The Wells Fargo Cross-Selling Scandal

The Wells Fargo Cross-Selling Scandal

By
Brian Tayan
Stanford Closer Look Series. Corporate Governance Research Initiative, December
2016

In this Closer Look, we examine the tensions between corporate culture, financial incentives, and employee conduct as illustrated by the Wells Fargo cross-selling scandal. In 2016, Wells Fargo admitted that employees had opened as many as 2 million accounts without customer authorization over a five-year period. We discuss the factors that contributed to the scandal, the repercussions for the bank, and its response.

We ask:

  • How did the company’s incentive system contribute to the scandal?
  • Would the system have worked better if coupled with additional metrics or controls?
  • What systems should have been put in place to identify and escalate potential problems earlier?
  • What steps should senior management have taken to better contain the fallout?
  • Is an inside or outside CEO successor better positioned to help the bank recover?
  • How do you maximize the positive contribution that incentives make to culture while minimizing potentially negative outcomes?