Wells Fargo Ethical Audit
2 billion US dollars as compared to the 2017 second quarter’s income of 5. 9 billion US dollars. The firm also experienced a drop of average deposit by 2 percent to 1. 3 trillion US dollars from 29. 9 billion US dollars. Therefore, the organization is a key pillar in the labour sector, more than 262 thousand people are permanent workers of Wells Fargo according to the Statistic report of 2017. Employees play a vital role in any organization and literally they are the pillars and drivers of all objectives and goals that results in achieving vision and mission. Apart from Wells Fargo, JPMorgan Chase Bank altogether with the Citi Bank and Bank of America are the top employers in the US banking industry. The Statistics report revealed, close 191, 169 and 142 thousand employees work for JPMorgan Chase Bank, Citi Bank and Bank of America respectively.
However, the latest report may just be a blow to Americans and other staffs of Wells Fargo. The malpractices at Wells Fargo forced the firm’s CEO John Stump to resign. He was then replaced by Tim Sloan (Wells Fargo, 2017). Rebuilding the image of the firm has been one of the most challenging tasks for Sloan since taking over the helm of one of the top three financial service operator firm in the US and also the number one employer in the banking sector. The opening of multiple accounts without the authority of clients is an offence according to the US business laws and the act attracted the attention of the Los Angeles City Attorney, Consumer Financial Protection Bureau in addition to the Office of the Comptroller of the Currency (Corkery, 2016).
The two bodies fined the bank 185 million US dollars. The workers' activities led to a frequent loss of employment opportunities from 2005 to 2016 (Mclean, 2017). On the other hand, workers who attempted to report about the company’s unethical operations were fired and blacklisted from holding any employment opportunity in the banking sector as highlighted by Arnold, (2016) after holding an interview with a former Wells Fargo boss. Carrie Tolstedl who acted as the Vice President in charge of Community Banking was forced to retire before the unethical fraud news in the banking industry hit headlines. It is reported that Tolstedly was responsible for all the operations since the goals for the salespeople at all the branches were too high and also failed to listen to complaints from workers.
After the scandal, the company sacked 5300 workers on allegations of malpractices. The company’s performance dropped in 2018, the total revenue was 21. 6 billion US dollars from 22. 2 billion US dollars recorded in 2017. The tax expense was 481 million US dollars as a result of court-related cases. While the net income dropped by 0. However, the new policies that were formulated aimed at ensuring the previous mistakes do not come back to haunt the financial institution. The financial institution then adopted different policies by scrapping off product sales goals, the new policies focused not only on opening new accounts but also on customer service, usage as well as customer’s feedbacks (Wells Fargo). Wells Fargo adopted some other measures that comprise of technology-oriented application to boost security and also a validation of several accounts to build on trust and confidence of the clients.
The other main precautions that were adopted by the firm comprised of an automatic email to all customers who open a new account with the financial institution and application letter for a credit card to be sent through an email. Moreover, inactive accounts were given a duration of 62 days then closed. Corporate management is key in an organization and determines the general behaviours of all employees linking them to the organization. Therefore, analyses all reasons that may ‘push’ employees to making some of the decisions and eventually come up with solutions. Organizational behavioural notions are likely to lead to the achievement of long-term goals. Ethics are structured with considerations of the objectives and goals of the organization guide workers towards achieving a common result.
All firms that focus on the code of ethics aim to direct workers towards a certain affiliation. For instance, the top management team failed to listen to workers’ complaints and instead ‘encouraged’ fraud leading to a weak corporate culture and eventually the firm started experiencing massive losses. When an organization creates a code of ethics, it is essential to ignore anything to do with a rewarding system. Focusing on the ethical code of conduct, training and hotlines for reporting unethical practices should be given the first priority. The leadership structure of the company plays a vital role in ensuring the project succeeds or not. In our case study, the managers failed to tap on their leadership skills to nurture a culture that a firm should adopt but instead focused on using shortcuts to create fake accounts and even went ahead to ignore all the notifications from the employees Donker, 2008).
The other negative impact Wells Fargo suffered is the damaged reputation and may take time for the organization to turn everything all around. First of all, focus on people that share the same core values as the ones depicted in the organization and may lead to success. Always have some of your best employees in the recruiting panel. The best workers will always highlight the high standards as well as effectiveness during the interview and will look for that from the potential hires. Highlight the profile of the employee that meets the recommended tasks and also has the moral values attitudes. While the rest of the money will be used to support sustainable conservation, agriculture, recycling in addition to other environment oriented activities.
According to the firms' reports, Wells Fargo has demonstrated commitment in the lending sector by promoting sustainable annual report leading to a continuous financing accounting process under the guidelines of United Nations objectives on sustainable development goals. The commitment clearly depicts the company’s objective in promoting clean technology altogether with financing renewable energy, It is not the first time the firm has allocated funds for a similar project. In 2015, 30 billion US dollars was released to support the transition process into environmentally friendly energy. According to Wells Fargo documented information, in 2016, the company produced an extra 9 percent of all solar and wind energy in the US. The junior employees of Wells Fargo were literally forced into the adoption of some policies and since the target for salespeople was more of unrealistic they had no option but to use shortcuts thus committing multiple offences (Levaux, 2018).
The executive and other senior officials of the company also failed to listen to complaints from employees, for instance, the supervisors, managers, human resources, Wells Fargo’s ethics’s hotline failed to listen to the plea of the junior workers thus prolonged the breach of code of ethics while other employees were fired (Arnold, 2016). Responsibility determines the direction of the company since controls the executive managers the way they tackle all issues that may emerge. For example, in the case of Wells Fargo fraud, the top managers had an option of containing the situation by listening to employees complaints and eventually drafting a solution. The top managers failed to evaluate how opening multiple accounts without the clients' consent would negatively damage the image of the firm.
The top managers instead focused on blaming the employees for the fraud cases and ended up firing 5,300 workers. The employees failed to take the responsibility but instead blamed the management team (Mclean, 2017). The fraud could also have been contained by the middle managers and other supervisors only if they had listened to the employees’ notifications and alert the top managers to address the issue. On the other hand, the human resource department failed to professionally handle the issue and instead sacked employees. The fraud incident revealed the weakness of the organization and workers opening accounts since they have been forced by their seniors to meet the daily quotas irrespective of the procedure clearly makes the scandal more complicated (Levaux 2018). Managers take into consideration a potential employee’s ethics when making a final hiring decision.
X 7. When appropriate, alcohol, drug and polygraph tests are conducted. X Subtotal for Hiring Ethical Job Candidates, items 1 through 7 1 2 4 1. I realized most of the job listing posted on different websites do not highlight on the importance of ethics. Wells Fargo always promise to perform the background checks but according to the review, the company rarely follows such procedures. For instance some of the former employees claim they were hired yet their credit rate was not impressive (Wells Fargo). The company highlights background check as an important aspect in the recruitment process but not keen to perform such actions (Wells Fargo). Wells Fargo did not follow the ethical dilemma issues and that’s why it was hit by a crisis in 2016. The top managers did not focus on listening to notifications from employees and the process led to massive opening of accounts in addition to issuing of credit and debit cards without the approval of clients thus damaging the image of the organization after the scandal was exposed (O’Brien, 2018).
Managers vocally support our Codes of Ethics and Conduct. X 13. All employees are trained to implement our Codes of Ethics and Conduct. X 14. All employees participate in an annual ethics code survey to X determine how well our organization is living up to the code. ETHICAL DECISION-MAKING YES SOMETIMES NO 15. Ethics is an important consideration in our decision-making process. X 16. Employees are trained to use an ethical decision-making framework to help them derive moral answers when issues arise. X 17. The ethics workshops are facilitated by someone our employees trust. X 20. The workshops examine real-life work-related situations that are linked back to the Code of Ethics or Code of Conduct. X 21. Employees share their real feelings with each other during our ethics workshop.
The ethics workshops are facilitated by someone our employees trust (Wells Fargo). Wells Fargo’s scandal is something that the company will not wish to happen again, the frim therefore beefed up ethics training to equip workers with the much needed skills that will nurture professionalism (Weir, 2016). The training workshop always link the fraud incident with the code of conduct to communicate effectively with employees. According to Wells Fargo’s code of Ethics and Conduct the frim advocates for honest and transparency in its operations. However, the top managers failed to give employees a chance to air their grievances about the malpractices in one of the top firm that damaged its reputation. Managers support our diversity initiatives. X 28. Flexible work schedules and cafeteria-style benefit plans meet the needs of our diverse workforce.
X 29. Our promotion, performance appraisal, and downsizing criteria do not discriminate against diverse employee groups. Flexible work hours and cafeteria are some of the diversity at Wells Fargo has led to penetration of international market leading to globalization. Also, more diverse workforces is another positive thing (Wells Fargo). The company’s promotion, performance appraisal as well as downsizing criteria is questionable. For example the company had to pay a former employer 73 million US dollars for discrimination altogether with unequal pay (Nikkey, 2017). Wells Fargo’s training workshops target to create self-awareness, commonalities and also employee differences among the workers (Wells Fargo). An internal reporting system exists for our employees to confidentially raise ethical issues and receive ethical clarification. X 37. An internal system exists for our employees to anonymously report potential ethical wrongdoing.
X 38. Employee requests for confidentiality are honored. The issue of confidentiality is a major hurdle for Wells Fargo employee as Robert (2016) points out. Most of the employees feared they would be victimized. During the 2016 crisis, employees confidentiality was not honored since some of the workers were dismissed while senior employees failed to take responsibilities (Mclean, 2017). The whistle blowers of 2016 fraud case were not given a chance and most likely some were among the 5,300 who were fired (Mclean, 2017). ETHICAL LEADERSHIP, WORK GOALS AND PERFORMANCE APRRAISALS YES SOMETIMES NO 41. Employees are surveyed about the extent to which the believe managers behave ethically at work. X 47. Our work goals are jointly determined by managers and their subordinates, and linked to organizational objectives (i. e.
, Management-By-Objectives). X Subtotal for Ethical Leadership, Work Goals, and Performance Appraisal, items 41 through 53 1 1 10 41. Wells Fargo managers failed to listen to workers notification to curb the fraud of registering fake accounts which is unethical, therefore, it seems the managers were behind the move since it was beneficial and also profitable (Mclean, 2017). The managers encouraged unethical practices at the firm therefore one cannot state that they ethical outside work (Mclean, 2017). After the crisis was revealed, managers and other top officials failed to take responsibilities but instead blamed it on junior employees leading to dismissal of 5300 workers. They are not honest, credible nor reliable (Arnold, 2016). ENGAGING AND EMPOWERING EMPLOYEES Yes Sometimes No 54. Employee satisfaction surveys are conducted and results used to Inform continuous improvement efforts.
X 55. Employees are passionate about their work and the organization. X 56. , Open X Book Management). Appreciative Inquiry techniques are used to address organizational X issues. At the end of the day, our employees reflect on their daily X performance and develop plans for the following day. Our employees elicit and review suggestions for improved work unit performance, and have the authority, within reason, to make changes as X needed (Scanlon-type gainsharing plan). Our employees share in the profits they help to generate (i. Managers do not engage employees on developing strategy irrespective of the situation (Arnold, 2016). Wells Fargo considers training as one of the most effective approach of improving skills of workers to achieve the set goals and objectives (Wells Fargo).
The company through various strategies posts the results of the company to inspire employees to work hard (Wells Fargo). The hotline ethics line was set up to address emerging issue but was neglected by the employees during the time fake accounts were opened. (Arnold, 2016). Our managers consider the impact organizational operations have on the natural environment (environmental risk assessment). X 70. Environmental goals and objectives are established, monitored, X 71. Product, or service, packaging is minimal. We operate in a “green” building. A specific person, or employee team, is responsible for developing and monitoring our organization’s community outreach activities. X 75. Upper management encourages input from, and dialogue with, stakeholder groups for issues that affect community members. X 76. Our organization donates money to community organizations.
X 82. Our managers participate in local business associations such as a rotary or the chamber of commerce. X 83. Our organization measures and assesses its community impacts and shares the information with the community. X Subtotal for Community Outreach Items, 74 through 9 0 0 74. They support the programme then engage in a feedback approach with members of the community for an effective process (Wells Fargo). ORGANIZATIONAL ASSESSMENT YES SOMETIMES NO 84. Our organization systematically examines its ethical performance on an annual basis. X 85. Our organization benchmarks itself to the industry’s best ethical practices. X Subtotal for Organizational Assessment, items 84 through 90 4 2 0 84. Wells Fargo has embarked on a serious analysis of ethical performance after the 2016 scandal (Wells Fargo). The company now focuses on ethical practices to retain its image after the 2016 scandal (Wells Fargo).
Through the company’s website it has ethical principles that are geared towards the vision and mission of the company to reclaim the ethics system structure. (Wells Fargo). (2016, May 26). Wells Fargo Center Earns Leed Platinum EB Certification. Retrieved from http://www. beaconcapital. com/company/news/Wells-Fargo-Center-Earns-LEED-Platinum-EB-Certification/3450?type_id=3 Charleston Chamber. , Poff, D. , & Zahir, S. Corporate values, codes of ethics, and firm performance: A look at the Canadian context. Journal of Business Ethics. Dfleischer. Retrieved from https://www. businessinsider. com/r-wells-fargo-to-reduce-headcount-by-5-10-percent-in-next-3-years-2018-9?IR=T Weir, P. (2016, April 22). The Root of The Problem: Wells Fargo Ticked The Training Box. com/assets/pdf/about/corporate/code-of-ethics. pdf Wells Fargo. Community Outreach. Retrieved from https://www. wellsfargo. wellsfargomedia. com/assets/pdf/about/investor-relations/earnings/second-quarter-2018-earnings.
pdf (Wells Fargo, 2017). Wells Fargo CEO Tim Sloan Announces Six New Long-Term Goals and Provides Update on Rebuilding Trust Actions. Retrieved from https://newsroom. com/about/corporate-responsibility/environment/ Wells Fargo. Our Code of Ethics and Business Conduct. Retrieved from https://www08. wellsfargomedia. com/assets/pdf/about/corporate/code-of-ethics. Leading banks in the United States as of December 31, 2017, by number of employees. Retrieved from https://www. statista. com/statistics/250220/ranking-of-united-states-banks-by-number-of-employees-in-2012/ Schlein, Z. (2018, July 30). , Choi, J. N. , & Kim, M. S. Top management ethical leadership and firm performance: Mediating role of ethical and procedural justice climate. com/WELLS-FARGO-14861/news/Wells-Fargo-to-pay-97-3-million-in-employee-class-action-suit-Judge-approves-97-3-million-settle-26564351 Wells Fargo. Guidelines when conducting background checks. Retrieved from https://wellsfargoworks. com/management/article/guidelines-when-conducting-background-checks O’Brien, G. (2018, March 26). Retrieved from https://www.
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