Colin Simon – In recent weeks, roughly 5,300 Wells Fargo employees and managers were fired for knowingly opening millions of unauthorized accounts which generated millions in revenue. Wells Fargo agreed to pay $190 million to settle the civil charges involving these fraudulent accounts. This penalty can be seen as a mere slap on the wrist considering that Wells Fargo is worth upwards of $235 billion.
Typically, when there is a large corporate scandal, the public calls for the resignation of the chief corporate executive and other high ranking officials. In the latest fiasco surrounding Wells Fargo, government officials such as Senator Elizabeth Warren and Treasury Secretary Jack Lew have demanded that Wells Fargo CEO John Stumpf resign. Yet, as of now, Mr. Stumpf has not offered to resign nor has he fired any senior executives. Rather, he has cast the blame upon the employees themselves.
So the overarching question is who is to blame: the corporate executives, the employees, or perhaps both? Both parties seem relatively at fault. However, when illuminating the context of this fiasco, the question changes. Rather than who is to blame, the more appropriate question is: what is to blame?
The answer: Pressure.
For many years, employees of Wells Fargo have been subjected to mental abuse from managers and been forced to work significant amounts of overtime on weekdays and weekends in an effort to meet sales quotas. Quotas are met through getting customers to open multiple accounts with the bank. These high-pressure environments and tactics can be seen to have led to the opening of these fake accounts. By opening fake accounts, the employees could satisfy the sales quotas and collect bigger bonuses—or even just keep their jobs.
Wells Fargo does not seem to be the only bank to put such immense pressure on its employees to get customers to open multiple accounts. It is a cultural practice that permeates the banking industry. Former bankers at other banks have claimed this to be an industry-wide problem.
The competition and aggressiveness amongst the banking industry is growing, leading to ever-increasing pressure being put on the employees by senior management. This has resulted in a blurred line between what is best for the customers and what is best for the employee’s sales goals.
In reality, the revenue generated from the opening of these false accounts is not for the betterment of the bank as a whole, but rather for the financial betterment of the employees themselves. The pressure put on the employees stems from the senior executives whom established these aggressive sales goals in order to keep their bank ahead of its competitors. Without this pressure, the systemic illegal actions of opening fraudulent accounts by its employees seem unlikely to occur.
A workplace culture that tempts employees to take illegal action is no proper workplace at all. For Wells Fargo and its competitors, these aggressive sales goals and high-pressure environments for its employees need to be dialed back. Otherwise, fiascos such as this are likely to continue.
