Question

Human Resource Management:

Respond to the following

Throughout history, various organizations have impacted society, as a whole, due to unethical actions and behaviors. Examine one organization that has been in the news within the past seven years for displaying unethical behaviors. Then, do the following:

• Provide an overview of this organization (e.g., company name, industry, and mission/vision).
• Find the companys Code of Ethics/corporate governance document and examine what aspects of these ethics were violated. Justify your rationale for why you believe certain components were violated, as related to the unethical behavior that occurred.
• Using information/research gained through the course thus far, how would you have modified their Code of Ethics to, hopefully, prevent these unethical lapses of judgment?

Answer 1

WELLS FARGO ACCOUNT SCANDAL:

OVERVIEW:

Wells Fargo is a US based Multinational financial organization and one of the top banks in the world which was founded by Henry Well and William Fargo in 1852. It is also one of the " Big 4 banks" in America. It has its presence in more than 35 countries around the world and always awarded as the most valuable bank brand in the world.

They provide financial services such as Savings account, Business/Current Account, Credit cards, Loans, Investments, Insurance, Merchant services, commercial finances and customer relationship banking.

Their vision is to satisfy the customers financial need and help them to succeed financially. Their value is Ethics, Customer attraction, Exceeding expectation,Promote diversity and  Empower leadership.

They have other subsidiary companies such as WellsFargo Advisors, WellsFargo Rail, WellsFargo securities,WellsFargo Bank,N.A.

ACCOUNT SCANDAL CASE :

Keeping all the reputation on one side, the company faced a huge controversy for opening millions of savings account in the name of the Wells Fargo clients without their permission. The controversy started in September 2016 but the scandal has started its roots in a very early concept called " Cross selling". Cross selling is the concept of encouraging customer to buy another product along with the needed one.

But in case of Wells Fargo, the mistakes lied with the employees, Due to immense target pressure, the employees started to sanction credit cards to customers who are already pre-approved with a token.,but without their permission. This was made possible by creating "fake pin numbers" such as "0000" to many customers and accepting the offers by themselves.They have also issued unwanted insurance policies for many customers.  

Apart from this, they have created fake target reports to the higher authority where there the goals are not reached.

CODE OF ETHICS AND JUSTIFICATION FOR VIOLATION:

• Honesty and Integrity: It is highly comparmised in this case, employees not following the laws, rules and regulations of the company. Job responsibilities under business policies are not followed.
• Ethical leadership , of supporting your employee by providing guidance in ethical selling, never placing pressure on employee to take unethical decisions, formal investigation on employees.
• Accountability on decision making- Explaining the responsibility and risks involved in the role and how to handle it ethically.
• Following Ethics Line: Ethics line is the confidential line provided for reporting violation of code and laws.
• Data/Information security policy - (Customer data being misused in terms of password ,etc)
• Privacy policy-(customer privacy is interfered by applying creditcards , insurances etc)
• Record management policy- (Employee modifies the sales target records)
• Information risk management

MODIFICATION OF CODE OF ETHICS:

• The problem here has mainly arose due to irresponsibility of leadership/ top management qualities. Top management need to analyse problems related to employees of frequent intervals and create a better Sales Model.
• The Target needs to be forecast much prior and evenly distributed to employee.
• Strong Ethics and Regulatory compliance team assigned.
• The company should opt for a better cyber security team to avoid exploitation of privacy
• The Bank should send alerts to customer when unusual transactions occur and if a product is been purchased the bank should attach a confirmation from the customer by any means , like Mobile, Email or Direct verification.