Introduction
Ethics remains among the most important considerations in business. In order to both serve the customers and promote healthy corporate growth, it is necessary to establish reliable systems of ethical management. Examining the case of Wells Fargo gives one an opportunity to appreciate the value of ethical leadership in business.
Ethics Questions
Modelling Character and Values
Considering the capabilities and leadership of Stumpf as the CEO of Wells Fargo, the man was able to cultivate a number of values in the company management. As a leader, Stumpf was not able to adequately respond to the emergent threat of unethical behavior. The reluctance in taking accountability or proposing an active solution to the issue spread to the rest of the organization, affecting its ability to self-regulate (Veetikazhi and Krishnan, 2018). In particular, a focus was made on aggressive sales practices, placing corporate profits as the main concern. Taking into account the Stumpf’s motto “Eight is great”, it is reasonable to assume that the organization placed great value of pushing additional products onto its customers (Tayan, 2022). Therefore, Wells Fargo focused much less on serving their customers and fulfilling their needs, instead choosing to embellish the importance of their profits.
Encouraging Ethical Conduct and Leadership
Ethics are among the key considerations for a business venture. Organizational practices that encourage socially-respected moral values are likely to attract customers and produce profits (Witzel, 2018). Leaders must use the correct values and behaviors in order to direct their organizations on the desired path. In order to encourage ethical conduct, CEO’s should emphasize the value of ethical sales, approach their work with empathy and consideration. The behavior of a leader must be customer-oriented, placing the needs, attitudes, and opinions of the buyers at the center of corporate governance (Ramich, 2022). Ethical leadership is capable of improving employee performance and corporate performance as a whole (AlShehhi, Alshurideh, Kurdi and Salloum, 2020; Saha, Shashi, Singh and Dahiya, 2019). Furthermore, it is important to show positive personal qualities, such as teamwork, understanding, an ability to accept criticism and change (Fibuch, 2022). A professional and approachable personality can translate into bolstering corporate climate.
Ethical Systems and Wells Fargo
The ethical systems at Wells Fargo were not given enough power or agency to be effective. With the increased incentive to seek profit via unethical measures, it was more advantageous for upper management to disregard ethical hotline considerations, or actively oppose them (A New Model for Ethical Leadership, 2022). Additionally, the pressure to conform persisted, overpowering the desire to combat unwanted behaviors within the organization (Lilly, Durr, Grogan and Super, 2021). In the face of rampant misuse of power, the ethical systems in the company were not capable of fulfilling their responsibilities. In order to allow such structures to function properly, it is important to encourage ethically-centered corporate culture within an organization. In addition, ethical boards, hotlines and other systems must be given sufficient authority to enact change within the organization when it is needed. In case of using a hotline, the process should also allow for a certain degree of anonymity, to protect employees from being fired in retaliation.
Business Takeaways and Potential Changes
There are a number of takeaways that the fall of Wells Fargo has shown to the industry. First, it demonstrated the importance of establishing an ethically-driven, uniform corporate culture. Despite certain employees in the company having ethical concerns, they were unable to speak up, or were pressured in acting unethically. According to norm theory, organizations should follow universal standards of ethical conduct as a way to encourage proper response to different kinds of situations (Akers, 2022). If Wells Fargo had followed the norms of ethics throughout the entire organization, they would have been able to better respond to emergent problems. Furthermore, it is evident that customer-driven service is one of the most important business practices. Wells Fargo worked to satisfy the monetary needs of its leaders, managers and executives, not taking either their employees or buyers into consideration. Establishing a stronger system of worker’s support, and focusing on delivering value would have likely helped the organization. Applying principles of utilitarianism, an organization must put emphasis on promoting the wellness of the majority with their actions (Akers, 2022). Through working with a common employee and buyer in mind, an organization can make better leadership decisions.
Conclusion
In conclusion, Wells Fargo served as a vital example of corporate mismanagement, professional neglect and unethical business practices. The company was unable to manage itself from the inside in order to minimize unwanted ethical dealings, and collapsed as a result.
Reference List
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Ramich, A., (2022) Council Post: What Is Customer Centricity? Forbes. Web.
Saha, R., Shashi, R., Singh, R. and Dahiya, R., (2019) Effect of ethical leadership and corporate social responsibility on firm performance: A systematic review. Corporate Social Responsibility and Environmental Management, 27(2), pp. 409-429.
Tayan, B., (2022) The Wells Fargo Cross-Selling Scandal. The Harvard Law School Forum on Corporate Governance. Web.
Veetikazhi, R. and Krishnan, G., (2018) Wells Fargo: Fall from Great to Miserable: A Case Study on Corporate Governance Failures. South Asian Journal of Business and Management Cases, 8(1), pp. 88-99.
Witzel, M., (2018) The Ethical Leader: Why Doing the Right Thing Can Be the Key to Competitive Advantage. Bloomsbury Business.