Hundreds of thousands of companies expect their employees to meet regular quotas every year to ensure continued high revenues. These standards foster a culture of immense pressure to perform and meet these goals. Wells Fargo, a well-known banking institution, set such standards for their employees, checking each person’s sales progress multiple times per day and constantly demanding results. This harsh and competitive environment is what eventually lead to a massive scandal involving 5300 employees, who created fake email accounts were created in order to open credit cards without the customer’s consent in order to meet the high standards set for employees.
According to Stakeholder’s Theory, as told by R Edward Freeman, the company’s prioritization of profits through the use of almost unreachable quotas is what will lead to its deterioration. When Wells Fargo placed profit on a pedestal so high that they were willing to neglect and harm their customers, the clients of the bank lose trust in the institution and as a result, take their business elsewhere. Although it is important for the company to maintain its rate of output, the focus needs to be on benefit for all the business’ stakeholders, including customers, as opposed to just the beneficiaries of high credit card sales.
On the other hand, based on Friedman’s article “The Social Responsibility of a Business is to Increase its Profits”, the bank’s primary focus on maximizing profits is justified and healthy. It is notable that, unlike Wells Fargo, Friedman stipulates the company still needs to stay within regulations and ethical limits. Regardless, setting quotas that require employees to sell unneccessary products is not necessarily in the best interest of the client. However, this single minded focus can dramatically increase the bank’s profit. Friedman’s reasoning of prioritizing profit explains why the company’s demanding sales goals have made it so successful in such a competitive industry.
Wells Fargo has since released statements apologizing for the incident and insisting that the company always has and always will prioritize the customer above all else. Despite this claim, the fraudulent cards were only discovered after customers noticed they were being charged for services they didn’t ask for, long after the violations started. This brings into question the sincerity of their statements. In the short term, these deceptions temporarily brought profit to the company and employees. Wells Fargo would have likely benefited by taking a business approach similar to Freeman’s explanation. Ultimately, the lack of responsibility to customers and sole focus on profit seem to be what allowed so many employees feel comfortable to disregard ethical conduct and use any means possible to achieve their goals.
Wells Fargo was recently fined for creating unauthorized credit cards. (1)
- Sullivan, Justin. Wells Fargo Bank. Digital image. Money.usnews.com. Getty Images, 24 July 2015. Web. 10 Sept. 2016. <http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/07/24/why-wells-fargo-is-the-best-bank-stock-today>.
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