Wells Fargo Case Study

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According to the path-goal theory, an effective leader must satisfy two criteria. They must identify the employees’ goals, such as promotion, and clarify the path to get there. This will encourage job satisfaction, effort and leader acceptance. They must also find a connection between employee and organizational goals. Therefore, when employees work towards their goals, it benefits the company’s success as well (Jaeger, 2016b). At Wells Fargo the goals weren’t aligned, as promotional opportunities were limited (Wells Fargo Reviews). The divergence between employee and organizational goals, in addition to the incredible pressure to reach unreasonable sales quotas, ultimately led to unmotivated, dissatisfied, and frustrated employees. Despite the need for a consideration approach, where the focus is on the relationship held with employees, an initiating structure where the focus was on the task, was employed (Jaeger, 2016b).

A radical shift in the company culture is required. The company has to realign their espoused and enacted values by improving on the six content dimensions of organizational culture, especially tolerance of failure (Jaeger, 2016c). This does not mean that they should accept their employees’ shortcomings. They should make goals more attainable, rather than setting up employees for failure and then threatening them. Management would benefit from allowing employees to set their own goals. Not only would this dilute the culture of fear, it would also lead to greater employee commitment since employees would accept the goals (Jaeger, 2016c). Furthermore, employee autonomy, one of the core job dimensions in the job characteristics model, would also increase. Employees would carry greater responsibility for the outcomes of their work and thus, possess higher internal work motivation (Jaeger, 2016a). There also exists a culture of competitiveness amongst the employees. Getting employees to work in groups rather than individually can circumvent this. Rewards could also be given out based on group performance rather than individual performance. This may lead to new teamwork issues such as social loafing, but it will improve the competitive culture present at Wells Fargo.

In regards to leadership, more effective feedback channels are needed, as management seems unapproachable and demanding. Management should adopt a consideration approach, which focuses on relationships, considering employees are frustrated and dissatisfied (Jaeger 2016b). Furthermore, path-goal theory states that, leaders have to tailor their behavior to meet the needs, abilities, and personalities of the employees. Along with allowing them to set personal goals, it seems that a shift in leadership behavior towards a more participative approach would be beneficial in terms of leadership acceptance, motivation, and decision quality (Jaeger, 2016b). Lastly, although leader reward behavior is evident through the company bonus structure, leader punishment behavior is also prevalent and should be eliminated. Management should avoid threatening the job security of employees and putting unnecessary pressure on those who fail to meet targets. According to Herzberg’s two-factor theory, this will keep employees from being dissatisfied at the very minimum, whereas encouraging opportunities for advancement and growth can help employee satisfaction (Jaeger, 2016a). It would be hard to implement these solutions at first as they completely overhaul the present system and may pose a threat to the company’s current standing. Regardless, they would go a long way in boosting morale, job satisfaction, motivation, and leader effectiveness as well as earning back their customers’ trust and loyalty.

While addressing this case, a few limitations arose. Firstly, there is a lack of information on the vertical and horizontal division of labor. This made the research and understanding of the organizational structure more difficult. The solutions may encounter opposition from senior management who often denied the problem related to the organization’s culture. In order to move forward, they need to accept that there was a problem in their managing strategies and be held accountable for the scandal. The banking sector is very competitive, which might make it hard for the firms to lower their goals and make them more realistic. Wells Fargo should aim for a balance between achieving their high goals and making sure that nobody feels pressured. Wells Fargo has approximately 265,000 employees making it hard to give a voice to everyone. An information system might help in allowing more transparency in the workplace. Solving the problems related to the ethics hotline would enhance the communication within the bank. This would allow employees to feel safe and address their concerns or give feedback, avoiding another similar situation.

Similar to many other international banks, Wells Fargo fell victim to the pressure and competitive environment present in the banking industry. The illegal and unethical behaviors used to get ahead may be attributed to a number of issues. Namely, the company’s internal culture, the motivation techniques used, and the leadership’s behavior. Despite Wells Fargo’s former good-standing and strong reputation, a number of customers and employees were affected. Although it may be difficult to earn their customers trust and loyalty again, in order to get back on track, Wells Fargo must act according to the customer-oriented values that got them to the top of the banking industry in the first place.

References

Arnold, C. (2016, October 4). Former Wells Fargo Employees Describe Toxic Sales Culture, Even At HQ. Retrieved November 24, 2016, from http://www.npr.org/2016/10/04/496508361/former-wells-fargo-employees-describe-toxic-sales-culture-even-at-hq.

Bank of America Corporation Company Information. (n.d.). Retrieved from

http://www.hoovers.com/company-information/cs/company-profile.bank_of_america_corporation.183a83bb3df4e047.html. November 15, 2016.

Citigroup Inc. Company Information.. (n.d.). Retrieved from

http://www.hoovers.com/company-information/cs/company-profile.citigroup_inc.09761e6d147a2884.html. November 15, 2016.

Corkery, M. (2016, September 20). Elizabeth Warren Accuses Wells Fargo Chief of ‘Gutless Leadership’. The New York Times. Retrieved from http://www.nytimes.com/2016/09/21/business/dealbook/wells-fargo-ceo-john-stumpf-senate-testimony.html.

Cross-Selling. (2008, October). Retrieved November 7, 2016, from

http://www.investopedia.com/terms/c/cross-sell.asp.

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