When analyzing the case of Well Fargo and its consumer abuse and compliance breakdowns, one should note that the company should separate its banking business from the firm’s other enterprises. This can help individuals control sectors better and avoid claims from the FED. According to Tayan (2019), due to its colossal assets ($1.95 trillion) and expanding target market, Well Fargo needs to improve its management quality. This can be achieved by separating the company’s banking business from its other enterprises.
The principal-agent problem implies conflicts that arose when Wells Fargo’s authorized agents carried out fraudulent procedures without the company’s knowledge. The role of corporate governance is to meet management objectives that are designed to increase productivity and address different aspects of the business. Corporate culture, in turn, differs from governance in that it determines the firm’s external rather than internal relations and characteristics in the target market. Incentive systems may contribute to aligning culture with governance by encouraging high productivity through rewards. Separating Wells Fargo’s banking business from its other enterprises may help avoid fraudulent schemes and increase the transparency of work.
The presented discussion of Well Fargo’s case is complete and touches on a number of important aspects of the scandal that has arisen. The rationale for the need to separate the company’s banking business from its other enterprises is logical and supported by relevant references as credible sources. The definitions related to corporate culture and governance, incentive systems, and other terms complement the discussion comprehensively and allow assessing the manifestations of relevant governance principles from Well Fargo’s perspective. The suggested recommendations are reasonable and based on objective conclusions and sound arguments.
Reference
Tayan, B. (2019). The Wells Fargo cross-selling scandal. Harvard Law School Forum on Corporate Governance.