Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behaviour but clearly did not work. Why do you think that is? What steps can leaders take to design systems within their organisations that encourage ethical behaviour rather than unethical behaviour? Aim for 400 words

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Wells Fargo was the darling of the banking industry, with some of the highest returns on equity in the sector and a soaring stock price. Top management flaunted the company’s lead in “cross-selling”: the sale of additional products to existing customers. “Eight is great,” as in eight Wells Fargo products for every customer, was CEO John Stumpf’s mantra. In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts. It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses. Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to shady sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not honour the company’s values and that there were no incentives to commit unethical behavior. The board initially stood behind the CEO but soon after received his resignation and “clawed back” millions of dollars in his compensation.

Q: Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behaviour but clearly did not work. Why do you think that is? What steps can leaders take to design systems within their organisations that encourage ethical behaviour rather than unethical behaviour?

Aim for 400 words

- Go into detail about what didn't work and why

- clear steps leaders could implement

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