Running head: TASK FORCE COMMITTEE REPORT 1
TASK FORCE COMMITTEE REPORT 6
Task Force Committee Report: Issues and Solutions
Task Force Committee Report: Issues and Solutions
Organization and the Issue to Resolve
Wells Fargo & Company is a publicly traded financial services company that originates from America with its headquarters in San Francisco, California and its central offices scattered across the country. With respect to market capitalization, it is ranked the second largest bank globally and by total assets, the third-largest bank in United States (Keller & Chiglinsky 2016). Wells Fargo was established in 18 March, 1852 in New York, United States by Henry Wells and William Fargo. The company provides services such as community banking, consumer lending, wholesale banking, equipment lending, agricultural finance, insurance agency, trust services as well as wealth and investment management. Wells Fargo has an investment banking division called Wells Fargo Securities. Its headquarter is in Charlotte, North Carolina. This subsidiary provides services of cross-selling, charter and international operations.
Currently, there is an ongoing controversy of the Wells Fargo account fraud scandal. This problem is believed to be as a result of creation of millions of fraudulent checking and savings accounts on behalf of the clients of Wells Fargo without their personal consent (Keller, 2017). As a result of the illegal activity, the company was fined, by various regulatory bodies such as the Consumer Financial Protection Bureau (CFPB), a combined amount of $185million. The company also faces other additional criminal and civil suits (Flitter et AL., 2018). These issues have adversely affected productivity by weakening the performance of the company due to the reduced opening and checking of new accounts together with application for credit cards. Similarly, customer loyalty also dropped as affected customers sleeked alternative service providers. As a result, the company has sustained disappointing levels of revenue and increased expenses as a result of high legal costs.
Current Corporate Structure
The corporate structure of Wells Fargo is hierarchical such that power and authority runs from top management to the middle management and then to the lower division. The top management comprises the company president and CFO, CIO, EVP, risk manager, legal, human resource, administration, community banking among other management positions. It also has fourteen board members. They make strategic decisions that are enacted by the downlines of the organization structure. The company’s corporate culture is driven by the vision which is to satisfy the customers’ financial needs and help them succeed financially. The main goal and mission is to become the financial services leader in areas of customer service and advice, innovation, team member engagement, corporate citizenship, risk management and shareholder value. The values include ethics, what’s rights for customers, leadership as well as diversity and inclusion. However, the organization culture and structure is weak leaving loopholes for greedy and devious leaders of the organization to pursue conflicting goals and leading with the contradictions created due to the conflicts. The top management therefore misled 5300 employees to open over 2 million fake accounts and as a result failed to honor the values of the company. This also caused widespread unethical behavior within the company as well as lack of motivation and job security for the remaining employees who saw the 5300 employees fired within a span of five years (Morgenson & Glazer, 2018).
Areas of Weakness
The first area of weakness is the corporate structure whereby employees take orders from the top management without demanding for explanations. It is important to note that there are multiple downside risks that the company is facing from internal control weakness disclosure that is giving room for fraudulent activities within the company. Another area of weakness is poor communication between the management and employees whereby, the company does not portray two-way communication hence high chances of important information not reaching top management for decision making. There is also a weakness in the company culture that accommodates widespread illegal sales practices and competition among employees to meet the aggressive sales goals. This culture is considered the primary trigger of the Wells Fargo fraud scandal. In addition to culture weakness, the company lacks the culture of caring for customers even though is stated in their values. Lastly, there is a weakness of lack of employee motivation in that employees are not well compensated for extraordinary performances and they are not given room for self-improvement. This reduces the performance of individual employees.
The following are some of the possible remedies to the Wells Fargo scandal that has caused devastating effects to the company. First, the company needs to focus on modifying the corporate structure and culture. This involves firing the compromised employees and employing new ones as well as restructuring the company’s management to improve team leadership and communication. Modifying organizational culture involve establishing stronger vision and values that will guide the company towards growth and success in the future decades. Additionally, the company should consider benchmarking against companies known to truly act in accordance with their vision and values. This will help acquire ideas on what can work in Wells Fargo as well as in incorporating the culture of caring for customers (Arnold, 2016).
Another possible solution is solving the problems systematically by encouraging interdependence across business units and departments. This will involve scrutinizing significant decisions through multiple lenses before finalizing. This will enhance good team leadership as well as motivation among team members. Another possible solution is diversifying management and clarifying decision rights between different managers. This will help determine which leaders are accountable for what decisions as well as removing the uncertainties within the organization. Lastly, the company should develop motivational strategies to improve the performance of employees in bringing back the trust the company had. This involves bettering compensation and providing rewards for top performing employees. The company should also provide more opportunities for independent growth of the employees since they are the ambassadors of the company thus, this will help them market the company and attract customers, offer better services hence improving customer trust and loyalty.
Wells Fargo is a financial services company in America with it’s headquarters in San Francisco, California. It is ranked second largest bank globally in terms of market capitalization and third largest in US in assets. It was established in 18 March, 1852 by Henry Wells and William Fargo. It’s services include community banking, consumer lending, wholesale banking, equipment lending, agricultural finance, insurance agency, trust services as well as wealth and investment management. The company was currently faced by an ongoing controversy of account fraud scandal as a result of creation of millions of fraudulent accounts on behalf of clients without their consent. This has coasted the company fines to a tune of $185 million and other criminal and civil suits. Additionally, the company has faced reduction in productivity and performance, loss of clients, low revenues and high legal expenses hence creating the need to find solutions to these problems.
The current corporate structure of the organization is hierarchical with the executive making strategic decisions that are enacted by the middle and lower level management. This structure has played a part in the problems facing Wells Fargo since it is weak and offers loopholes for the devious and greedy managers who misled employees into conducting business unethically and opening over two million fake client accounts. The organization culture also does not honor the values and vision of the company. Therefore, it is important to note that there is a weakness in the corporate structure, company culture, team leadership, communication as well as employee motivation.
To combat the challenges facing the organization and restore normality and trust, the following are some of the possible actions: modifying the corporate structure and culture as well as benchmarking with companies with strong values, structure and vision so as to help improve Wells Fargo’s culture, structure and adherence to values; solving problems systematically to enhance team leadership and motivation among team members ; diversifying management and clarifying decision rights between managers to improve accountability and remove uncertainties; and lastly, development of motivational strategies so as to improve employee performance and customer trust and loyalty through improved and better services.
Arnold, C. (2016). Former Wells Fargo employees describe toxic sales culture, even at HQ. NPR.
Flitter, E., Appelbaum, B. & Cowley, S. (2018). Federal reserve shackles Wells Fargo after fraud scandal. The New York Times.
Keller, L. (2017). Wells Fargo’s fake accounts grow to 3.5 million in suit. Bloomberg.
Keller, L.J. & Chglinsky, K. (2016). Wells Fargo eclipsed by JP Morgan as world’s most valuable bank. Bloomberg.
Morgenson, G. & Glazer, E. (2018). Wells Fargo’s 401(k) practices probed by labor department. The Wall Street Journal.