Incentives Gone Wrong at Wells Fargo – A Case Study
The article “Incentives Gone Wrong, Then Wrong Again, and Wrong Again” is a cautionary tale about how even well-intentioned incentives can go awry without the appropriate oversite and measured impacts (Kinicki, 2021, p. 247-249). Viewing the situation from a Wells Fargo leadership perspective, it is easy to see how flippant incentives based on an “eight is great” philosophy started the chain of events into motion (Kinicki, 2021, p. 247-249). What is not clear, however, is why leaders continued to turn a blind eye as it became apparent the performance measurement was resulting in short-term windfalls with long-term devastating effects.
Needing to be a profitable, it is natural that Wells Fargo looked to incentivize its employees by rewarding those who were able to open more accounts. The organization lacked structural guardrails, however, that would prevent employees from unethical behaviors such as opening accounts without customer knowledge or opening fraudulent, temporary accounts to receive credit before promptly closing them. Leadership was aware, at least to some degree, as employees were documented or terminated over some of these unethical actions. This was happening at the same time as other employees complained about their inability to reach the eight-account objective without using similar, undesirable means. Although the company instructed employees not to participate in these illicit activities, actions speak louder than words. Leadership failed to make changes to prevent the unwanted behaviors, seeming hypocritical. Employees were in fact rewarded if they were smart enough not to get caught. The lack of corrective action by leaders destroyed the organization’s reputation, not only as a banking institution but also as an employer. The financial and future branding costs to the organization are hefty. Using the “Nature of Consequence” model provided in the text, Wells Fargo applied positive reinforcement to supposedly unwanted behaviors sending mixed messages throughout the organization (Kinicki, 2021, p. 237).
Since motivating the employees to make more money for the business seems a key driver, it is unclear why employees were not measured on the profit obtained from transactions versus the sheer number of accounts opened (Witman, 2018). Leadership failed by not conducting a long-term impact study. Based on the feedback and noted discrepancies the current model was not sustainable. From the employee perspective, individuals saw their colleagues rewarded for unethical behavior impacting overall attitudes and employee engagement. Rather than incentivizing a team to work together, the performance measures pitted employees against one another, clawing their way to the top to earn recognition and monetary rewards. Overall citizenship within the organization was negatively impacted, with leadership losing credibility. Based on the information within the article, it is particularly disturbing that “eight is great” seems to be selected based solely on the fact it rhymed versus any sound judgement or data to support customers’ needs or wants for that many accounts (Kinicki, 2021, p. 247-249). Generally, this toxic work environment must have taken a toll on employees’ overall mental well-being as they came to understand leadership’s lack of integrity and care for both their employees and customers.
Addressing these issues must start at the top of the organization with a change of leadership. Those in power who not only allowed but at times rewarded these behaviors must be removed. New leadership has a difficult task of regaining trust, something hard to obtain and easily lost. The criteria used in the performance management system needs to be completely revamped too. Employee incentives should be tied to a mix of customer service scores, profitability of accounts (both new and existing), along with additional recognition for creativity or continuous improvement ideas. Regardless of how many accounts are opened, if the customers are not treated well, they can easily take their money to other establishments. Employees need to feel safe and respected in the workplace. Creating and supporting a whistle-blower program, supported by those heading the company, would be a step in the right direction. Lastly, a more stringent internal audit process must be put in place to ensure accountability at all levels of the organization. This will lead to less opportunity for those unethical tendencies to resurface.
The Bible states in Colossians 3:23, “And whatsoever ye do, do it heartily, as to the Lord, and not unto men” (Morris, 2012). Christians are to do all jobs as if they are serving the Lord, being honest and doing their best. Allowing anyone, regardless of their status, to impose unethical behaviors is not biblical. Christians primary goals are to love God first and then love their neighbors as themselves. Taking earthly rewards for misleading and financially hurting others is sinful, even if an organization encourages the behavior through ill-conceived performance management systems.
Kinicki, A. (2021). Incentives gone wrong, then wrong again, and wrong again. In Organizational behavior a practical, problem-solving approach (3e ed., pp. 247-249). McGraw Hill.
Kinicki, A. (2021). Organizational behavior a practical, problem-solving approach (3e ed.). McGraw Hill.
Morris, H. M., Henry, J. G., & Morris, H. M. (2012). The Henry Morris study Bible: King James version. Master Books.
Witman. (2018). Teaching Case: “What Gets Measured, Gets Managed” –The Wells Fargo Account Opening Scandal. Journal of Information Systems Education., 29(3).
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Low Motivation at Amazon
The online retail powerhouse Amazon.com is renowned for award-winning customer satisfaction ratings (Kinicki, 2021). The company has a self-described “customer obsession” (Amazon, n.d.), which manifests in industry-leading service, innovative technology, and a reputation for excellence. For these reasons, the public perception of Amazon is exceptionally positive. However, the company is not without problems. The case study “Workers at Amazon Are Not Feeling Motivated” (Liberty University, 2022) describes the firm from an internal perspective. The following sections use the three-step problem solving approach to define Amazon’s problems, identify causes, and make recommendations moving forward.
Step 1: Define the Problem
From the perspective of Amazon as an organization, there are no notable problems at the group/team level, nor at the organizational level, based on the information provided in the case study. The reliably high customer satisfaction is evidence of success at these levels. However, there are gaps between the firm’s desired state and reality when considering individual-level outcomes of its organizational behavior. For example, the company experiences high turnover in its many fulfillment centers although it seeks employee commitment. Most importantly, Amazon’s problem is poor work attitude (i.e., low job satisfaction) although it desires happy workers. This gap between reality and desired state is a problem because of its inevitable negative impacts on performance. Employee dissatisfaction has led to “public outcry” (Liberty University, 2022, para. 5) and boycotts. Backlash from consumers disrupts the company’s public relations goals. Boycotts shut down production. High employee turnover requires greater spending for training. Simply put, the problem of poor work attitude causes Amazon to lose money and suffer a damaged reputation.
Step 2: Identify the Causes
There are several causes for Amazon’s problem of poor work attitude among employees. First, the situation factor of job design is lacking. Unrealistic daily quotas are difficult for employees to meet. Employees failing to meet quota standards risk write-ups, which can eventually result in termination (Liberty University, 2022). Next, the situation factor of leadership is poor. Supervisors place too much emphasis on productivity goals, to the detriment of basic human needs. To try and meet goals, many workers skip bathroom breaks and avoid speaking to one another for fear of wasting time (Liberty University, 2022). A third situation factor causing Amazon’s problem is an unhealthy organizational climate. An overly strict attendance policy leads to people reporting to work despite sickness and injuries (Liberty University, 2022). There is also a notable group-level process cause to the work attitude problem. The climate for justice is weak, as employees perceive inequity between themselves and management. While managers receive bonus pay, individual contributors feel insulted with gift cards or cookies (Liberty University, 2022).
Step 3: Make Recommendations
Given the deeply rooted cultural issues within Amazon’s fulfillment centers, simply resolving the work attitude problem would not be helpful long-term. Closing multiple facilities would be a way to dissolve the problem, eliminating the situation altogether. However, the company still wishes to operate. The ideal recommendation is to solve the problem, which may be achieved using the following three methods.
First, Amazon could refresh job design by incorporating idiosyncratic deals. I-deals would allow for negotiation between employees and managers about employee tasks to ensure they align with organizational goals while remaining realistic (Kinicki, 2021). Next, Amazon could apply the concepts of Justice Theory so employees perceive distributive justice between themselves and their supervisors. Kinicki (2021) confirms there is significant correlation between distributive justice and job satisfaction. Scripture also supports an emphasis on supervisor-employee justice. In Colossians 4:1, Paul advises, “Masters, provide your slaves with what is right and fair, because you know that you also have a Master in heaven” (New International Version, 1978/2011). He explains that although people hold various levels of authority at work, they all have equal importance before God.
Third, the company could apply the principles of Maslow’s Need Hierarchy Theory. Amazon wants its employees to be self-actualized and perform at the highest level. That goal can only be achieved when lower-level needs are met first (e.g., physiological needs like bathroom breaks and love needs like a sense of camaraderie from talking to coworkers). Stewart et al. (2018) explain that employee happiness from appropriately addressing Maslow’s hierarchy “results in improved employee productivity, efficiency, spirit, loyalty, and retention” (p. 67). The action plan for implementing these solutions begins with the company communicating to employees that changes are coming to address their concerns. Action should then be immediate, beginning with meeting basic necessities, then working upward through the hierarchy of needs.
Amazon. (n.d.). Who we are. Retrieved May 26, 2022, from https://www.aboutamazon.com/about-us (Links to an external site.)
Kinicki, A. (2021). Organizational behavior: A practical, problem-solving approach plus Connect. McGraw-Hill.
Liberty University. (2022). BMAL 500: Organizational behavior. Week three, case study: Workers at Amazon are not feeling motivated.
New International Version Bible. (2011). Zondervan. (Original work published 1978)
Stewart, C., Nodoushani, O., & Stumpf, J. (2018). Cultivating employees using Maslow’s hierarchy of needs. Competition Forum, 16(2), 67-75. http://ezproxy.liberty.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fscholarly-journals%2Fcultivating-employees-using-maslows-hierarchy%2Fdocview%2F2369806244%2Fse-2%3Faccountid%3D12085 (Links to an external site.)