Wells Fargo Case

Regulators in the U.S. have fined Wells Fargo $190 million on allegations that it opened more than 2 million unauthorized customer accounts and credit cards in order to meet internal targets. In relation to these allegations, the bank has terminated 5,300 employees. As a fall out the CEO has resigned and the COO has taken over as CEO. (Sarah 2016)

This problem not only affects those customers or employees directly involved with Wells Fargo but to all the stakeholders involved in the value chain of retail banking including the regulators. Making it imperative to be addressed at the earliest, since it is leading to value destruction. As, the customers will have lower reliance on banks, thus reducing the number of transactions, leading to lower

As, the concept of incentivizing sales is a common practice amongst many banks, the root cause of the problem needs to be understood. Wells Fargo can provide insights on how the problem originated and why no action was taken prior to the problem becoming a major issue. These findings should be shared with regulators and peer banks to improve the banking system going forward, thus creating shared value.

Furthermore, one of the objective of the bank is to maximize shareholders return but by not focusing on all the stakeholders, Wells Fargo will not be able to provide the desired return. In fact shareholders will lose returns as a result of not focusing on all stakeholders.

Wells Fargo should use the stakeholder management technique to cater for this issue. Below is the illustration of this using Carroll and Buchholtz (2012) technique on stakeholder management, the process of which is detailed in Appendix 1.

Firstly, let’s define what a stakeholder is. “A stakeholder is an individual or a group that has one or more of the various kinds of stakes in the organization” (Carroll and Buchholtz,

(Jennifer Dunn, 2016) Thereby building a stronger community in which they operate. However, the community can tamper the banks reputation with other powerful stakeholders, such as media, if they are not fulfilling their promises. Hence, they have both urgent and power claims on the banks operation.

Peer Banks: Some banking transactions, involve peer banks as counterparties. They may also act as co-financers. Hence, their interest in the company is also to generate revenues and profits but in collaboration. If the credit rating or even reputation is not in alignment with the policies of the peers, they may not seek to do business with that bank. Thus, if their claims are not addressed timely, this may result in lost opportunity. Therefore, they have the power to influence the company but not through a legitimate claim.

Dominant stakeholders: Are those with powerful and legitimate