Wells Fargo Financial Scandal
An Outline
The Wells Fargo Cross-Selling Scandal
Introduction
I will examine the frustrations between the organization’s culture, financial incentives, and the worker conducts as showcased by the cross-selling scandal. The company employees opened over 2million unauthorized customer’s accounts. Therefore, I will discuss the ethical factors that led to the scandal, the bank’s actions, and the primary recommendations.
The key questions include:
How did the firm’s inducement system constitute to the scandal?
Would the system have performed better if coupled with additional metrics or controls?
What detection systems did the company require to identify the problems earlier?
What algorithms should the company executive team have taken to contain the fallout?
What are the responsibilities of particular departmental duties to help the company recover?
How does the company optimize the positive inducement contribution to culture while reducing potentially adverse outcomes?
By addressing the above factors, I will determine whether the company had adhered to the ethical principles (honesty, transparency, justice, accountability, human rights respect, and non-discrimination). Also, the company needed adherence to moral themes.
Reasons for the Scandal
- The decentralized corporate structure deterred its management functions, hence sustaining a culture of considerable civility to the venture units. The structure only integrated the corporate staffs, while sideling the customers in the assessment of the risks.
- On the performance and inducement factor, the company published an achievement scorecard for enforcing workers of selling unwanted products and opening fraud accounts for the customers. The company broke the moral theme of penalizing employees who failed at attaining the set goals. The company implemented the fifty-fifty strategy of balancing the company expectations. The high unreasonable goals escalated the cheating scope, leading to untrustworthy corporate.
- The leadership authority failed in executing their responsibilities effectively. At a greater extend, the management did not recognize the sales practice transgression scope and scale. The command leaders reduced the sales problems due to their absolute commitment to the sales culture. The management failed to bother on employee misconduct. Despite the firing of one percent of employees, the management presumed that the other workers typically behaved. Therefore, the administration dealt with conflicts or bad news insufficiently, thus damaging the company’s reputation.
Actions taken
- The company hired a consulting firm to review all the potential unauthorized accounts opened without consumer consent.
- Through the process, the company compensated consumers with a total fee amounting to two point six million dollars.
- It terminated an extra five thousand and three hundred people for at least five years.
- The executive leader of the retail department of the corporate retired.
- The company also abolished the aggressive product sales objectives and reset branch-level inducements in recognizing and appreciating customer service rather than cross-sell frameworks.
- Besides, the organization created new algorithms for account verification openings and established additional training and command mechanisms to safeguard infringements.
Recommendations
- The company needs to reframe the compensation and pay equity program. The company should include benefits, like health care, and retirement benefits, and the annual rewarding of the best performing employees.
- There should exist a mutual relationship between the branch-level workers and the senior executive. The executive decision-making process should capture all the metrics of the company.
- The company should have an internal audit that investigates the projected corporate risk. Therefore, the company should develop a framework of the problems that do not seem materialistic in a monetary perspective but have a massive material effect on the venture reputation.
- The corporate leader’s behavior should rhyme with the set company values.
- The company should focus on advocacy and awareness measures. Having a mutual relationship between the consumers and the workplace, such as individual accountability, ensures diversification of ideas.