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Wells Fargo Setting the Stagecoach Thundering Again

Solution Id Length Case Author Case Publisher
2777 1445 Words (6 Pages) Mahendra R Gujarathi, Samir K Barua North American Case Research Association : NA0467
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Wells Fargo, a company based in California, started their journey on March 18, 1852. The founders of the company were Henry Wells and William Fargo. The company’s aim was to provide banking and express services. Over time, the dramatic image of a stagecoach carried by six thundering stallions came to symbolize Wells Fargo. The bank had a vision and a policy to avoid participating in unethical and criminal activity, but it also had a high-sales culture. to complete the transactions, which compelled its personnel to create 2 million illegitimate accounts without the clients' approval. The bank had to appear before the Senate Banking Committee for a hearing and received several fines from various institutions and organizations, like $100 by the CFPB and Los Angeles city attorney. For engaging in illicit actions that violated the company's code of conduct, the bank fired 5300 workers. John, the bank's CEO, announced his resignation, leaving the incoming CEO with a lot of unanswered issues.

Following questions are answered in this case study solution:

  1. Discuss the role of culture in the fake-account scandal.

  2. Identify the affected stakeholders.

  3. Reflect how, as an organizational leader, the stakeholder management approach promotes ethical and legal decision making.

Case Study Questions Answers

1. Discuss the role of culture in the fake-account scandal.

In essence, Wells Fargo has a high-pressure sales culture, also known as “decentralized corporate structure”. This practice is an unethical sales approach; it involves using a crude method in which a firm employee serving as a salesperson repeatedly pressures the customer into making a purchase. In Wells Fargo, these psychological pressures had a corrosive effect. This caused the staff to defraud their clients and open approximately 2 million illegitimate bank and credit card accounts. According to Wells Fargo, 5,300 workers were let go because of the scandal; nevertheless, these individuals were bad apples who had been fired and who are not emblematic of the larger culture and procedures of the organization. One of the former members of the company opened against this by saying that the whole of Wells Fargo’s foundation is cross-selling. This employee also claims that Wells Fargo promoted cross-selling beyond what is fair. This banking culture stands in opposition to Wells. According to Fargo's mission statement, we strive to forge lasting bonds with our clients by giving them a remarkable experience and by learning about supplying the best appropriate goods, services, guidance, and direction. The unhealthy high-pressure sales environment that the Employees felt pressured to create the fictitious accounts and violate the company was meant to be executed upon its vision. 

Due to their apparent adherence to their five core values, Wells Fargo was mistakenly thought to be a bank that upheld ethical standards while, in fact, they had none. Inside their confines, the murky business has long existed. Among many examples, they conducted an internal review that discovered an increase in "sales integrity" instances 15 years before the scandal made headlines. To meet their assigned sales goals, the employees believed they had to cheat the system. They cheated out of concern for their jobs, according to a study from August 2004. To reach their sales targets, the staff had to create millions of fictitious accounts. Employees claim that as of 2019, not much has changed after the incident and that they are still under pressure to obtain bonuses and push through deals with "no real respect." Employees were pushed into having to pull out such a deception by the firm, and therefore, in my opinion, the culture was not their fault. Even customers showed disrespect for the staff. Even during the hearing, the CEO was questioned about why he hadn't fired any senior executives or resigned, but he was unable to respond since Wells Fargo had established the culture, which was not only toxic but also crude.

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