marketing

W wie brand. They believe that many customers prefer buying from firms that share their values and that if a company supports a cause the consumer ted with the implementa that share their values III 3. Are there ethical risks associated with their tion of Sseko's strategy? Strategic Case 2 Not So Well: The Case of Wells Fargo Wells Fargo, one of the largest banks in the United States, is in hot water. The Consumer Financial Protection Bureau fined the bank $185 million after it opened 2.1 million unauthorized client accounts and services that lowered customer's credit scores. About 5,300 employees were fired for falsely opening accounts and forging client signatures. Wells Fargo reached a $110 million settlement to resolve a civil class action complaint. The bank issued a statement that This ement is another step in our in consumers and rebuild t h ey to make this A culture for Fraud conduct at War al pressure plays a key role in creating eshical the discovery on Decame clear that A wells Fargo went way beyond fraudulent bank Sushsequent investigations paint a picture of ulture where dient activities were en les goals. A letter addressed to forme CEO from 2007 was discovered describine how are opening fake bank accounts and forine ank's aggressive sales quotas. Those corporate culo ed to meer sales John Stumpf from employees were o conducted an investigation of w e employees who had made calls to the comes with concerns sales practices at the company. Is ia memaines ved that there for www tead there was evidence of ion Corporate against while b eispiel, but only 2 percent of the tower of the glorye. Yeone whistleblower has already wo w w inst Wells Fargo, sering more may follow. The few mployee wo S5 Amico to cover back pay co m es, and legal fots. This is the largest india wwwdered to date under the Occupational Safety and Health Administration's (OSHA) whistleblower peotection program. OSHA vardered the bank to chire the employee Moreployees began to of horrific stories of bully being disciplined, of all ated against for complaining about being of rewing to bs, forced to make quotes by signing men for now accounts without their consent which led to meet ention. As a result, Stumpf publically stated his back the management practices and immediately fired more than signatures to meet the bank Evidence also sup activities. When Mas often to ing into the roor COV , which former employees, attribu cul or a decent also placed Wame hank unit, Carrie Tolsted were too high, and and sales promotions adde 5,300 employees. Stumpf resigned as CEO and was replaced by Timothy Sloan. Under Sloan, Wells Fargo reviewed calls made to its ethics line over the past five years in which all o wed themselves more than 40 percent of the time. A also investigated cases where employees were terminated within 12 months of making a call to the ethiss line 1 confirmed a few cases "raised questions." Without ethics and complia Exchange Commission (SEO failed to report on suspicious activities did not meet quotas were fired also suggests managers approved of these the misconduct was identified, the bank's solu Dento terminate employees without investigat mot cause. An investigation by a special board which included 100 interviews from current and wawees, attributed the scandal to a "sales-oriented entralized corporate structure. The review a blame on the former head of the community Carrie Tolstedt. It became evident that sales poals ang high and retail scorecards, instituted by Tolstedt promotions added significant pressure. Employees she goals could only be reached by cheatine thics and compliance programs and uni- and policies regarding conduct, it is hard employees to determine what conduct is acceptable in the company. An investigation by the Securities and mmission (SEC) revealed that Wells Fargo on suspicious activities related to money The Surveillance and Investigations group. which had pre had previously been applauded for its diligence in such incidences, received different directives under gement. They were instructed to only record facts and final decisions in the bank's internal case management system. Wells Fargo paid a penalty of $3.5 million With regard to organizational struc- ture, chief executive officers often set the ethical tone for the entire marketing orga- nization. Although the former CEO claims he never saw early emails describing the fraud, numerous employees claim they became whistle blowers, sending letters to the board's audit committee and calling the ethics hotline about the fraud. The result? They were fired. Consumer Trust Many consumers and companies lost trust in Wells Fans Once trust is lost, it can take a long time to rebuild The scandal was so widespread that nearly a year after the initio fallout, more than 1 million additional possible fraudule accounts were discovered bringing the number of potentia unauthorized accounts to 3.5 million. In addition to the WELLS FARGO WELI FARC 107 Whistle-Blower Retaliation Many employees are concerned about ret- Mbution when making a decision to report potential misconduct externally. Wells t Questions for Discussion 1. Evaluate how Wells Fargo treated its primary stakeholders. 2. How can a division, like sales, operate with such a different ethical subculture? 3. How can Wells Fargo, going forward, prevent unethi subcultures from damaging its brand and reputation