Well Fargo Ethical Dilemma

This article discusses the unethical behavior by Well Fargo personnel that led to a $185 million fine for generating around 2 million fake accounts. The article identifies the main problems and concerns, how they developed, and who was responsible. It also suggests ways in which the problems could have been avoided and organizational behavior concepts that could have been applied. The article also highlights the organizational behavior problems that occurred and what actions were or should have been taken to solve them.

Running Head: WELL FARGO ETHICAL DILEMMA
Well Fargo Ethical Dilemma
Name
Institution

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Well Fargo Ethical Dilemma
Identify and discuss the main problems or concerns mentioned in this organization.
In September 2016, an investigation was held concerning the unethical behavior by Well
Fargo personnel. During this time, Well Fargo was issued with a $185 million in terms of fines
for generating around 2 million fake accounts besides 500,000 credit cards, which its clients not
at all approved. It was found that the majority of the Well Fargo staff made additional accounts
under the names of their customers without their knowledge and accrued bank fees from the fake
accounts that were created. There was not a trivial number of fake or falsified accounts that were
created by the employees-2 million fake accounts were created. The unethical practices had been
occurring for some years in the company and the company’s chief executive officer (CEO) since
2007, John Stumpf, openly refuted any information about the scam before 2013. Thus, this
scandal affected the repute of prioritizing client service, as well as cultural integrity. Well Fargo
suspended incentives for workers following the $185 million settlement with the regulators. The
scandal further resulted in the sacking of around 5,000 workers plus $5 million being allocated
for client reimbursements for accounts the clients, not at all required (Levine, 2016).
How did these problems develop and who was responsible?
Well Fargo fraudulent account opening came in light in 2016 where the firm was accused
by the Consumer Financial Protection Bureau (CFPB), the office of the Comptroller of the
Currency, as well as the Los Angeles City Attorney. These agencies alleged that the bank,
between 2011 and 2016, produced extra falsified bank accounts from the current clients.
Therefore, the problem within the bank came from the demands of the management that needed

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the employees to sign more than 8 products on a single customer. The scam purportedly
emanated from the firm’s sales program that was created by Stumpf (Trevino & Nelson, 2016).
Thus, with the slogan “eight is great” the CEO’s program set stringent objectives for its workers
to deliver to the company by making more sales to boost the profit of the company. In addition,
sales associates and executives in Well Fargo were ordered to get eight products into the hands
of every client in the market. Therefore, these demanding quotas made the personnel being
ordered to make more sales to cut short-cuts, creating novel deposit accounts with no the
authority from the clients, as well as targeting clients from minority communities who spoke
little English. Therefore, the CEO and the managers should be blamed for the scandal because
they made unrealistic demands on its employees (Egan, 2016).
How could the problems have been avoided?
Well Fargo was aware of the problems that were taking place in the firm and undertook
no measures to stop these concerns, which affected millions of clients who had opened accounts
they were not aware of and many workers trying to attain impracticable sales objectives. Well
Fargo had aggressive selling goals and cashiers were needed to attain these demands to keep up
their rewards (Reckard, 2013). Thus, when inexperienced workers are faced with getting
remunerated decorously plus making ethical choices, these employees will go to the earlier. The
company must have executed additional training programs for the management along with the
staff to comprehend the significance of customer service above sales objectives. This could have
enabled the employees to prioritize client service rather than sales goals, thus avoiding the
fraudulent activity.

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Furthermore, the scandal occurred because the management set unrealistic sales that
made the workforce to engage in fraudulent activities. The scandal could have been avoided if
the company could make sure that workers’ goals actually assist to boost the firm’s mission. The
workers must have goals, which mirror the mission of the company, rather than the unrealistic
sales figures.
Identify organizational behavior concepts that were or could be applied in the
organization.
In the case of Well Fargo Scandal, the organizational behavior concepts that could be
applied include recruitment, intense culture and reward system. These concepts are evident in the
case where the company had inadequate structures that could have allowed these organizational
behavior concepts to prevent the scandal (Wilcox, Cameron, Reber & Shin, 2013).
What organizational behavior problems occurred and what actions were or should have
been taken to solve them?
Incomplete Recruitment Process
In the time the scandal occurred, Well Fargo had incomplete recruitment process because
it hired people that did not have integrity and honesty values. Integrity and honesty are important
values towards ensuring that the employees display ethical behaviors while undertaking their
duties and avoid unethical practices. It appears that the recruitment process in the company never
considered the analysis of integrity and honesty. There are definite tests that the company should
have considered to promote their efficiency while hiring the right people for the job. Studies
show that those who take part in dishonest behavior lack the integrity and honesty values. Thus,

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hiring employees with integrity and honesty could have helped the company to avoid losing
millions of customers and finances via unethical behavior.
Faulty Reward System
The reward system that was used by Well Fargo was faulty. Consequently, if the firm is
looking for superior performance, but rewards founded on attendance, the result would be greater
attendance and not necessarily greater performance. This fashioned a prospect for the employees
to benefit themselves through the unethical behavior of creating fake accounts. Well Fargo
should have looked for a reward system, which did not base their incentives off behaviors that
were so easily visible and should have designed policies, which eradicate fraudulent behavior.
The company must have analyzed the behaviors, which they desired and directly reward these
behaviors (Ochs, 2016).
Intense Culture
A powerful culture may present a comparative advantage for the company, but too may
stark hindrance as it was the case for Well Fargo. The company had a culture that was called
“outcome-oriented culture” that allowed the company to use rigorous practices while enforcing
steps and tasks to attain a certain result (Reckard, 2013). The company worked hard to get the
right people that could enable it to create many accounts for the customers, which would provide
a strong revenue stream that would boost the bottom line. This resulted in this epic meltdown of
mass percentages because of the huge pressure that the company applied to their workers.
Therefore, Well Fargo could have selected from many other cultures to increase profitability
whilst still treating their clients with integrity and respect. For example, the company could have

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implemented an innovative culture that could have allowed employees to come up with own
ideas to boost the company (Griffin & Moorhead, 2014).
Identify organizational behavior concepts that were or could be applied
Performance Management Systems (PMS)
The performance management systems could be applied it should be centered on
customer service rather than sales. The company ought to reflect the way to motivate the
stakeholder supervision plus reward personnel that think of the long-term wellbeing of their
clients. A payment program should align to the firm’s code of ethics rewards ethical conduct to
tap into personnel’s motivation to offer excellent client service and develop long-term
relationships (Brown, Treviño & Harrison, 2005).
Leadership
The leaders were responsible for the unethical behavior within the organization where
they should be in the forefront in promoting ethical behavior. The leaders at Well Fargo should
have demonstrated high-level integrity and honesty to ensure that they influence the way things
should be done based on ethical values. The leaders should create a climate that will ensure that
the employees comply with the code of ethics established in the company (Carpenter, Bauer,
Erdogan & Short, 2013).
Selection Systems
The selection systems should be designed in a manner that it ensures that the recruitment
process hires people with integrity and honesty. When a company like Well Fargo hires, it must

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gesture its organizational values from primary interactions with the prospective recruits. This is
possible through its recruitment practices in a manner that is in configuration with its code of
ethical behavior along with vision plus value statements (Ordóñez, Schweitzer, Galinsky &
Bazerman, 2009).

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References
Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning
perspective for construct development and testing. Organizational behavior and human
decision processes, 97(2), 117-134.
Carpenter, M., Bauer, T., Erdogan, B., & Short, J. (2013). Principles of Management.
Irvington, NY.
Egan, M. (2016). 5,300 Wells Fargo employees fired over 2 million phony accounts. CNN.
Retrieved September 5, 2018, from
http://money.cnn.com/2016/09/08/investing/wellsfargo-created-phony-accounts-bank-
fees/.
Griffin, R. W., & Moorhead, G. (2014). Organizational behavior: Managing people and
organizations. Mason, OH: South-Western/Cengage Learning.
Levine, M. (2016). Wells Fargo Opened a Couple Million FakeAccounts. Bloomberg L. P.
Retrieved September 05, 2018 from
https://www.bloomberg.com/view/articles/2016-09- 09/wells-fargo-opened-acouple-million-
fake-accounts.
Ochs, S. M. (2016). The Leadership Blind Spots at Wells Fargo. Harvard Business Review
Digital Articles, 2-5.

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Ordóñez, L. D., Schweitzer, M. E., Galinsky, A. D., & Bazerman, M. H. (2009). Goals gone
wild: The systematic side effects of overprescribing goal setting. The Academy of
Management Perspectives, 23(1), 6-16.
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