Wells Fargo: When hitting targets goes horribly wrong

Meeting targets is one of the core missions in any organisation interested in profitability. In fact, targets are so critical to performance that employees have been sacked or seen their salaries docked for failing to hit set numbers.

But organisational focus should not just be on meeting targets, but also on the methods used. In a story that is widely known by now, Wells Fargo employees were found to have created more than two million fake bank and credit card accounts on which they charged various fees.

While the fees were real, the accounts were never authorised by the owners. The company has since fired 5,300 employees, been fined Sh18.5 billion and is now under government investigation.

This is just one example of the fallout that can occur when companies set targets without being mindful of how these targets might elicit unintended unethical behaviour.

Under the heading, ‘Vision and Values’, Wells Fargo CEO John Stumpf states on the company website: “Everything we do is built on trust. It doesn’t happen with one transaction, in one day on the job or in one quarter. It’s earned relationship by relationship.”

Tighter controls

It now looks like a handful of employees will undo what it took Wells Fargo decades to build among millions of its customers.

Regulators are blaming the bank for not having tighter controls and oversight on employee behaviour. But a researcher and professor of leadership at a business school in Switzerland, Jenniffer Jordan, has questioned if loose controls were the problem.

“It seems like what was lacking was values-based leadership at the helm of this Wall Street behemoth,” she said.

According to Prof Jordan, lack of values-based leadership could lead to scandal at any company. Her research has shown that the best leaders are those who not only emphasise meeting goals, but also how those goals are met. For a values-based leader, a goal is only important to the extent that the company’s values are upheld in the process.

“Yes, setting goals is important for keeping employees motivated. But if those goals are achieved at the expense of the company’s values, then the achievement is more than shallow – it’s a major blemish to the company’s public image and trust,” Jordan said.

Overemphasis on goal achievement can lead to a ‘just do it’ mentality, that can be very dangerous if people feel they have been given permission to do whatever it takes, even if it means crossing a line.