Wells Fargo cases

Workers tell Wells Fargo horror stories

This first case shows, how ineffective HR can grow through the whole company and do a lot of damage resulting in incredibly high expenses for the company to pay on compensations. Also it shows, how everything in a company is interconnected and too high objectives set at the top of the company can result in a huge damage to the public opinion of the company.

I am surprised that Wells Fargo did not predict that some of the workers would come out with the message. It shows a lack of strategic planning. Also, clearly the managers have not been trained very well for their role and their behavior is the main cause of the situation described.

Of course, setting high goals is important and if the employees feel challenged they might achieve more but everything has to be done in certain limits and in this case the outcome was the very opposite from what the company expected. 

On the other hand, the things said are mostly only what the employees claimed and even though I feel compassion with them, I believe that at least some part of the employees have not suffered as much as they say and they only saw the opportunity of a financial compensation for them. I think those cases must be really tricky for the court and often it is just a word against another word.

Letter warned Wells Fargo of 'widespread' fraud in 2007 

From what I've understood, there has been some serious issue for this company where opening of fake accounts has been reported and the CEO was not aware of this for a long time. In this article, it is stated that actually the CEO knew about the issue much sooner than it is stated.

It is really scary that in such a large company, unethical and even illegal behavior has become a standard business practice. It it thus hard to believe that the CEO did not know about those events.

I see a link here to the topic of financial reward and compensations. In the book there was a section about the CEO salaries and I think here we see it in practice- even though CEOs get paid an incredibly high salary, which for many people is not understandable and they require justification. Usually employees feel that the TOP management does not work as hard as them and they feel like the managers actually 'steal' from the employees salaries. In this case we can see how huge amount of responsibility the management actually has to bear. The CEO is the main figure in the whole company- if the company is doing well, he gets rewarded but if the company is doing bad he is called as the main responsible. Employees, who have been engaged in illegal practice under management's orders might even get compensation and they are looked at as the poor ones, while the CEO has to spend hours at court and even go to jail, because he simply let something like that happen in this company.

Inside Wells Fargo, workers say the mood is grim

In this case, we can see, how incredibly damaging a situation like this can be to the whole organization. Even workers, who have not been directly involved now feel bad about working for the organization and there is an overall mistrust among all people within the organization. It is really crazy how horrible the current atmosphere is at the company, I can imagine that people fear to come to work and the job has become something they just go to earn money, they are not motivated to perform above average, to help the company grow, they cannot see some common objective they work towards.

People, who have been involved in the  issue are now blamed because they tried to defend themselves and are now made feel bad for what they did. Even though clearly- they did the right thing from the ethical point of view. I don't actually even understand, why they continue working for this company, when it has done so much bad to them. Again the CEO states that everything is improving and that they are getting the situation under control. But how much of that is actually true and to what extent it is only about trying to improve the already very damaged public picture of the company. 

Again, in this article we only hear one side of the things and situations of employees, who have been negatively impacted by the scandal. Thus, the size of the issue might be different if we heard both sides of the story.

Most feared Wall Street prosecutor warns bankers against silence

Clearly, a scandal of such size as the one of Wells Fargo, has to have a some kind impact on the whole industry at least on a local scale. As we can see in this article , other Wall street banks have started to put emphasis on an ethical behavior of bankers realizing, that unethical behavior is not sustainable in the long term. I think it is really good that other banks have taken action to prevent such situations at their organizations.

It sends a very good message for the employees, who get ensured that they are not engaging in unethical practices of the company but also to the public picture of the company, since it shows that they have recognized a problem that has occurred in the banking field and are taking actions to do something about the situation.  

Wells Fargo boss urged to resign over accounts scandal

This case corresponds with what I said about the CEO responsibility. In his speech at the court he uses a lot of big words and his sentences are predictable in a way that- well what else can he say about a scandal of this scale than that he is sorry:

'I am deeply sorry we failed to fulfil our responsibility," said Mr Stumpf, before a hearing of the Senate banking committee.
"There is no question with some of our customers we violated trust," he added.
"We never directed nor wanted our team members to provide products and services to our customers that they didn't want.
"That said, I accept full responsibility for all unethical sales practices,"

The problem I see here is, how much of it does he actually mean and how much of it actually true. I think in situation like this, there is no way to 'save' it but I suppose the goal is to minimize the outcomes. 

Sources

CNN Money. Inside Wells Fargo, workers say the mood is grim. Available from: http://money.cnn.com/2016/11/03/investing/wells-fargo-morale-problem/index.html. Accessed 4.5.2018.

CNN Money.

Letter warned Wells Fargo of 'widespread' fraud in 2007. Available from: http://money.cnn.com/2016/10/18/investing/wells-fargo-warned-fake-accounts-2007/index.html. Accessed: 4.5.2018.

CNN Money. Workers tell Wells Fargo horror stories. Available from: http://money.cnn.com/2016/09/09/investing/wells-fargo-phony-accounts-culture/index.html. Accessed: 4.5.2018.

CNN Money. Most feared Wall Street prosecutor warns bankers against silence. Available from: http://money.cnn.com/2016/10/20/investing/preet-bharara-bank-culture/index.html. Accessed: 4.5.2018.

CNN Money. Wells Fargo boss urged to resign over accounts scandal. Available from: http://www.bbc.com/news/business-37419968. Accessed: 4.5.2018.