BUS520 Assignment 1 - Organizational Issues and Solutions

BUS520 Assignment 1 - Organizational Issues and Solutions

BUS520

Wells Fargo is a community-based, diversified financial services company. It has over $1.9 trillion in assets. The vision of Wells Fargo is to ensure the financial needs of their customers are satisfied. They want to be a catalyst in the overall success financially. Wells Fargo was founded in 1852 and is headquartered in San Francisco, CA. Wells Fargo has over 8200 locations, 1300 ATMS, and offers mobile banking and it services 42 countries and territories, Wells Fargo provides banking, investments, mortgage and consumer/commercial financial support to customers all around the globe. Wells Fargo has over 265,000 employees and services every one in three households in America. In Fortune’s 2017 rankings of America’s largest corporation, they are ranked No. 25.

For many years, Wells Fargo dominated in the US banking industry. They appeared to have perfected the art of “cross-selling” and were showered with praises and awards for finding new ways to extend financial products to its existing customers. While other banking firms made cut backs, Wells Fargo substantially expanded, acquiring the NC lender, Wachovia, in 2008. Because federal regulators viewed Wells as on the country’s strongest, best run institutions, the Wachovia acquisition was quite smooth. Wells operated under the values and goals that suggest they were here to do right by their customers, making their customers’ financial needs their top priority. They strived to attract, develop, and motivate the best employees who could collaborate across business and function lines to serve their consumers best. Ethics, diversity, inclusion, and leadership are values they pride themselves on in an effort to show their commitment to the highest standards of integrity, transparency, and performance.

Unfortunately, however, its reputation has completely crumbled. In 2016, a fake account scandal broke open wide. Federal regulators discovered Wells Fargo employees had secretly created millions of fraudulent bank and credit card accounts for their existing customers. The bank was initially hit with a $185 million fine, which also resulted in the termination of 5,300 employees for related reasons. However, it is thought to believe penalties and fines will reach well beyond the 300 million mark when everything is said and done. The scandal rocked Wells Fargo to its core. The blame was placed on unrealistic goals placed on employees that led to middle management encouraging unauthorized bill pay and fraudulent bank accounts for its existing consumers. Wells operated from the “tone in the middle” for its culture. Group acceptance was a great incentive so when employees saw other employees not doing the right thing but being rewarded for bad behavior to say the least, the tone in the middle prevailed. It became their culture. You have to take a look at you company when thousands of Wells Fargo employees have the ability openly engage in illicit behavior. It becomes difficult not to conclude that management at the bank simply dropped the ball. They failed to curb a culture of contempt that not only impacted its customers, but the law as well as its shareholders.

The focus from legislators, regulators, and prosecutors must now be on the tone in the middle to determine how such broad misconduct was able to thrive for so long and prevent it from occurring in the future. Areas of weakness include the lack of accountability and transparency offered by upper management. Investigations were critical in assessing the ability in which former heads allegedly cultivated a culture that led to wrongdoing. There became confusion between effect and cause. When Wells Fargo did identify misconduct, its solution was to get rid of the employees who created these accounts instead of taking a look at what causes could have contributed to their behavior or investigating what other individuals may have played a role in creating an environment conducive to this type of activity having the ability to thrive.

Organizational practices I would personally modify as a consultant for the new and improved

Wells Fargo, is to continue acknowledging there was an issue without giving excuses. Focus on remediating and fixing what was broken, first and foremost being to reestablish trust from its customers. Get the right team in place and motivate them to create a culture that their employees, customers, and shareholders altogether can trust in.

Reference Page

The Vision, Values, and Goals of Wells Fargo. (n.d.). Retrieved July 29, 2018, from https://www.wellsfargo.com/about/corporate/vision-and-values/

Flows, C. (2016, September 29). Wells Fargo: What Drives Toxic Corporate Culture? Retrieved July 30, 2018, from https://www.forbes.com/sites/realspin/2016/09/29/wells-fargo-whatcauses-toxic-corporate-culture/#79d5583149a1

Wells Fargo timeline: Bank's 17-month nightmare. (n.d.). Retrieved July 29, 2018, from https://money.cnn.com/2018/02/05/news/companies/wells-fargo-timeline/index.html

McLean, B. (2017, June 30). How Wells Fargo's Cutthroat Corporate Culture Allegedly Drove Bankers to Fraud. Retrieved July 29, 2018, from

https://www.vanityfair.com/news/2017/05/wells-fargo-corporate-culture-fraud

Frost, W. (2017, April 10). Wells Fargo report gives inside look at the culture that crushed the bank's reputation. Retrieved July 29, 2018, from https://www.cnbc.com/2017/04/10/wellsfargo-report-shows-culture-that-crushed-banks-reputation.htm