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Rock Street, San Francisco

This is one of the most dangerous dynamics to trouble a
financial institution. This paper is about the sales fraud infamy facing
financial services firm Wells Fargo in the U.S. and the failure of its senior
leadership team to ban the scandal in spite of several years of repeated

As early as 2010, Wells Fargo imposed extremely pushy and
forceful sales goals on its employees. Specifically, they were told to sell at
least eight accounts to each client, contrasted with an average of three
accounts ten years earlier. Wells Fargo CEO, John Stumpf, explained this goal
on the basis of a simple rhyme, telling shareholders in the bank’s 2010 annual
report: “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, for

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These goals appeared large when supervisors threatened
salespeople who failed to meet their goal. One former employee interviewed by
CNN reported, “I had managers in my face yelling at me” and that “the sales
pressure from management was unbearable.”

Large scale unethical sales practices often begin with minor
ethical agreements:

A bank account manager, under stress to make a
sales goal, pushes a customer to add a credit card.

Still short of the goal, the account manager
asks his/her friends and family to open accounts.

With the goal still not attained, the account
manager opens accounts without asking customers and transfers a small amount of

A lawsuit against Wells Fargo claimed, ” Employees who
failed to resort to illegal tactics were either demoted or fired as a result.”

According to Stumpf’s testimony, a board committee became
aware of the fraud “at a high level” back in 2011. They had a complete contention
in 2013-2014. Stumpf explained that he personally became aware in 2013, when
after two years of unsuccessful solutions within the business unit the volume
of fake accounts was still increasing. He also noted that originally, the bank
didn’t undestand customers could be charged fees for fake accounts.

A lawsuit filed against Wells Fargo also claims that
employees shared with one another the know-how used in the fraud. They used a
short and simple way to reminiscent of a video game hack: “gaming” referred to
opening accounts without permission and authorization, “sandbagging” meant postponing
customer needs, “pinning” stood for generating PINs without permission and
authorization and “bundling” involved forcing customers to open multiple
accounts over customer exceptions.

Despite five years of clear and repeated warnings, the
executive team and the board of directors were remarkably slow to see the range
of the gravity of this fraud, and to address it effectively. Wells Fargo
leaders also seem to be blind to the magnitude of this crisis, both for consumers
and its own culture.


Usually, people have a deep essential desire to be helpful,
profitable and perform more than they thought they could. But, sometime their
attempts and efforts will not be noticed and immediately affect employee’s
productivity. Finding employee’s motives are difficult and vary from individual
to individual. There are several researches about the correlation between
motivation and productivity. As the result, there are many theories that can
cause employees to work harder and be more useful. These theories classified in
two groups: Content theories and Process theories.

Content theories deal with “what” motivates people and it is
concerned with individual needs and goals. Maslow, Hertzberg and McClelland
theories are the samples of content motivation theories. On the other hand,
Process theories try to describe how behavior is energized, managed, retained
and 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 productivity

So, what exactly can wells Fargo use to incentivize its
employees to fulfill at higher levels?

While these problems are obvious in
the daily operations, a manager should be looking into how to cure or reduce
these challenges. To reach the high level of efficiency, Wells Fargo
needs to find some solutions to increase employee’s intensives first. Making a
strategy that focuses on education, training, and the right kinds of inducements
will increase employee’s potential.


There are three possible solutions that can help
organizations to have a high level of motivation:

Reevaluate incentives:

A first solution
refers to incentives and motivation. Anything can serve as an incentive if it
can persuade someone to do something new. There are three kinds of incentive:
tangible, intangible and experiential. Tangible incentives are material objects
like money bonuses or physical prizes such as TV or watch. Intangible incentives
are thing like recognition, praise, access to better leads, or extra time off.

Experiential incentives provide the individuals with an experience.

Some manager’s
within the bank believe that a paycheck should be incentive enough to come into
work and put forth 100% day in and day out. Others adhere to the intrinsic
motivation of having pride in one’s work or the desire to be the best in a
specific position. The link between performance and motivation started
with the notion that financial rewards do help improve performance.

Setting realistic goals:

A second
solution would be for manager’s to set realistic goals.  “Goal setting is the process of
developing, negotiating, and formalizing the targets or objectives that a
person is responsible for accomplishing”. It is important for sales incentives
to be challenging but also achievable. This is a tricky
solution.  If a goal is too difficult, it
could be de-motivating in and of itself, but if the goal is easily gained it
can have the same effect. The employees need to be close enough to attain
their goals, to feel the need to push themselves. Therefore, a manager needs to
assess his/her employee’s abilities on a more repeated basis, as oppose to
annually, 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 goals
and define their level of motivation to achieve them.

Establishing consistent expectations:

A third solution
would be for management to establish stable anticipation. A commonly used
phrase in today’s business banking world is “the only constant is change.”  While this can seem very true at times, a
manager needs to be proactive is maintaining a consistent set of expectations.  In addition to managers attempting to set
consistent expectations themselves, they need to be proactive and hold the
credit approvers accountable for being consistent as well.

From all above, increasing employee
retention can help you maximize your team productivity. That is why it’s important
to invest in options to improve employee’s morale. It’s also recommended to
make new hires feel welcomed and motivated on their first day. This will help
them to be more comfortable and ask their questions when have any problem. In
addition, for low performing employees, quarterly bonuses are actually a much
stronger motivation.


Five years later, the bank is
finally sending customers an email every time a new account is opened and
revising 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 collaborate
in problem solving.

The lesson to be learned here is clear. Motivation and
incentives have a direct, important impact on the way the team members perform
their 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 do
the very best they can.

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