U02: When ethics doesn’t matter but bonuses do….

Meeting goals meant getting a substantial bonus. It was more important to meet those goals by doing something unethical than to do the right thing. Wells Fargo has been in the news recently regarding top management allowing accounts to be opened without the knowledge of the account holder. As a result, top management received substantial bonuses and customers were left with accounts that they don’t want and distrust for Wells Fargo. There was no concern for the customers, employees or the fact that they were operating unethically.

Wells Fargo’s CEO John Stumpf along with other leaders were well aware of what was going, in fact, they encouraged it. Wells Fargo was focused on goals, goal attainment is connected with leadership and ethics. “Leaders determine the direction of an organization, and there is an evaluative component to setting that agenda; it is either desirable or undesirable.” (PSU) In this case, the agenda was undesirable because it resulted in over 5,000 employees being fired. When the leader is allowing this behavior, employees will follow because they are doing as they are told. In some cases, they don’t even realize that they are doing anything wrong because it is coming from their superiors.

“Toxic leaders are characterized by destructive behaviors such as leaving their followers worse off than they found them, violating the basic human rights of others and playing to their basest fears.” (Northouse, 2016) The leaders at Wells Fargo, fired employees that were doing what they were told to do and they were violating the rights of their customers by opening fraudulent accounts all for their advantage.

“Earlier this month, Wells agreed to pay $185 million in fines and restitution to federal regulators after employees opened about 1.5 million accounts customers didn’t want, and perhaps 500,000 undesired credit cards.” (Dougherty) Although, Wells Fargo is doing to right thing by paying the fines and restitutions, it doesn’t take away the fact that they did these unethical practices and that thousands of low-level employees lost their jobs. And let’s not forget the distrust that the public now has for Wells Fargo.

 

References:

Pennsylvania State University (2016) Lesson 1: Ethics and Leadership. Retrieved from https://psu.instructure.com/courses/1791578

Dougherty, Carter. (2016) Wells Fargo Scandal A Setback To Lobbying Efforts By Big Banks http://www.huffingtonpost.com/entry/wells-fargo-lobbying_us_57f50546e4b0325452629c51 retrieved on 10/5/16

Northouse, P. (2016). Leadership: Theory and Practice (7th ed.). Thousand Oaks, CA: SAGE

3 Comments

  1. Kimberly Carney October 9, 2016 at 4:37 PM #

    Brittany and Sonja
    You both made valid points. I understand that the employees were wrong too, as they weren’t being ethical in following their bosses. I do realize that this isn’t right, however, these were low-level employees that needed their jobs. It isn’t so easy to just quit their jobs and get a new one. Again, not saying that they were right but that is just an important point to consider.

    Thank you both for your thoughts because they are definitely valid points.

  2. Sonja Celeste Rushton Whittington October 6, 2016 at 2:41 PM #

    Brittany and Kimberly, I actually agree with both of you. I think this is an example of complete breakdown in the ethical climate of the organization. The bottom line took precedence over all other considerations.

    While the employees certainly knew what they were doing was wrong (for the most part), the argument could be made that the leaders at Wells Fargo exploited the lower-level employees by implicitly encouraging the unethical behavior. As Brittany noted, the leaders developed a corporate culture that accepted this unethical behavior. Although I have not read the Well Fargo Code of Ethics, I suspect it addresses professional relationships and prohibits leaders from using their position of power to coerce followers into unethical behavior. The APA, the AOM and the CCEP codes of ethics each specifically prohibit the psychologist from exploiting those junior or reliant on him or her for personal or professional gain. (APA, 2010; AOM, 2006 ; CCEP, 2000). We tend to think of situations like this as being in the realm of sexual harassment. But in this case, it seems the leaders exploited the lower-level workers for monetary gain. We’ve probably all worked in environments where “little” ethical violations were ignored; little violations can snowball and/or become acceptable if not checked. The workers certainly knew they were doing something unethical but no one was looking and no one was stopping them. Failure, in my opinion, on both sides.

    Sonja

    Academy of Management. (2006). Code of ethics. Retrieved from aom.org: http://aom.org/About-AOM/Code-of-Ethics.aspx

    American Psychological Association. (2010, June 1). Ethical principles of psychologists and code of conduct: Including 2010 amendments. Retrieved from http://www.apa.org/ethics/code/

    Canadian Psychological Association. (2000). Canadian code of ethics for psychologists. Retrieved from http://www.cpa.ca/aboutcpa/committees/ethics/codeofethics

  3. Brittany Nicole Krapf October 6, 2016 at 12:04 PM #

    Hi Kimberly,

    I have to play devil’s advocate here and argue that the employees signed the code of conduct provided by the bank, and in doing so knew that they were acting in “inappropriate sales conduct” (Smith, 2016). While I agree that leadership has an influence over the employees, and the threat of termination and bonus of extra pay played an important role in their decision, the employees still acted in an unethical manner.

    When a code of conduct is introduced, rules and regulations are set to be enforced. Likewise, most codes encourage their employees to act in the highest of ethical standards and to take responsibility for their behaviors. As Lowman (2012) argues, it is the professional responsibility of employees to protect clients and their well-being (p. 243). And the employees of the bank, no matter what the requirements of management were, did not act in a manner that protected the clients. As is noted in the Academy of Management (2006) Code of Ethics, integrity is a very important factor to ethical decision making. The code states that individuals must “seek to promote accuracy, honesty, and truthfulness in the science, teaching, and practice of their profession. In these activities … do not steal, cheat, or engage in fraud, subterfuge, or intentional misrepresentation of fact” (AOM, 2006, p. 2).

    I have to argue that the employees knew what they were doing was wrong and against their bank’s code of conduct. And, whether or not they were following the rules of upper management, they had options. Not only did they have the option to leave the company, but Wells Fargo had a system in place for internal reporting in situations such as this (Smith, 2016). There were options. I cannot believe that 5,000 employees weren’t aware that there actions were unethical or wrong.

    References

    Academy of Management. (2006). Code of ethics. Retrieved from http://aom.org/About-AOM/Code-of-ethics.aspx

    Lowman, R. L. (Ed.). (2006). The ethical practice of psychology in organizations (2nd ed.). Washington, DC: American Psychological Association.

    Smith, A. (2016, September 14). Wells fargo’s code of conduct didn’t prevent alleged dodd-frank violations: Educate employees about the code of conduct and vigorously enforce it. Society for Human Resource Management. Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/wells-fargo-code-of-conduct.aspx

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