Overview of the Wells Fargo Scandal
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 started to realize that the goal was unobtainable, they began making accounts without customers’ consent in many costumer’s names. If employees did not do this, they were fired. Therefore, after employees were fired because of this, they started reporting these things.
Government Investigation and Public Fallout
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, and the CEO reined. On top of all that, Wells Fargo 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.
Wells Fargo’s Historical Reputation
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, caring for its clients and making the services more convenient for them. It states that the bank had a positive reputation, making it credible.
Root Causes of Ethical Collapse
The reason behind the scandal connected with 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 from the employee’s work, which was the management’s fault.
Rebuilding After the Crisis
The bank suffered significantly from these actions because it paid the fine and had to cope with its spoiled reputation. Wells Fargo must prove that the organization has managed its ethical controversies and no longer engages in fraudulent activities.
Work Cited
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2020). Case 3: Wells Fargo: The Stage Coach Went Out of Control. In Business ethics: Ethical decision making and cases (12th ed., Part 5). Cengage Learning.