Wells Fargo: the Accounts Scandal

November 2019

Nadine Shehadeh

One might ask, how can a company balance autonomy and accountability? 2016 saw one of the most prominent financial scandals of the decade as Wells Fargo’s fraudulent practice of cross selling and opening unauthorized accounts came into light. With roughly 3.5 million accounts opened under false pretenses, Wells Fargo has entered an era of public scrutiny, Federal interference and major internal organizational changes.

This case explores various moral and ethical dilemmas, the main one being corporate culture and the treatment of employees in relation to the culpability of the organization. As the case progressed, Wells Fargo’s culture had been called to question as it has been revealed that a high amount of pressure had been applied to employees from superiors thus sparking the chain of fraudulent activity. The entire performance and incentive structure was based on the ideology that the goal-setting process was a balancing act, meaning low goals cause lower performance and vice versa, hence the increase in employee participation in working towards incentive rather than authenticity.

Moreover, the senior management at the company had denied accountability of applying pressure on employees and rather than taking responsibility, CEO John Stumpf and the rest of the board of directors have chosen to stay within their positions while employees suffer the consequences. This however, did not resonate well with Federal agents and representatives like Senator Elizabeth Warren who labeled Stumpf’s leadership style as “gutless” and expressed “ At best, you were incompetent. At worst, you were complicit.” From a moral standpoint, the atomic view of organizational responsibility introduced by Susan Wolf is applicable to the sales culture at Wells Fargo in that the organizational structure of hierarchy ultimately concludes the notion that individuals within an organization should take accountability for the company’s actions. While Wells Fargo claims this scandal is the fault of 1% of the company, its structure denotes this view as their company morals suggest employees are under the supervision and management of its board and CEO therefore the hierarchy should take any and all responsibility for any fraudulent activity carried out within the firm. This however, was not the case during the trial proceedings as Stumpf claimed, “I’m not aware of any overbearing sales culture”, and was forced out, along with forfeiting $41 million by the board and federal agents.

The outcomes of this scandal suggests that workplace culture heavily influences the output of the organization, therefore incentive and rewards can be used to great effect, however when combined with unattainable goals and inefficient ethical guidance an unhealthy environment is expected. Wells Fargo has effectively demonstrated a failure in risk evaluation and management, and if they wish to continue to stay a banking giant, the attention to ethical compliance issues when implementing strategic schemes is imperative. For the bank to operate with a conscientious CSR approach, the incentive structure needs remodeling to encourage authentic output and prevent falsified activity, along with sufficient training and proper incentive recognition. In the end, Wells Fargo’s senior executives ultimately led the bank contradicting to their core values and the outcome of this scandal demonstrates that autonomy must be regulated and limited in organizations in the pursuit of accountability throughout the entire firm.


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