reputation.
Road to repairing Damage of Reputation
To begin with, Wells Fargo apologized publicly for fraudulent activities that included opening customers’ fake accounts, selling unwanted products, and charging unwarranted fees. As from 2002, Wells Fargo had been involved in the above fraudulent activities to boost its sales and growth. According to whistleblowers such as Guitron, the sales team was expected to open at least five fake accounts on a daily basis, charge approximately $25 dollars, and sell the customers products such as insurances they did not need (Bishop, 2018). Due to the damages incurred on its customers and investors, Wels Fargo agreed to settle the criminal charges with $3 billion to settle the criminal charges including the civil action of customer mistreatment for the last fourteen years. Part of the $3 billion is $500 million for investors who were lured to invest with the bank with fake details other than actual ones.
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Another way Wells Fargo has repaired damage to their reputation is by changing the way it motivates its employees. Over the 14 years of fraud at Wells Fargo, employees had been rewarded for meeting target sales and punished for not doing so. Employers of the bank had a monthly target as part of their duties. Hitting these goals meant that it would be factored in their annual bonusses. Furthermore, thousands of employees at Wells Fargo had lost their jobs due to failure of meeting target sales (Flitter & Cowley, 2019). Such motivation resulted to bending the rules on ethics and compliance which eventually exploded in 2016. annul basis. To others, it meant they would retain their jobs. Since then, Wells Fargo has improved the working conditions of its employees by reducing the pressure to get sales up.
Wells Fargo, however, still has numerous steps to take to ensure such a scenario does not take place. The company should consider changing the executive team. Leaders that worked with Stumpf who tolerated the fraudulent behavior should be replaced with a new team. Wells Fargo should also adhere to what they said they would do particularly pressuring their employees. According to Forbes (2015), one of the best ways of repairing one’s reputation is doing what you said you’d do. Based on claims of employees working at Wells Fargo, the companies continue to maintain and hone its culture of aggressive sales. This is contrary to their claims of changing ways of motivating employees.
Top Leaders responsibility for Customer-Facing Employees
Yes, top leaders should be accountable for customer-facing employees. The rationale behind the decision stems from the fact that top leaders are responsible for the kind of cultures they enable or rather cultivate in an organization (Tams & Gentile, 2020). In the case of Wells Fargo, for instance, the executive team allowed for the aggressive sales culture to thrive even amidst unethical and fraudulent practices. Employees were forced to open fake accounts to meet the sales targets set for them by the top leaders. Besides, the profits they garnered from the fraudulent practices were immersed in their own pockets. In addition, whistleblowers tried to warn the top leaders to stop the fraudulence and were fired. The culture at the organization makes top leaders accountable. Also, the top leaders celebrated the wrong behavior. The reward of opening fake accounts without the knowledge of the customers should not have been celebrated in the first place. Research reveals that the way employees are rewarded greatly impacts the customer experience (Westerlund, 2019). The rewarding for opening more fake accounts resulted in numerous complaints by the customers at the organization.
Wells Fargo’s situation as an “Ethical Dilemma”
The ethical dilemma for Wells Fargo is setting unrealistic target sales goals for their employees which triggered the creation of approximately two million fake accounts. In addition, the top executives were aware of the fraudulent activities and instead of questioning, they encouraged and celebrated the unethical behavior. Another part of the ethical dilemma stems out from the way they handled the situation. The attempts made were to cover the scandal other than change the culture of the organization. Whistleblowers such as Guitron were fired and customers unprotected from fraudulent activities. From a philosophical standpoint, the ethical dilemma at Wells Fargo is interesting when viewed under the lenses of utilitarianism. The top leaders enriched their personal accounts at the expense of employees’ integrity and investors. As such the utilitarian argument is the improper optimization of personal wealth (Cavico & Mujtaba, 2017). The ethical concept is that with the optimization of the right set of interests for the leaders, ethics is served. Top leaders and employees alike created an environment where they attended to selfish interests of self-enrichment and retaining their jobs respectively.
In conclusion, Wells Fargo has taken steps such as changing the organization culture and firing leaders such as Stumpf. Based on the analysis, however, the firm needs to do more in terms of completely doing away with the aggressive sales culture to repair its reputation. Apologizing publicly may not be enough while the policies and fraudulent activities are ongoing. Changes in the culture of Wells Fargo need to be inside out.
References
Bishop, E. E. (2018). An Analysis of Motivation and Culture: Examining the 2009-2016 Wells Fargo Case (Doctoral dissertation, Indiana University).
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.
Flitter, E. and Cowley, S. (2019). Wells Fargo says its culture has changed. Some employees disagree. The New York Times. Retrieved from https://www.nytimes.com/2019/03/09/business/wells-fargo-sales-culture.html .
Forbes (2014). 10 simple ways to improve your reputation. Retrieved from https://www.forbes.com/sites/yec/2014/01/28/10- simple-ways-to-improve-your-reputation/#6cd6373e6b9f
Tams, C., & Gentile, M. C. (2020). Giving Voice to Values: Responsible management as facilitation of ethical voice. The Research Handbook of Responsible Management. Cheltenham: Edward Elgar .
