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 for consumersand 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. There are three possible solutions that can helporganizations to have a high level of motivation:1.
Reevaluate incentives:A first solutionrefers to incentives and motivation. Anything can serve as an incentive if itcan persuade someone to do something new. There are three kinds of incentive:tangible, intangible and experiential. Tangible incentives are material objectslike money bonuses or physical prizes such as TV or watch. Intangible incentivesare thing like recognition, praise, access to better leads, or extra time off.Experiential incentives provide the individuals with an experience.
Some manager’swithin the bank believe that a paycheck should be incentive enough to come intowork and put forth 100% day in and day out. Others adhere to the intrinsicmotivation of having pride in one’s work or the desire to be the best in aspecific position. The link between performance and motivation startedwith the notion that financial rewards do help improve performance.2. Setting realistic goals:A secondsolution would be for manager’s to set realistic goals. “Goal setting is the process ofdeveloping, negotiating, and formalizing the targets or objectives that aperson is responsible for accomplishing”.
It is important for sales incentivesto be challenging but also achievable. This is a trickysolution. If a goal is too difficult, itcould be de-motivating in and of itself, but if the goal is easily gained itcan have the same effect. The employees need to be close enough to attaintheir goals, to feel the need to push themselves.
Therefore, a manager needs toassess his/her employee’s abilities on a more repeated basis, as oppose toannually, in order to set and revise short- and long-term goals and objectives.This would allow manager’s to go over their employee’s conception of the goalsand define their level of motivation to achieve them.3. Establishing consistent expectations:A third solutionwould be for management to establish stable anticipation. A commonly usedphrase in today’s business banking world is “the only constant is change.” While this can seem very true at times, amanager needs to be proactive is maintaining a consistent set of expectations. In addition to managers attempting to setconsistent expectations themselves, they need to be proactive and hold thecredit approvers accountable for being consistent as well.From all above, increasing employeeretention can help you maximize your team productivity.
That is why it’s importantto invest in options to improve employee’s morale. It’s also recommended tomake new hires feel welcomed and motivated on their first day. This will helpthem to be more comfortable and ask their questions when have any problem.
Inaddition, for low performing employees, quarterly bonuses are actually a muchstronger motivation.ReflectionFive years later, the bank isfinally sending customers an email every time a new account is opened andrevising its sales goals. For the bank, any obstacles to speaking up must be removed.That starts with listening to and protecting the employees who raise concerns.
Also, managers must take explicit steps to encourage questions and collaboratein problem solving.The lesson to be learned here is clear. Motivation andincentives have a direct, important impact on the way the team members performtheir jobs. Tough and difficult goals cause the employees to act unethically,and if they aren’t strong enough, they would not have a reason to go out and dothe very best they can.