Between 2016-2018, Wells Fargo Financial Services Company (“Wells Fargo”) reported an account fraud scandal where bank employees had created millions of bank accounts without clients’ consents.
Bank account fraud, Wells Fargo
The Company was accused of a variety of fraudulent and unethical practices. subsequently, this unethical practice led to civil and criminal lawsuits resulting in a $2.7 billion penalty by the end of 2018. Meanwhile, the former chief executive of the Company, John Stumpf, faced a lifetime ban from banking and was fined $17.5 million. The Company fired 5300 employees found responsible to perform these unethical practices.
How did it happen?
These employees who had complete control over clients’ accounts switched their PIN to “0000”. As a result, tellers could move money out of accounts without the client’s permission. Besides, the employees issued different types of credit cards for pre-approved clients while cardholders did not know about it.
Investigation in action
While the Company faced $185 million in fines for the creation of 1.5 million fake accounts in September 2016, the scandal did not cease to exist and, as reported, in March 2017, an additional 3.5 million fake accounts were reported by Consumer Financial Protection Bureau. Furthermore, upon investigation, it was clear that the primary source of these unethical practices was not a limited number of unethical employees but mostly the effect of high sales pressure by managers to increase sales to receive employee rewards.
The employee rewards systems
The employee rewards systems are programs and strategies that motivate individuals or teams to achieve company goals. Moreover, an attainable rewarding system injects the passion and encouragement needed for employees to reach their higher capacity and performance level. These programs can also explain motivational theories such as expectancy and content theories. However, the rewards systems are not just financial and they must pay extra money or commission to employees; rewards can be non-financial such as training and skill improvement programs.
Successful employee rewards system
A crucial element in implementing a successful rewards system is to ensure that organizations treat and reward employees equally and based on their measured performance. Since, the entities and managers who monitor and evaluate employees precisely and do not prioritize financial gains over business ethics and performance have a higher chance of success.
Failure in employee rewarding system
An inaccurate practice in setting and managing the recognition systems could cause considerable damage to a business and its organizational behavior system. Additionally, Wells Fargo pressured the employees to sell more products without monitoring the employees’ practices and implementing the quality-metrics in the workplace, they made their biggest mistake.
Make it attainable!
An unattainable rewarding system could influence the business negatively if employees can not achieve their financial targets from legitimate ways; Consequently, employees are likely to sacrifice their ethics, rules, and the quality of their work to achieve the business mandated outcomes. For example, Wall Fargo managers and employees ignored the fundamental factors such as customer service, ethics, law and reputation and concentrated on financial rewards and advantages.
Come to an end…
Overall, the employee rewarding systems are the outcome of behavioral psychology researches and years of experience in organizational behavior. Therefore, to implement these systems in workplaces, it is crucial to analyze and inspect all influential factors.
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