Introduction
Wells Fargo is one of the American international financial service companies that provide banking services. Conversely, the enduring vision of the company is what the management authority has considered to have the potential of assisting its customers to thrive financially. There are various values that have the ability of making the company to achieve the goals of its establishment (Pastin, 2013). For instance, the management authority regards their customers to be the cornerstone of anything that they do. The reason for that is because the desire of the company entails exceeding the expectations of their customers as well as building a long lasting relationship with them.
On the other hand, the company has been striving to develop, inspire, attracts, as well as retain its resourceful team members that have the ability of collaborating with other business organizations. As a result of that, it means that the company is committed the highest standards of transparency, integrity, and principled performance. Doing the right thing in the right way is what makes its management authority to be accountable for any mistake that might evolve (Anthony, 2010). In return, it is evident that gives the company the potential of promoting diversity in all aspects of the organization. The reason for that it is because it has been realized that the general success of any business mainly emanates from incorporating and inviting diverse perspectives.
Research indicates that people are meant to be leaders taking into account the role they play within the organization. Because of that, another objective of establishing this company entails leading team members, governing their actions, and that of the business as a whole. This takes into account offering equal opportunities to team members, communities, customers, and shareholders. In order to be in the position of ensuring that the company has become the financial service leader, it is crucial to respond to customer complaints or suggestions. To do so, the management authority takes the responsibility of listening as well as understanding the needs of their clients as well as their financial goals (Moody & Mays, 2005). The reason for that is because it is the one that enables the company to continue offering exceptional services and guidance to aid them to excel financially.
Since the establishment of this company, team members are one of the factors that have been perceived to be valuable resources. The management authority ensures that each employee feels valued, supported, and respected which in return enables them to achieve the goals of the company and their career objectives. As a result of innovative thinking, desire to test and learn, industry-leading technology, it is possible to create value for their potential customers. This has the ability of increasing the efficiency of its day-to-day operations (Chandler, 2006).
What caused ethical collapse?
In the process of working or setting the global standards that aid in managing the activities of the company, the desire of the management authority entails ensuring that the needs of their customers have been met. This in return has the ability of protecting the company’s assets, privacy, and information. The company has also been in the position of positively contributing to the community through advancing diversity, compassion, and inclusion. In the long run, it is becomes easier to create economic opportunities as well as promote environmental sustainability (Chandler, 2006). The objective behind this also entails creating or delivering a long-term value for its shareholders via a strong risk discipline, balanced business model, a world-class team, and efficient execution.
The vision, mission, and vision of the company are one of the fundamental factors that used to foster its day-to-day operating activities. This is to imply that the company was absolutely trying to operate an ethical business despite its huge blunder. Because of that, the scandal that enveloped the company is what mainly teaches other business organization the importance of running an ethical business. Initially, the company had a fiduciary responsibility of treating its potential customers fairly (Pastin, 2013).
The bank used to offer different services before setting unrealistically high sales goals to its employees. This in return ended up encouraging many workers to game the system. For instance, in case a client purchased one service, workers were advised to cross-sell more of it. The only option that its employees used in order to meet such unrealistic sales target entailed making up accounts that clients had not yet requested for. The intention here was to ensure that the workers have maintained their work. In return, it was realized that millions of fraudulent accounts had been fabricated by employees so as to keep their bosses happy (Anthony, 2010).
Economic research indicates that it is important to have created and maintained the trust they have with their customers. The reason for that is because a healthy economy is always established on a strong foundation of banking. So as to be in the position of building and maintaining that, there have to be a system to aid in monitoring as well as penalizing misconduct against the clients being dishonored and taken benefits of by their banks. Taking into account the vision, mission, and values of Wells Fargo Company, ethics used to be one of its five principal values. Regardless of that, it was later discovered that this was a value that was not respected (Moody & Mays, 2005). According to the information that was published by the CNN Money report, it suggested that there were various workers who failed to flag proper sales tactics hence forcing the management authority to fire them.
Although this retaliation is perceived to be shameful, the truth is that the company had already set up an ethics hotline as well as implementing different ethical training. However, the bank ended up punishing workers who had the ability of doing the right thing and the right time as well as reporting their misconduct to the company (Chandler, 2006). Another mistake the bank did was driving away workers, for instance, financial advisers, who had already noticed the unfair and harsh practices of the bank. When a person decides to change his or her bank, it will only depend on the integrity of their financial advisors (Anthony, 2010).
How did the top leadership at Wells Fargo undermine the foundational values of the Wells Fargo code of ethics?
Taking into account the transformations that other business organizations are experiencing, it means that massive technological advancement is one of the factors that have played a crucial role in driving new businesses models and products. Despite that, it has been realized that “fintech” start-ups have already started disrupting traditional way of handling businesses to the extent of bringing the required efficiency to the banking sector. This takes into account the manner in which digitization have managed to change the primary way that financial institutions used to operate (Moody & Mays, 2005).
Innovation is perceived as being one of the important factors that are used to foster sustainable growth in the banking sector in the near future. The reason for that is because innovation within the banking sector is regarded to be an important fact that aid in controlling the functions of banks. Apparently, it was noted that a huge gap existed between the expectations of the consumers in this area as well as banking leaders’ progress in enhancing innovation. This implies that the management authority of Wells Fargo had extremely failed to nurture an environment in which innovation and other new ideas could have been appreciated. The reason for that is because this is the main foundation for developing new products and services (Pastin, 2013). Its main focus was on cross-selling as well as driving thousands of workers to participate in inappropriate sales conduct with their clients.
As stated above, the root cause of the ethical collapse is because of the lack of accountability within the organization. Nevertheless, it should be kept in mind that the accountability of the company’s external shareholders was still lacking. According to the report that was recently published, Wells Fargo used to be the leading consumer cross-selling financial institution amongst the American banks. Regardless of that, one area of concern is whether the management authority really had this focus on cross-selling (Chandler, 2006).
As noted, one of the main reasons is because the focus of its management authority seemed to be too concentrated on the company’s short-term return. Economically, it has been proven that with cross-selling, it is easier to acquire customers quickly as well as making such an acquisition to be relatively cheaper. Because of that, it implies that the bank had the potential of reporting to its potential investors that it was more profitable using such a strategy (Hill, 2011). For instance, one of the former head of the company was about to escape with millions of money which in return resulted to the firing of employees as well as jeopardizing their career under his leadership.
Ideally, as potential investors and customers, it is important to evaluate the transparency that exists within the banking sector. The reason for that is because such organizations always interacts with customers and companies that associates with them. What its management authority failed to take into consideration is to understand their metrics for success for both the short-term and long-term visions. It is important to ensure that the management authority have had the potential of assessing their success so as to develop extra mechanisms to be used in enhancing or increasing the profitability of the business.
On the other hand, the company failed to raise the bar for its corporate governance. In the process of utilizing or investing the resources of the company, this is one of the fundamental areas that increase the chances of meeting the objectives of its establishment. As noted from above, having a vision that has the ability of meeting the company’s core values is one of its priorities. Regardless of that, what its management authority failed to take into consideration is monitoring the manner in which its internal policies are formulated, implemented, and met (Hume et al., 2010).
How did Wells Fargo Corporate culture promote unethical decisions and actions?
In the modern business world, any business organization should have the ability of creating ethical cultures that has the potential of wining customer loyalty. The reason for that is because it is the one that enables it to safeguard its long-term performance. Furthermore, its management authority needs to have the ability of bearing the ultimate duty of promoting tactical behaviors. In the act of punishing transgressors and rewarding ethical behaviors, it implies that it is possible to reinforce morally upright behaviors as well as creating a positive culture within the company (Hill, 2011). The efficient promotion of business ethics is the one which will in return assist in boosting workers’ morale retain them as well as increase business performance in the long run. With the absence of a strong behavioral reward system and a well-structured ethics, it means that the company did not have the necessary tools in place to assist in creating an ethical culture.
Another reason is that the existence of unauthorized accounts with clients’ monies is one of the sales cultures that had the potential of providing incentive structure for rewarding employees. Such incentives were ultimately based on the amount of products that the workers managed to sell. According to research, it was later realized that a large percentage of the workers had failed to open accounts that were initially requested. What they did involved accumulating several account applications which were to be opened later (Hume et al., 2010). What followed is that some workers continued to inform their esteemed customers them that some products can only be available only with additional retirement or insurance plans. This then implies that the culture of Wells Fargo is the one that failed to foster incentive-compensation program. Such a program is the one that was to enhance sales practices that do not take into account proper oversight. Therefore, the management authority of the company should be blamed for lacking the potential of establishing internal controls that has the ability of preventing such practices (Hill & Jones, 2013).
How did the investment banking community contribute to the ethical collapse of Wells Fargo?
Taking into account the investment activities of the banking sector, it is evident the company had already managed to instill and maintain a reputation of sound management. From the information collected, it is evident the existing banking community had extremely failed to identify the relationship that existed between the bad behavior and the goals of the organization through engaging in unethical activities. For instance, as the sales of the community became more and more difficulty o achieve, a lot of banking misconduct arose from other banking sectors (Eileen, 2012). It was later realized that the majority of the individuals who had already participated in such misconduct were already associated with the unethical behaviors of other banking institutions.
On the other hand, in the process of managing the risks that their banking sector was experiencing, the banking community had ultimately failed to work in line with the requirements of the company, group risk officers and so on. As a result of that, it was impossible for the company to be in the position of spreading decision-making amongst themselves. The significance of this is that it could have enabled the company to produce better business results since its management authority was closer to their customers (Hill & Jones, 2013). Another reason that made the company to ethically collapse when associating with other banking community is just because of the failure to control its functions so as to understand the systematic nature of the other banks.
Conversely, the adoption of the control functions by other banking community made the company to adopt narrow transactional approaches that could have not enabled it to prosper. Basically, the general focus of individual lawsuit or employee complaints is something other banking sectors failed to addresses. Some of the operational risks that other banking sectors had experienced were kept secret to the management authority of the Wells Fargo Company. This is return deprived it the potential of reviewing compensation issues or sales practices that was impacting the compacting as per that time (Plunkett, 2008). The reason for that is because they could have considered the scenario as being something that was ultimately contained, well-managed by the organization.
Legally, other banking sectors made it evident that the management authority of the company could have lacked the ability of quantifying its financial activities. The reason for that is because the management authority of the company was already confident in handling the sales integrity issues that were initially reflected in the systematic breakdown. As a result of that, it was evident that its human resource did not have a great deal of information that could have enabled them develop other means of consolidating sales information. Generally, it implies that the processes and controls that were used by the existing banking sector did not have the potential of detecting, investigating, and remediating sales practice desecrations by the company (Eileen, 2012). This is what made it impossible to determine the main root cause of such unethical practices.
Conclusion
Taking into account the information collected above, it implies that although the advisability of the general centralization is one of the subjects of disagreement within the company, the events that transpired indicates that there still existed a strong centralization risks in the banking sectors. In the process of emphasizing the need of meeting the goals of its establishment, cross-selling is one of the metrics that the company used in rewarding incentive payment to its esteemed workers. Although the company had managed to publish scorecards that were aimed at ranking its branches on sales metrics, the truth is that they all failed. Other than using such a mechanism in enhancing its incentive systems, the program could have somehow functioned properly if it could have been structured differently.
On the other hand, the pressure that the workers experienced was also one of the contributors of ethical misconduct as compared to financial incentives. Such deceptive practices were already acknowledged by the management authority but there was no action taken to correct it. Together with the banking community, this is what made it employees not to be able to meet their goals in an ethical way.
References
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Chandler, R. J. (2006). Wells Fargo. Charleston, S.C: Arcadia Pub.
Eileen, P. F. (2012). Ethical Lessons of the Financial Crisis. Routledge Press
Hill, A. (2011). Reimagining equality: Stories of gender, race, and finding home. Boston, Mass: Beacon Press.
Hill, C. W. L., & Jones, G. R. (2013). Strategic management: An integrated approach. Mason, OH: South-Western, Cengage Learning.
Hume, J. B., Thacker, J. N., & Wilson, R. M. (2010). Wells, Fargo & Co. Stagecoach and Train Robberies, 1870-1884: The Corporate Report of 1885 with Additional Facts About the Crimes and Their Perpetrators, revised.
Moody, R., & Mays, V. (2005). Wells Fargo. Lincoln: University of Nebraska Press.
Pastin, M. (2013). Make an ethical difference: Tools for better action. San Francisco, Calif: Berrett-Koehler Pub.
Plunkett, J. W. (2008). Plunkett's Banking, Mortgages & Credit Industry Almanac 2009: The only complete guide to the business of Banking, Lending, Mortgages and Credit Cards. Plunkett Research Ltd.
