This is one of the most dangerous dynamics to trouble afinancial institution.
This paper is about the sales fraud infamy facingfinancial services firm Wells Fargo in the U.S. and the failure of its seniorleadership team to ban the scandal in spite of several years of repeatedwarnings.As early as 2010, Wells Fargo imposed extremely pushy andforceful sales goals on its employees.
Specifically, they were told to sell atleast eight accounts to each client, contrasted with an average of threeaccounts ten years earlier. Wells Fargo CEO, John Stumpf, explained this goalon the basis of a simple rhyme, telling shareholders in the bank’s 2010 annualreport: “I’m often asked why we set a cross-sell goal of eight. The answer is,it rhymed with ‘great’. Perhaps our new cheer should be: ‘Let’s go again, for10!'”These goals appeared large when supervisors threatenedsalespeople who failed to meet their goal. One former employee interviewed byCNN reported, “I had managers in my face yelling at me” and that “the salespressure from management was unbearable.”Large scale unethical sales practices often begin with minorethical agreements:§ A bank account manager, under stress to make asales goal, pushes a customer to add a credit card.§ Still short of the goal, the account managerasks his/her friends and family to open accounts.§ With the goal still not attained, the accountmanager opens accounts without asking customers and transfers a small amount ofmoney.
A lawsuit against Wells Fargo claimed, ” Employees whofailed to resort to illegal tactics were either demoted or fired as a result.”According to Stumpf’s testimony, a board committee becameaware of the fraud “at a high level” back in 2011. They had a complete contentionin 2013-2014. Stumpf explained that he personally became aware in 2013, whenafter two years of unsuccessful solutions within the business unit the volumeof fake accounts was still increasing. He also noted that originally, the bankdidn’t undestand customers could be charged fees for fake accounts.A lawsuit filed against Wells Fargo also claims thatemployees shared with one another the know-how used in the fraud.
They used ashort and simple way to reminiscent of a video game hack: “gaming” referred toopening accounts without permission and authorization, “sandbagging” meant postponingcustomer needs, “pinning” stood for generating PINs without permission andauthorization and “bundling” involved forcing customers to open multipleaccounts over customer exceptions.Despite five years of clear and repeated warnings, theexecutive team and the board of directors were remarkably slow to see the rangeof the gravity of this fraud, and to address it effectively. Wells Fargoleaders also seem to be blind to the magnitude of this crisis, both forconsumers and its own culture.
SolutionUsually, people have a deep essential desire to be helpful,profitable and perform more than they thought they could. But, sometime theirattempts and efforts will not be noticed and immediately affect employee’sproductivity. Finding employee’s motives are difficult and vary from individualto individual. There are several researches about the correlation betweenmotivation and productivity.
As the result, there are many theories that cancause employees to work harder and be more useful. These theories classified intwo groups: Content theories and Process theories.Content theories deal with “what” motivates people and it isconcerned with individual needs and goals. Maslow, Hertzberg and McClellandtheories are the samples of content motivation theories. On the other hand,Process theories try to describe how behavior is energized, managed, retainedand stopped.
Process theory consists of four sections: Reinforcement theory,Expectancy theory, Equity theory, and Goal-setting theory.The equation is quite simple:High levels of motivation = High levels of productivitySo, what exactly can wells Fargo use to incentivize itsemployees to fulfill at higher levels?While these problems are obvious inthe daily operations, a manager should be looking into how to cure or reducethese challenges. To reach the high level of efficiency, Wells Fargoneeds to find some solutions to increase employee’s intensives first. Making astrategy that focuses on education, training, and the right kinds of inducementswill increase employee’s potential.