#2 from Shockley
In September 2016, Wells Fargo’s scandalous practices came to be known. It was revealed that bank employees were opening bank accounts, transferring money, and signing up for different services in customers’ names without the customers consenting to these activities. These extra accounts were generating fees payable to the bank. It is alleged that these illegal and unethical activities were done due to aggressive, impossible to meet sales quotas placed on employees. Employees were also trained to use fake email addresses and phone numbers when customers failed to provide one. There was a culture permeating Wells Fargo that if an employee was not cheating then he would not meet the numbers required to remain employed at the company (Cavico & Mutjaba, 2017, p. 4).
Jim Collins’ research focused on the numbers, so he was not wrong, but he did misinterpret the root of the numbers. When he did his examination, he saw a company that utilized the Hedgehog Concept and started producing exemplary numbers. “Then the Wells Fargo team asked itself, ‘What can we potentially do better than any other company?’ The brutal fact was that Wells Fargo would never be the best global bank in the world – and so the leadership team pulled the plug on the vast majority of the bank’s international operations” (Collins, 2001). This action appears to be the perfect example of the Hedgehog Concept. The company abandoned something it knew it would never be able to become the best at. The company then focused on “profit per employee” which they appeared to be the best at until their fraudulent activities surfaced.
Profit per employee practices can be a recipe for disaster without attentive leadership. “Without proper safeguards, incentive-based compensation arrangements in financial institutions may encourage excessive risk-taking by employees, leading to serious financial loss for financial institutions…These compensation arrangements were based on short-term revenue, and thereby incentivized employees to expose the financial institution to more risk” (Mims, 2017, p. 429). The executive leadership at Wells Fargo pushed employees to meet sales quotas and open numerous, superfluous accounts for customers or be subject to disciplinary action. This produced a cutthroat environment that eventually led to unethical activities on the part of the employee (Cavico & Mutjaba, 2017, p. 5). Culture of an organization is developed at the top of the organization and is implemented by the bottom. The leadership of Wells Fargo failed in two main ways. “The astute and agile leader should not be blind-sided by any weaknesses or improprieties in the company or organization, such as in the case of Wells Fargo, employees acting in an illegal and immoral manner to meet the unrealistic sales goals set by the bank…Moreover, the leader must be proactive, not a mere reactor, which sadly, appears to be the case with Wells Fargo” (Cavico & Mutjaba, 2017, p. 16). Had Wells Fargo’s leadership noticed the sales goals it was setting on its employees was turning into a weakness, it could have been proactive in preventing any unethical or immoral practices that would harm its customers.
Leaders with a Christian worldview should refrain from participating or allowing their employees to participate in any unethical business practice. It is important to always remember God will provide enough for those who believe in Him and trust Him. “God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good word (2 Corinthians 9:8).
