Wells Fargo is in the spotlight again for allegations of unethical behavior following the recent scandal of fraudulent consumer activity performed by employees, some of whom were fired when attempting to bring attention to the unethical issue. One-fourth of the banking Big Four has been added to the list of companies embroiled in questionable actions and ethical violations in regard to its company culture.
The company has been on the road to recovery in rebuilding public and consumer trust ever since the several account scandals that took place between 2011 and 2016, which included the making of unauthorized charges and changes to customers’ mortgages, credit cards, auto insurance policies and other acts that have put them under the microscope of a skeptical public—and the Securities Exchange Commission. Upon discovery by the Los Angeles City Attorney and Consumer Financial Protection Bureau, more than 4,000 employees were fired for misconduct and wrongdoing that led to exorbitant overdraft fees and other costs of which customers were greatly unaware. Wells Fargo was slapped with more than $200 million in fines from the aforementioned parties as they concluded their respective investigations. The dismayed public also turned an eye to its leadership, namely its Chief Executive Officer and President Timothy J. Sloan. In a letter that precedes the organization’s recently revised code of ethics, Sloan emphasizes that its ethics “are the sum of all the decisions each [of us] makes every day.”
The public fallout and scandal shook the company enough to create a total overhaul of its company culture, including the development of a confidential 24/7 EthicsLine, that allows employees to confidently and confidentially make wrongdoings and internal misconduct known, whether it is done by employees or management. Sloan’s new transformational leadership has resulted in concerted and tangible change in the organization including not only the EthicsLine, but a change in pay structure that moves away from meeting sales goals, and the creation of the Office of Ethics, Oversight and Integrity in its corporate risk department as well, showing a dedication to quality and delivery (Strategic Direction). By January 2017, four months after the scandal broke, credit card applications were on the rise along with net income—it is unclear, however, if this is linked directly to company changes. Sloan also admitted to the bank’s slow response to how serious the problem of fraudulent activity was, which hurt operations in the short run and the long run.
As culture and business practices as Wells Fargo change to reflect corporate citizenship, ethical behavior and corporate social responsibility, the results of those efforts will take time to see. Wells Fargo created and executed a global campaign to rebuild and restore consumer trust to the tune of more than $100 million to show the public the elimination of unhelpful metrics and measures, promises of confirmation of account activity and full transparency and admission of wrongdoing. The reparation of its misconduct has become an integral part of its five-year and twenty-year plans for continued company growth. An effective plan like this lends itself to a positive corporate strategy and business future. A sense of responsibility is often expected from companies, especially in this current sociopolitical climate. Taking concerted effort to show corporate social responsibility should be exactly that, and not a gimmick in order to build social capital (Jones & Harris, 2014). Effective leadership is also necessary and crucial, as they are the leaders of a organization to whom everyone looks. They should be the models and exemplars of ethical behavior, serving as a “reference marker” of sorts for what the mission, vision and goals of an organization are (Hacker, 2015).
- Jones, M., & Harris, A. (2014). Principals leading successful organisational change: Building social capital through disciplined professional collaboration. Journal of Organizational Change Management, 27(3), 473-485.
- Hacker, S. K. (2015). The Power of a Reference Marker as a LEADERSHIP STRATEGY. The Journal for Quality and Participation, 38(3), 4.
- Strategic Direction. (2015). Transformational leadership: The impact of its behaviors on manufacturing strategy. Strategic Direction, 31(2), 25-27.
