wells fargo scandal ethics

Explicit principles are those that are codified and shared, and held up within the group, whereas tacit principles are those that are held and reaffirmed by observation and imitation. These can be as simple as the way people in an organization tend to dress, and as complex as lengthily written codes of conduct that members agree to live by. Having trouble finding the perfect essay? This is a moral statement that is true in all cases, and which can be relied upon to decide if a certain action is ethical. 51 animated videos - 1 to 2 minutes each - define key ethics terms and concepts. AHRMA Keynote Speaker! The Federal Reserve, in an unprecedented move. The diagram below shows how agency theory exists through the agent and principal relationship. Comparing #WellsFargo #Vision and #Values documents from 2013 – noticed many changes. And an education in the basics can benefit everyone in their day-to-day lives. By continuing we’ll assume you board with our cookie policy. You have the option to turn the switch and redirect the trolley. Or they could do the right thing and not create unauthorized accounts and potentially lose their jobs. The helpline cannot be considered a hotline to report specific suspected ethical violations. For example, one can say, “you should not steal.” This can be viewed as true for all people and may be relied upon in all cases. Robert @ FergusonValues . Sixth, Designing Ethical Systems: Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behavior, but it … . “Employees who missed sales quotas would have to work weekends or stay late to catch up. 8 short videos present the 7 principles of values-driven leadership from Giving Voice to Values by Mary Gentile. In other countries, dial the AT&T USA Direct Access Number from www.usa.att.com/traveler/index.jsp, then the above number. She was eventually fired. Over the two years following the emergence of the scandal, the following events transpired at Wells Fargo: These would already be a painful enough set of punishments for the bank, and they do not even consider the cost to the bank in the form of bad press and the potential impact to its business in terms of loss of customers. If you become aware of postings that violate these rules regarding acceptable behavior or content, you may contact NDIA at 703.522.1820. Did you catch that? Wells Fargo has a fiduciary duty to treat its customers fairly. What do you think Wells Fargo could have done to better curb fraudulent activity? Kant would likely suggest that the company should develop a code of conduct based on categorical imperatives, and then enforce that code of conduct. Mill took another viewpoint on ethics in his argument for utilitarianism. One thing I do know is that a lot has changed since December 2013 when I first reviewed the bank’s Vision & Values. This essay has been submitted by a student. Neither Stumpf nor Tolstedt will receive a bonus for 2016. If you’d like this or any other sample, we’ll happily email it to you. Plato went further, though, and defined four specific Virtues: temperance, fortitude, prudence, and justice. Without some level of organizational complicity, they could not have made the choices they made. How does this look in light of Wells Fargo? Wells Fargo has been fined $185 million by the city of Los Angeles, CA for generating fictitious accounts over a five-year period. 5. Available from: https://gradesfixer.com/free-essay-examples/wells-fargo-scandal-ethical-issues-and-possible-prevention-measures/, Recieve 100% plagiarism-Free paper just for 4.99$ on email, *Public papers are open and may contain not unique content. This section included a listing of 6 key areas the bank was focused on to improve and grow its business. Let’s look at how three core ethical philosophies could have been applied (or rather would have failed in their application) to help Wells Fargo avoid this costly and unproductive scandal. Creating the unauthorized accounts was wrong. On the other side of the ledger, the amount of revenue Wells Fargo made against all of these fines, penalties, and lost goodwill? Lawmakers at a Congressional hearing called WFB a “criminal enterprise.”. This view also provides some potential ideas about how the scandal could have been avoided – if Wells Fargo hadn’t tied cross-selling goals to such painful penalties, employees may not have seen the cost of not creating unauthorized accounts as high enough to cross their own ethical boundaries. WFB management had knowledge of the existence of the potentially unethical and illegal problem since 2013 but failed to make any public disclosures since, as WFB CEO John Stumpf told a U.S. Senate panel, the amounts involved were seen to be immaterial to the bank’s size. When aware of unethical and potentially illegal practices, management accountants shouldn’t ignore them but should take appropriate steps to help resolve the issue while considering the risks of reporting the practice and of remaining silent. The company used its financial strength to purchase Wachovia during the height of the financial crisis—forming what is now the third largest … Alternately, if Wells Fargo had better compliance practices for the creation of new accounts, the tellers may have felt that the cost of trying to create unauthorized accounts was too high (because of the likelihood that they would be caught doing so). A second useful concept is that of organizational communicativeness, that is, how freely information is exchanged between parties in the organization. Senior management also failed to make any changes to the incentive program before the regulatory actions. Students who find writing to be a difficult task. 1. The nature of business ethics education today relies on much the same set of underlying principles as ethics in general. 4. In addition, often when the incentives within an organization are misaligned, the sense of fairness within the organization disappears before other effects are felt. An October 12 Wells Fargo press release announced Stumpf’s immediate retirement. A categorical imperative is a moral statement that is true in all cases, and which can be relied upon to decide if a certain action is ethical. Home — Essay Samples — Entertainment — Fargo — Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures. If you violate this Legal Notice, NDIA may, in its sole discretion, delete the unacceptable content from your posting, remove or delete the posting in its entirety, issue you a warning, and/or terminate your use of the NDIA site. At the same time, approximately 5,300 employees were fired for their roles in the scandal – an enormous group of people to be complicit in this kind of activity. California and Illinois have announced one-year suspensions of business relationships with WFB. The latest ethics scandal to hit the banking world demonstrates the importance of ethical influences in regard to company culture, risk evaluation, employee incentives, and more. Singular ethics also provides a tool, in moral quandaries, that allows for the development of an ethical map of a situation. Coming back to these ideas from time to time as policies are being considered and implemented and tracking them on a regular basis will help organizations ensure that they live out the ethics they intend to, and avoid unproductive scandals. The employee’s sense of fairness is violated, and likely that employee’s focus and commitment to their job will suffer following the lost promotion. If this was an optimization of some kind, one can certainly be forgiven for being confused as to what was being optimized for. That is – people who are concerned with doing the right thing and trying to behave ethically. DEFENSE CONTRACTING, Topics: Defense Contracting, Defense Department, 2101 Wilson Blvd, Suite 700 This can be too vague though, unless concepts of fairness, communication, and wider organizational principles are clearly defined within the cultural footprint. In an attempt to correct the situation, Wells Fargo fired 5,300 participating employees, which amounts to about 1 percent of the 300,000 total company employees. At the same time, the bank ran a huge regulatory risk as scrutiny of financial service companies has increased since the great recession, and the creation of unauthorized accounts is viewed as a serious offense by regulators (hence the exceptionally large fines and penalties). Between 2011 and 2016, approximately 5,300 employees were fired for fraudulent sales practices. Should anyone really be surprised that this scandal occurred? Although Wells Fargo attempted to curb fraudulent activity with an ethics workshop and change in compensation structure, the company continued to find fraudulent accounts being opened by employees. It’s not as useful when considering a large, complex, multifaceted organization. Improvements in this area will not only lead to more confidence in our business organizations across the world but will also help businesses avoid costly unforced errors. There are nuances between personal ethics ("singular ethics") and those that occur within a business context ("organizational ethics"). Maybe a good place to start is to look at how we are teaching ethics to those that we would one day aspire to behave ethically as business leaders. Plato does not necessarily try to define people’s actions as right or wrong (as Kant and Mill do) but rather considers that a person in full possession of the Virtues will do what is right when faced with a decision. An entire generation of managers thrived in the culture, got rewarded for it, and are now in positions of power.” One former employee said she could not meet sales goals in any ethical way and called the Wells Fargo’s ethics hotline. Take the Trolley Problem – the very reason it is interesting to discuss is that there is not a clear ethical answer to it.

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