Question

Develop a comprehensive description of Wells Fargo and its operations and identify the practices which would have contributed to company’s corporate failure. in 500 words

Answer 1

Wells Fargo & Company is an American multinational financial services compan founded in 1852.It is a diversified community based company catering to the various financial needs of the customers . It is headquartered in San Francisco, California, with central offices throughout the United States .one out of three households in United States enjoy the services of Wells Fargo. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018 rankings of America’s largest corporations. Various services offered by Wells Fargo include Business Banking, Wholesale banking, Mortgage, Consumer Finance, Commercial Finance and international services. Presently in this corona virus recession, it was helping customers by way of deferring payments and waiving fees. They announced recently that they will cap its participation in the U.S. government's small business coronavirus rescue program at $10 billion.

Key facts as per their fourth quarter report of 2019 (12/31/2019)

Assets — Approximately $1.9 trillion

Customers — Approximately 70 million+

ATMs — More than 13,000

NFC – enabled ATMs (Mobile Wallet at ATM)

— 11,551 (85% of network)

Team members — Approximately 260,000

Locations — 7,400

Market value of stock — $222 billion

Wells Fargo is an industry leader and most trusted bank . In the year 2016 , they had to face the worst episode due to the dump incentive system they adopted . As per their policy ,Employees have to hit the sales targets so as to gain the bonus . When the sales pressure was hard to bear ,employees created fraudulent accounts so as to meet their sales target. As soon as the scandal was revealed they eliminated the sales goals that prompted the employees to the fraudulent activity . employees who had connection with this scandal was fired . They paid the largest penalty for the terrible mistake they committed .

Corporate failures can happen when there is risk blindness , ineffective board members , unethical practices , defective communication and wrong incentive policies .

By analysing the case of Wells fargo , they were put on fire due to the wrong incentive policy .It created a bad behaviour which in turn vanished the ethical image   in the minds of public . They managed to over come this cause of corporate failure by immediately eliminating the existing HR policy . Promptly switching to a better HR policy saved Wells Fargo . Effective Communication after the scandal created transparency in the minds of stake holders . . They have effectively communicated to the investors and customers that mistake have been committed and they have corrected the same by accepting the penalty imposed on them. Wells Fargo regained the reputation they lost .. In 2018 also they had issues but they managed to comply with the government regulations which maintained the image in the eyes of public . Loss of trust among the public is the nightmare of every financial institution as their existence solely depends on the mutual trust . Wells Fargo regained the trust and avoided the chances of corporate failure which would have happened if prompt and wise decisions were not made .