Introduction
This case study summarizes that a very well-known bank, Wells Fargo, has been around for a long time. Upper management had unrealistic sales goals that they wanted their employees to meet. When employees realized that the plan was unattainable, they began making accounts without customers’ consent in many customers’ names. If employees did not do this, they were fired. Therefore, after employees were fired because of this, they started reporting these things.
The government began an investigation to look into these allegations, finding out they were true. In that process, Wells Fargo had to pay back millions of dollars to customers and employees, the CEO resigned, and on top of all that, Wells Fargo had lost the trust of its customers. It states that Wells Fargo’s reputation suffered due to the fines and restrictions imposed on the bank, but the financial institution could not control the problem at the stage of its development.
Corporate Culture
Wells Fargo had an excellent reputation for more than a century, and it was destroyed because of the unethical actions of the senior management and the unrealistic setting of the goals for the employees. The bank was established at the end of the 19th century, and from that time, it promoted the policy of equal treatment for all clients regardless of their gender, social status, or racial background. These ideas of inclusion and diversity were unique then, and Wells Fargo embraced them before they became mainstream. In addition, the bank actively promoted technological innovations, cared for its clients, and made the services more convenient for them. It states that the bank had a positive reputation, making it credible.
Stakeholders Involved
The stakeholders involved in the case were clients, bank employees, and Wells Fargo’s higher management. Not all participants were consciously aware of the situation, which led to ethical and legal problems. For example, managers knew about the fraudulent practices of the employees because they set unrealistic goals concerning the number of new accounts themselves. They created the monthly and annual plans, meaning managers signed these requirements.
At the same time, they did not directly imply that the employees had to engage in fraudulent activities, even though the goals were unrealistic. From the legal point of view, managers were not responsible for falsifying the signatures of the bank’s clients. The employees, in their turn, were fully accountable for their actions, and the fact that they had no other choice, in this case, does not make them less guilty from the legal point of view. Clients of the bank, whose signatures were forged, were the definite victims of the manipulations that the employees of Wells Fargo made.
Ethical Issue Classifications
The scandal, connected to the bank’s fraudulent activity, was the inability to share responsibility among the employees. The high-level executives set the goals, and other employees in the bank had to meet them. As a result, they started to open bank accounts for people who did not exist and were caught in signature falsification (“The Wells Fargo Case Study” 2). These actions were part of meeting the goals of the incentive and compensation program set by the bank’s CEOs. The situation was the logical consequence of the unrealistic expectations of the employee’s work, which was the management’s fault.
Another vital detail was the fraudulent activity of the bank employees and the falsification of the signatures of the bank clients. Managers set such requirements of work that the employees were fired if they did not create accounts without customers’ consent (“The Wells Fargo Case Study” 2). In other words, they used people’s personal information and opened bank accounts without permission, signing on their behalf. These actions were unethical and criminal because they violated the laws. It allows us to classify the discussed ethical issue as fraud and falsification.
Ethical Dilemmas
The employees of Wells Fargo faced the most severe ethical dilemma because they had to choose between their job and breaking legal and moral rules. It is unlikely that the bank employees would forge signatures and open fake bank accounts of clients without their consent if their manager does not approve it. In addition, they understood that if they rejected, they would lose their position.
These people needed to provide for their families and themselves, and they needed their salaries, so they agreed to open fake bank accounts (Day 300). The bank, in its turn, imposed illegal and unethical responsibilities on them. Even if these employees understood that they were engaged in fraudulent activity, they preferred not to think about their moral responsibility for it.
Social Responsibilities Involved
The bank suffered significantly from these actions because it paid the fine and had to cope with its bad reputation. In 2016, when the fraudulent activity was disclosed, Wells Fargo had to pay $185 million as a fine to the Office of the Comptroller of the Currency (“The Wells Fargo Case Study” 2). In addition, approximately 2 million clients of the bank required financial compensation for the actions of Wells Fargo after its employees opened credit and bank accounts without their signatures (“The Wells Fargo Case Study” 2).
The allegations against the bank led to the official termination of more than 5000 employees who participated in the fraudulent actions (“The Wells Fargo Case Study” 2). This information shows that Wells Fargo had to pay for the damage to the state and its clients. The employees who were made to participate in the fraudulent schemes suffered because of the actions of their managers without receiving compensation for it. Instead, they were only punished according to the law because they were responsible for opening the bank accounts without clients’ permission and forging signatures.
Conclusion
Wells Fargo must prove that the organization has managed its ethical controversies and no longer engages in fraudulent activities. The bank has destroyed its reputation, and most clients will not choose this organization because of the previous cases of creating credit and bank accounts without obtaining clients’ consent. In addition, such episodes cannot be forgotten in several years, and it is a comparatively new case.
Wells Fargo has to pay fines to people who suffered from its fraudulent activity and has several active court cases (“The Wells Fargo Case Study” 6). The bank has changed its board of directors because the previous one was accused of fraud (“The Wells Fargo Case Study” 6). The organization understands that the unethical conduct of Wells Fargo will be an issue of concern for many years, and it tries to attract and retain its clients using all possible methods (“The Wells Fargo Case Study” 6). Wells Fargo’s current strategies are not as effective as they used to be, but they are legal and ethical.
Work Cited
Day, Kathleen. Broken Bargain: Bankers, Bailouts, and the Struggle to Tame Wall Street. Yale University Press, 2019.
n.a. The Wells Fargo Case Study. n.p., 2023.