A Current Business Topic That Involves Unethical Behavior
Despite its corporate vision of serving as a trusted provider, Wells Fargo’s indiscriminate sales targets and poorly structured incentive scheme nurtured and encouraged unethical business practices. In 2016, America’s fourth-largest banking institution admitted to exerting immense pressure on its customer-facing employees to accomplish unrealistic sales quotas, triggering an explosion of organization-wide malpractices. From 2002 to 2016, the company’s workforce opened millions of unauthorized accounts in customers’ names without their authorization and knowledge. An investigation into the long-running fraud revealed that employees falsified clients’ bank records, forged their contacts and signatures, and even transferred funds across accounts to levy service fees (van Rooji and Fine 1). The toxic corporate culture was attributed to rigid and indiscriminate targets set by the management and an incentive scheme that stimulated the employees’ desire to earn more through dubious means. Although setting goals enhances staff productivity, excessive managerial influence on the workforce may spur inappropriate behavior and the eventual compromise on organizational ethics.
The Business Ethics and the Breakdown of Moral Values
Wells Fargo, a prominent financial institution in the United States, enjoyed tremendous reputation for ethical practices and excellent management and leadership. However, the firm was recently embroiled in a decade-long scandal, which has been classified as an organization built on a culture of deceit and deception. A comprehensive audit of the organization revealed that the employees opened millions of customers’ accounts using their details without their knowledge and consent, sometimes forging their signatures, leading to a $185 million fine (Reuters). Consequently, thousands of clients ended up paying or incurred penalties, fees, and interest payments on services they had not procured. Wells Fargo’s acclaimed organizational culture and foundational ethical ideals failed to protect the firm’s decision-making processes, resulting in the blatant violation of best practices.
Additionally, the scandal reflected the rampant disregard of ethical responsibilities and sustainability of the firm’s practices. For instance, exerting excessive on employees and even inducing them to apply devious means to enlist as many new bank accounts as possible breached the duty of care owed to its customers. The strategies applied by the management disregarded the creation of long-term value for its clients and instead upheld the pursuit of bottom lines and profitability. This implies that Wells Fargo’s executives established an environment which promoted unethical behavior, deceitful practices, and dishonest engagement. Therefore, the management’s failure to formulate attainable quotas reflected a poor understanding of sustainable operations.
Measures to Correct the Unethical Behavior
Wells Fargo engaged in an overly aggressive sales tactic which exerted immense pressure on employees to open new accounts and issue credit or debits to increase the firm’s profitability. The company also developed poor incentive schemes attached to the employees’ revenue generation. Flitter and Cowley note that the company also imposed punitive measures for employees who could not meet the ambitious sales quota, with many who could accomplish the targets being fired. From this perspective, one intervention which could rectify the unethical conduct is to create an organizational environment which minimizes the workforce exposure to situations which could trigger malpractice. For instance, the high-pressure performance demands, which disregard the impracticality of the set targets, should be removed through policy and objective changes. The firm should redesign its business model to become service-oriented instead of measuring its success on quantifiable metrics such as the number of accounts opened by an employee. Moreover, the incentive scheme should be abolished since it promoted deviousness as a means of earning hefty bonuses.
Conclusively, the organizational cultures established by firms should be a guiding framework on which business operations should be conducted. This implies that all processes should reflect the firm’s commitment towards advancing ethical practices and avoiding scenarios which could incentivize malpractice. Wells Fargo’s fraudulent account scandal amplifies the need for executives to formulate practical policies, such as sales quotas and incentive schemes, which do not compromise the firm’s ethical standards.
Works Cited
Flitter, Emilly, and Stacy Cowley. “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.” The New York Times, 2019, Web.
Reuters. “Wells Fargo Faces Costly Overhaul of Bankrupt Sales Culture.” Reuters, 2020, Web.
van Rooij, Benjamin, and Adam Fine. “Toxic Corporate Culture: Assessing Organizational Processes of Deviancy.” Administrative Sciences, vol. 8, no. 3, 2020, pp. 1–38. Web.