Wells Fargo Banking Scandal

Intro:

Wells Fargo has become a household name and has a range of financial products and billions in assets. Wells Fargo is one of the few banks that spans centuries with a history of products that date back to the 1700s. Over the past few decades Wells Fargo also became popular with investors because of the high returns on Wells Fargo stocks. The culture of Wells Fargo became one of upselling and cross-selling to get customers to buy more products. Bonuses were based heavily on how many products employees could sell. Employees were encouraged to always sell to customers regardless of need. "Eight is great," was the Wells Fargo mantra, which simply means that every Wells Fargo customer should be encouraged to buy eight Wells Fargo products. This phrase was started and touted by CEO John Stumpf's and permeated throughout the company.

In September 2016, it was discovered that Wells Fargo employees had created over 2 million unauthorized customer accounts. Employees stated they felt forced to hit sales quotas and were micromanaged by their superiors. These employees said they were tracked by the minute, and those supervisors pressured them to sell more than they were able. Wells Fargo was forced to pay $185 million in fines because of these fake accounts.

Do some research on Wells Fargo. Be sure to focus on how the CEO and top officials led before and during the scandals.

Then answer thequiz questionsbased on your research and information contained in your textbook.

sources :

*https://money.cnn.com/2018/04/24/news/companies/wells-fargo-timeline-shareholders/index.html

*https://www.usnews.com/opinion/articles/2016-09-19/wells-fargo-problem-is-fake-accounts-were-part-of-the-profit-system

*https://thefinancialbrand.com/55877/wells-fargo-cross-selling-culture/

Questions:

Wells Fargo's culture:

1.How would you describe the culture of Wells Fargo before the scandal?

2.Where do you believe the culture started? Give some examples.

3.CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not honor the company's values and that there were no incentives to commit unethical behavior. Do you believe this is true? Why or why not

4.Were middle managers partially to blame for the Wells Fargo culture, or is this a result of upper management? Explain.

5.What should business leaders take away from this scandal?

6.What could Wells Fargo have done differently to avert this cultural meltdown?

7.What should the Board of Directors have done when they heard about the scandal

8.What behaviors can leaders model to promote ethical behavior in their organization?

9.Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behavior, but they didn't work. Why do you think that is?

10.What steps can leaders take to design systems that encourage ethical behavior rather than unethical behavior?