Wells Fargo Case Study: Goal Setting, Fraud & Performance System

This case study examines the Wells Fargo account fraud scandal, focusing on the application of goal-setting theory and the effectiveness of performance management systems. It explores how key principles of goal setting, such as clarity, challenge, commitment, feedback, and task complexity, can enhance employee performance and prevent fraudulent activities. The analysis identifies flaws in Wells Fargo's performance management system, including excessive sales pressure and inadequate oversight, which contributed to widespread misconduct. The study proposes improvements to the performance management system, emphasizing reward and compensation strategies, regular performance appraisals, disciplinary processes, feedback mechanisms, and comprehensive training programs to foster ethical behavior and prevent future fraudulent practices. Desklib provides access to this case study along with a wide range of solved assignments and study resources for students.

Case Study
Wells Fargo account fraud
scandal

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Key principles of goal setting theory and how it helps in enhancing employee performance. ..1
Elements of performance management system for eliminating fraudulent practices.................3
CONCLUSION................................................................................................................................5
References:.......................................................................................................................................6

INTRODUCTION
In organisation performance management is continuous assessment in such manner for
matching the goals of company. This is also used for setting strong goals and metrics in order to
identifying progress and areas of individual strength. This related to the development is
individual with competences and commitment which works towards the achieving of shared
objectives within an organisation that supports and encourages their achievement. It ensures to
met goals in effective and efficient manner as it is strategic and integrated approach to deliver
sustained success in organisation through improving people performance who work and develops
capabilities of team and individual contributors (Agrawal, N.M., 2019). The report is based on
case study of Well Fargo account fraud Scandal which is wells Fargo & company. It is
community based financial services headquarter in San Francisco. The vision of company is to
satisfy the financial needs of customer an helping them to succeed financially. The company
deals in banking, investment and mortgage products and services, as well as consumer and
commercial finance. The report will cover the principles of goal setting theory and how it helped
in enhancing employee performance. Further it explains elements of performance management
for eliminating fraudulent practices.
MAIN BODY
Key principles of goal setting theory and how it helps in enhancing employee performance.
The goal setting theory is employee engagement tactic which involves specific objectives
and measurable gaols in order to improve the productivity, The incorporation of goal setting
theory in workplace in context to wells Fargo & company this helps in improving employee
performance and boost employee engagement. This theory in 1968 was developed by Edwin A.
Locke in article “ Toward a theory of task motivation and incentive”. In organisation, the
employee work well when they face challenging goals as it forces employees to work hard and
develop their skills by receiving positiver feedback and sense of achievement (Arana-Solares,
and et.al., 2019). This results in productivity, satisfaction in workplace in framework to Wells
Fargo & company. In goal setting theory there are several principles which helps in enhancing
employee performance.
 Clarity- In this principle the goal needs to be clear and specific as employees of the
organisation understands project objective and deadlines which results in less risk of
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misunderstandings. In Wells Fargo & company the clear goal was set to satisfy the
customer financial needs by offering them several services and products. It has the
decentralised corporate structure which helps in motivating employees to perform well in
organisation.
 Challenge- The goals should be challenging in order to keep employees engaged and
focused while performing of tasks which is needed to reach goal. In organisation the level
of challenge needs to be specific to each person in order to increase their motivation in
context to Wells Fargo & company. The more challenging goal make person more
focused on their task and makes easier in avoiding unnecessary distractions (Aranda, and
et.al., 2019).
 Commitment- From starting the goals are assigned which becomes essential for
employees to understand and support the goals. The less commitment towards the goal by
employees makes less in enjoying process and ultimately achieves goals. The goal
commitment is degree of determination which a person use for achieving accepted goal
and determines two important factors of importance and self-efficacy (Barnabè, and
et.al., 2019).
 Feedback- This is an important component in goal-setting theory as regular feedback
needs to be provided through goal-achieving process in order to ensure task and staying
on track for reaching goal. In company of Wells Fargo & company the offering of
feedback to employees helps in knowing who well they are performing towards the goals
and where is the need of improvement. This helps in monitoring progress of an employee.
 Task Complexity- This principle states that goals should be divided into small tasks.
After reaching to small goal the review process needs to be perform for updating
employees on overall progress towards the large goal in context to Wells Fargo &
company.
The principles of goal setting theory helped the employees in enhancing the employee
performance in context to Wells Fargo & company. The company take use of several principles
such ass clarity, commitment, feedback and many more which helped in enhancement of
employee engagement. The Wells Fargo & company set clear vision to have customer
satisfaction by offering them quantity financial services. The set of clear goals improves
employee performance by keeping their motivation level high. The positive feedback to
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employees provides an opportunity for their continuous improvement. The principles of goal
setting theory helps in increasing employee engagement within organisation by offering clear
guidelines regarding as how to set and achieve goals in effective way (Chen, and et.al., 2019).
The offering of constructive feedback on regular basis enhances employees performance and
boosts to morale and workplace satisfaction. To motivate employees of wells Fargo company the
goals should be SMART as it energizes behaviour giving direction, challenge and forcing
employee to think and devise new methods of performing.
Elements of performance management system for eliminating fraudulent practices.
The performance management is demonstrated as strategic and systematic approach for
ensuring the employee performance as individual and team member that enables in
accomplishing organisation competitive advantage by producing of level and quality of products
and services for facilitating customer satisfaction in context to Wells Fargo & company.
There was arise of conflicts in community bank Well Fargo vision and values which
emphasis on sales goals. It argued that company generated sales of products which is neither
needed nor used and tolerated low quality accounts by community bank senior management
(Cooke, and et.al., 2019). The rules of wells Fargo was violated by employees without analysing
what caused or motivated. The company identify misconduct and solution was to terminate
offending employees without considering causes for offending conduct. There are several types
of misconduct which involves employees opening unauthorised personal checking or saving
accounts for existing customers, falsifying customer information, falsification of bank records,
funding manipulation, forging customer signatures, the creation of unnecessary accounts, which
served no customer financial need (Manhart, and et.al., 2020). The keeping of sales model intact
and growth put significant pressure on the employees to meet their goals. Several employee felt
they failing to meet sales goals which can result in termination or career hindering criticism by
supervisors. Due to sales pressure the employees are engaged in misconduct which leads to
problematic behaviour. In order to avoid this fraudulent practices in wells Fargo company the
employees should be praised and rewarded and established incentive plans.
The aim of performance management is to create set of processes which focuses on
employee job roles by maintaining and improving performance. Following are the elements of
performance management system which helps in eliminating fraudulent practices which are as
follows-
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1. Reward and compensation- This is an important element in performance management
by having this practice in the organisation of Well Fargo company it leads to enhancing
the performance of employees and eliminates the practice of fraudulent. To make
employee feel valued is required to recognize and appreciate them. The reward and
compensation motivates employee to perform better by offering them incentives or
bonuses. When employees in the organisation attains set goals and targets then
organisation rewards their staff which can be non-monetary also such as paid vacation.
The use of performance incentives and financial metrics with planning and properly
aligning incentives with strategic goal leads to elimination of fraudulent practices
(Mellado, and et.al., 2019). For the branch bankers the compensation plan was structured
for meeting threshold requirements which is eligible for incentive compensation. Wells
Fargo too aligned performance management and recognition with sales goals, so that
incentive compensation and performance rating both can be associated with sales.
 Performance appraisal – This defines to regular flow of employee job performance and
its overall contribution in economy which is also known as performance review. The
employee performances is evaluated which helps company in identifying whether
employee us productive or liability for an organisation in context to Wells Fargo
company. This practice helps in eliminating fraudulent which is committed by employees
by understanding their abilities as it act tool for developing opportunities in regards to
employees (Rahayu, and Saifi, 2019). This is an systematic evaluation of work which
employees performs. Wells Fargo company rake use of this practice for regular review of
employee performance for knowing their contribution in company. This involves the
evaluation if skills, growth, achievement or failure of employees.
 Disciplinary process- This is a approach which is used by management for modifying
undesirable performance and behaviour by taking use of corrective action process. The
employee performance can be modified by providing them training, coaching and
constructive feedback. In order to avoid fraudulent practices in wells Fargo company
there needs to proper and clear communication of workplace rules and procedures so that
employees can exactly know what is expected of them. The disciplinary process can be
taken in several forms of counselling and training, written warning, etc.
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 Feedback- In organisation feedback is an essential element which ensures to have well-
rounded and supportive HR department. The providing of continuous feedback makes
easier for company in tracking employees performance and knowing whether there is
need for development to enhance their performance in context to Wells Fargo company.
The effective feedback is critical component in successful performance management
program which needs to be used in conjunction with setting of performance goals. The
effective feedback provided to employees on progress towards their goals of Wells Fargo
company leads to improvement in employee performance and motivates them from not
committing any king of misconduct (Sivathanu, and Pillai, 2019). The power of self
awareness used in organisation motivates employees to perform better by showing of
their direct impact of skills and strength.
 Training- This practice is helpful in enhancing the employee performance as several
online and offline training are provided to employees in organisation. The effective
training leads to increase in productivity as employee are made feel valued. The well
trained employees shows both quality and quantity performance. In context to Wells
Fargo company the training program offers the opportunity to strengthen the skills of
everyone. Training can help in improving performance management in workplace as it
gives employees a framework of how their job duties and tasks should be completed. It
centralizes knowledge in workplace.
CONCLUSION
From the above report it is being concluded that performance management not only
evaluates the performance with reward and punishments but also improves the performance of
individual in order to meet overall organisational goals. The effective use of performance
management in company helps in tracking employee performance, engagement and provides
high level training. The company take use of several principles of performance management in
order to enhance the performance of employee such as clarity, commitment, feedback and many
more. Further, several elements of performance management system such as reward and
compensation, performance appraisal, training, feedback etc. helps this in eliminating fraudulent
practices done by employees in organisation.
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References:
Books and Journals
Agrawal, N.M., 2019. Modeling Deming’s quality principles to improve performance using
interpretive structural modeling and MICMAC analysis. International Journal of Quality
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Arana-Solares, and et.al., 2019. Contextual factors intervening in the manufacturing strategy
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production economics, 207, pp.81-95.
Aranda, and et.al., 2019, July. Integration of Internet of Things (IoT) and Blockchain to increase
humanitarian aid supply chains performance. In 2019 5th International Conference on
Transportation Information and Safety (ICTIS) (pp. 140-145). IEEE.
Barnabè, and et.al., 2019. Assessing performance and value-creation capabilities in lean
healthcare: insights from a case study. Public money & management, 39(7), pp.503-511.
Chen, and et.al., 2019. Cross-boundary e-government systems: Determinants of
performance. Government information quarterly, 36(3), pp.449-459.
Cooke, and et.al., 2019. Mapping the relationships between high-performance work systems,
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Manhart, and et.al., 2020. A meta‐analytic review of supply chain risk management: assessing
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Mellado, and et.al., 2019. Synthesising performance in the construction industry: An analysis of
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Rahayu, and Saifi, 2019. The reciprocal relationship between profitability and capital structure
and its impacts on the corporate values of manufacturing companies in
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Sivathanu, and Pillai, 2019. Technology and talent analytics for talent management–a game
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