Page 32 - Wells Fargo Bank (C) Teaching Note

The answer, lies in a failure on the part of management.
Wells Fargo suffered from:

• Lax internal controls

• Excessive incentive programmes

• Intense performance pressure from unrealistic sales

goals

Employees Incentives

Branch-level Reward
employees
=
incentivised to
increase products Bonus Payment or
per household fired

Senior management
disconnect with
incentive structures.

Senior Management Incentives
Failure to see the
problem or simply a
failure to monitor it?

Senior
management Reward
incentivised to
increase =

performance not
Package of benefits
based on
‘Eight is Great’ No chance of firing
metric

The CEOs who presided over these and similar practices,

when brought to book, generally go free with large

remuneration packages and pensions. After all the

rhetoric there is little evidence of senior management

facing criminal or even punitive censure.