Management homework help due tonight 11:30 western time
I. Problem
On September 8, 2016 Federal Regulators announced that Wells fargo customers nationwide had been paying ghost fees on accounts they had never signed up for. Employers secretly created about 2 million unauthorized bank and credit card accounts since 2011. The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.
The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as "widespread." Customers were being charged for insufficient funds or overdraft fees -- because there wasn't enough money in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers' knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.
The bank agreed to pay $185 million in fines, along with $5 million to refund customers. Wells Fargo also said it had fired 5,300 people over the past few years due to improper sales tactics. Wells Fargo has the highest market valuation among any bank in America, worth just north of $250 billion. Berkshire Hathaway (BRKA), the investment firm run legendary investor Warren Buffett, is the company's biggest shareholder.
(Elijah - will edit it more (raw) ) “Everything we do is built on trust,” said by the Wells Fargo Chairman and CEO, John, G. Stumph according to their Wells Fargo’s Vision and Values of Wells Fargo. The company’s objectives and mission is to earn their employees and customers trust by relationship. However, their scandal tarnished their reputation. Their fraudulent acts of making accounts without the knowledge of their customers is unethically acted. At first, the managers thought that their workshop has been effectively efficient, since their employees were meeting the quota. However, belatedly they have known that it would harm them in the long-run.
Senior managers develop empowered employees through impressive strategies to have a positive result of an internal motivation. The incentive programs, for example uses higher compensation, better career paths, and recognition awards. Unfortunately, this restricts the employees to define the company by themselves. Employees wanted to personally excel in a company, however they don’t want to be held accountable for their actions. Therefore, they ended up complying with the definition the company implements. Undermining the true value of empowerment purposely made to allow employees to internally succeed, but became externally committed.
That’s why the employees did not feel responsible for unethically reaching the company’s sales goals, because they only followed what is expected from them. “Employees aren’t able to reach their goals, because they need to have their paycheck,” said by Corkery and Cowley in New York Times, Well’s Fargo Warned workers against sham accounts, but they needed a paycheck.
In reality, their goals driven by bonuses cripple their innovation and motivation. The reason behind is, due to unachievable goal, employees are pushed to commit unethically even with their two days ethical workshop. The company set a sales goal, but employees aren’t able to achieve it, therefore they become externally committed to their work.One of the reasons that employees can’t reach their sales goal is because of time constraint. Employees have to meet their quota by the deadline. The second is the unachievable goal. Though it may good to have high standards of goal, for the long-run this will hurt the company, as employees will be overly stressed. Employees ended up making fake accounts to meet their quota and redefine their goal which is to achieve the goal even if it is unethical.
Wells Fargo needs to have a realistic goal so employees won't end up unethical. They have an ethical workshop for the employees, however this does not foster the behavior they wanted to achieve, because when employees need to achieve their goals for bonuses for the most, ethics became out of the picture.
The top management does not admit, that the problem is within their own strategies, that their goals are set too high that employees are limited to deal and be innovative on how to meet it. Top managers should empower people and talk the problems out such as the goals are set too high. It’s not about reaching the numbers but also how to be innovative in achieving it. Employees become too dependent on the plans that the corporation has describe for them to do that they ended up relying on the objective instead of passionately implementing by themselves. Their morale, satisfaction, and even commitment highly affects performance.