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Ethical challenges faced by wells fargo a research paper
Ethical challenges faced by wells fargo a research paper
Ethical challenges faced by wells fargo a research paper
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Ms. Tolstedt decided to retire in July, 2016 when the investigation was moving toward finality. Wells Fargo allowed Ms. Tolstedt to retire and take with her around $125 million in stock options while around 5300 of her former employees are getting fired for their part of the fraudulent activities. The author feels Wells Fargo did an injustice to society and Ms. Tolstedt’s former employees by allowing her to retire and take all of her stock options with her, since she should have been
In the article Wells Fargo’s Reaction to Scandal Fails to Satisfy Angry Lawmakers it mentions how lower-level employees were mainly affected by this unethical behavior and that more than 5,300 employees had been fired due to the unethical practice. Some employees were fired that did not participate in the unethical practice during the scandal were affected as well as a result of not being able to attain the sale goals. Stated in the article, How The Wells Fargo Phony Account Scandal Sunk John Stumpf, “Two former employees filed a $2.6 billion class action suit, alleging branch workers were unfairly fired when they could not meet Wells' aggressive sales quotas.” Customers also suffered because they trusted this bank and its employees to do their job right and they were taken advantage of.
Henry Wells and the Fargo was the founder of the Wells, Fargo Company. Henry Wells was the founder of the Wells and Company and Fargo was a partner in Livingston, Fargo and Company. Due to increase in the competition environment they both felt to join the American Express Company that was a major competitor. After the separation of the directors and others issues to American express, they decided to establish their own Company. On the march 18, 1852 they form Wells, Fargo & Co.
Today, Wells Fargo is widely recognized for its commitment to the Hispanic and Latino community. This commitment however, is not a recent phenomenon and dates back to before the turn of the century. Since its founding in 1852, Wells Fargo had encouraged team members to treat all customers with courtesy and respect. The once informal policy became company standard in 1888 when agents and managers were required to show “proper respect to all. Let them be men, women, children, rich or poor, white or black…”
In an attempt to save face Wells Fargo released the statement, “Wells Fargo's culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members," but in reality is this what Wells Fargo actually stands for? At no point should an employee be threatened by public embarrassment if they do not reach such ridiculous quotas. They seem to have a complete disconnection somewhere along the road between corporate and the actual everyday operations of Wells Fargo. In order to avoid this happening again in the future, they should see to it that they adhere to company culture, and receive input in their decisions further down the chain of command. Running any business should be more than just appeasement of the Board of Directors, because otherwise the ethics of everyday operations are put at risk.
In response to the incident, the company implemented many security measures to protect against future breaches. In addition, the company has experienced a limited amount of internal fraud. Most cases involved employees attempting to steal cash from the company or manipulate the company’s financial
Based on information provided by the financial institution, one could infer that Wells Fargo has a corporate culture that empowered its employees to put their own interests ahead of its customers and a “sales at all costs” culture provided the backdrop for the deed. It seems the underlying cause for the unauthorized accounts with customers’ monies was a sales culture that provided an incentive structure that rewarded employees on the more products they sold. Some employees did not open accounts requested by customers and, instead, accumulated a number of account applications to be opened at a later date. This is called “sandbagging.” Another example is some employees would tell customers that certain products were only available as a package
According to Fortune, “Executives sought to drive growth by putting undue pressure on its employees to hit sales quotas, and many employees responded by fraudulently opening customer accounts. In most cases these accounts were closed before customers noticed, but in other cases consumers were hit with associated fees or took hits to their credit ratings. The bank was forced to return $2.6 million in ill-gotten fees and pay $186 million in fines to the government. But the biggest hit Wells Fargo will take is to its reputation, as the media and government officials spent much of the year slamming the bank for its fraud,” (Mathews). The victims being the unknowing customers who saw their credit ratings plummet and faced steep financial fees, that were brought about through no fault of their own.
One recent lawsuit dealing with a financial scandal is the Wells Fargo fake accounts scandal. In 2016, it was revealed that Wells Fargo employees had opened millions of unauthorized bank accounts and credit card accounts in the names of customers, without their knowledge or consent. This allowed the employees to meet sales quotas and earn bonuses. As a result of the scandal, Wells Fargo paid a $185 million fine to the Consumer Financial Protection Bureau and other regulatory agencies. In addition, the company faced several class-action lawsuits from affected customers.
Organizational Strategy and Objectives The foundation of Wells Fargo’s strategy is its focus on customers. The company’s strategy tends to drive the choices they make and also enable them to prioritize its efforts, differential from peers, and build a lasting value for customers, employees, communities, and shareholders. The diversified business model tends to provide the company with the stability and the strength as it assures communities and customers that it exists to serve them and also the future generations. The objectives of the company are to be the leader in financial services in areas of team member engagement, customer services and advice, shareholder value, innovation, corporate citizenship, and risk management (Wells Fargo n.d).
Contracting ethical officers and on-going training would have educated employees on the proper decision making steps. This dilemma safeguarded that Wells Fargo will take a different approach with its management team, ensuring they are trustworthy and promoting the company values, as customer satisfaction and trust is the
As employees faced pressure to reach quotas, they found ways to cheat the system. If a customer came in to open an account, the employee would simply make it two or three. The intense pressure placed on employees created an environment that not only rewarded dishonesty and malpractice, but made it necessary to maintain employment. Many employees attempted to report these illegal practices to the Wells Fargo ethics line, but action was never taken and the problem escalated.
Under this approach, an action is considered morally bad because of some characteristic of the action itself, not just because the product of the action is bad. Wells Fargo unethical practices demonstrates unethical behavior, under deontological ethical theories as its employees duty to operate in an honest and fair fashion , in providing services to the public. Wells Fargo codes of conduct does not permit sales practices of these sort, therefore the employees who participated in these practices made unethical decisions. Unfortunately there was a wrong-doing on a massive scale. The acts of unethical behavior were conducted by both the employees and management.
Having an understanding to ethical consideration and accountability will improve customer satisfaction, employee performance, and the continuum for accountability ("Ethical Leadership: Fostering An Ethical Environment And Culture",
Section 1: Introduction and situational analysis: In the world of business ethics, there are certain examples and scenarios that have become a commonplace for teaching aids. In the case of Enron and its eventual downfall from a perceived highly ethical and successful company. Enron was once ranked the sixth largest energy company in the world. At the height of its success, Enron seemed to be an outstanding corporate citizen, with all the social wellbeing and business ethics tools and status symbols in place (Brinkman, 2003, p. 244). However, due to a deep culture of rewarding clever strategies to bend, break laws and codes, the company eventually collapsed and filed for bankruptcy.
