09 Oct Review the Outcomes Box in the Organizing Framework at the end of the
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Review the Outcomes Box in the Organizing Framework at the end of the chapters to help you identify the important problem(s) in this case. Remember that a problem is defined as a gap between what you desire and what is happening.
· What is happening now and what should be happening?
· Include all three levels in your discussion: individual, group/team, and organizational.
· If one problem is more important or relevant than the others, identify it and focus on it for Steps 2 and 3 discussions.
· The key players in the case all have a different perspective regarding the problem that you have identified. When defining the problem, identify which key player’s perspective you are using to approach the problem.
· Use Case details to determine the key problem(s). Do not assume or create problems that are not included in the case.
· Ask yourself why you identified an item as a problem and use concepts from this chapter to support your discussion.
Step 2: Identify the causes of the problem(s).
Once you have defined the problem, review the Inputs and Processes boxes in the Organizing framework to begin identifying the causes of the problems that you have identified.
· Review the Person and Situation factors in the Inputs box and decide how people or situations in the case contributed to the problem.
· Person factors can be for example, personality, values, or needs.
· The situation factors can include competition, regulators, and leadership. You must explain why each factor you select is a cause of the problem. Did a particular policy or practice play a role in causing the problem?
· After identifying the person and situation factors that contributed to the problem, review the Processes box in the Organizing frameworks at the end of the chapters to determine if an individual, group/team, or organizational level process caused the problem.
· Ask yourself why you feel that the process contributed to the problem and be sure to support your discussion with concepts from the chapters in the text.
Step 3: Make your recommendations for solving the problem. Based on the causes identified in Step 2, what are your best recommendations?
· Be sure to consider both person and situation factors—as well as processes at the three different levels (individual, team, and organizational). Develop and discuss the specific steps in the action plan that you will use to implement your recommendations; be sure your recommendations are related to the causes that you identified for the problem and that their implementation helps to resolve the problem.
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MGT 2530 – Case Study #() – Title and Chapter
Step 1: Define the Problem
Step 2 – Identify the Causes of the Problem
Step 3: Make Your Recommendations and Create an Action Plan
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Case Study 1 10/9/22, 11:53 AM
Case Study 1 10/9/22, 11:53 AM
Case Study 1 10/9/22, 11:53 AM
Rubric for Cases (1) |
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Criteria |
Ratings |
Pts |
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Problem definition 20 pts. max |
20 to >15.0 pts Excellent Problems are clearly described in terms of a gap between desired & current outcomes; all 3 levels of the framework (individual, group, & organizational) are discussed in the problem definition. |
15 to >10.0 pts Satisfactory Problems are described but not clearly in terms of a gap between desired & current outcomes; only 1 or 2 levels of the framework (individual, group, & organizational) are discussed in the problem definition. |
10 to >5.0 pts Needs improvement Problems are described vaguely or imprecisely, without clear reference to desired & current outcomes; no or only 1 level of the framework (individual, group, & organizational) is discussed in the problem definition. |
5 to >0 pts Unsatisfactory Problems are described vaguely or imprecisely, or in terms of solutions rather than gaps between desired & current outcomes; the framework (individual, group, & organizational) is not discussed in the problem definition. |
20 pts |
Causes of the problems are identified & discussed 20 pts. max |
20 to >15.0 pts Excellent Specific case details & concepts & models from the course are used as evidence to identify & discuss causes of the problems; any inferences & assumptions used in the analysis are clearly identified as such & are supported with evidence & reasons. |
15 to >10.0 pts Satisfactory Specific case details & concepts & models from the course are used as evidence to identify & discuss causes of the problems; if assumptions & inferences are used, they may not be identified as such or are only partially supported by evidence. |
10 to >5.0 pts Needs Improvement Causes of the problems are identified & discussed, but are only partially supported by evidence; if assumptions & inferences are made, they are not supported by evidence. |
5 to >0 pts Unsatisfactory Causes of the problems are identified but are not supported by evidence. |
20 pts |
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Recommendations to deal with the problem are presented & evaluated 20 pts. max |
20 to >15.0 pts Excellent At least 2 recommendations to deal with the problems are discussed, including whether these recommendations are aimed at resolving, solving, or dissolving the problems, and the likely effectiveness of these recommendations made on the basis of good evidence & reasoning. |
15 to >10.0 pts Satisfactory Two recommendations to deal with the problems are discussed, with some mention of whether they are aimed at resolving, solving, or dissolving the problems, & discussion of their likely effectiveness on the basis of partial evidence or speculation. |
10 to >5.0 pts Needs improvement One recommendation to deal with the problems is discussed, with minimal or no mention of their aim to resolve, solve, or dissolve the problems, & little or no discussion of its likely effectiveness. |
5 to >0 pts Unsatisfactory One recommendation to deal with the problems is discussed, with little to no analysis or discussion of likely effectiveness. |
20 pts |
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Action plan is created 20 pts. max |
20 to >15.0 pts Excellent An action plan for implementing you recommendations is created that takes into account its feasibility and i relevance to the causes of the problems you identified in your analysis. |
r ts |
15 to >10.0 pts Satisfactory An action plan for implementing your recommendations is created but it gives insufficient consideration to its feasibility or its relevance to the causes of the problems you identified. |
10 to >5.0 pts Needs improvement An action plan is created but it gives little or no consideration to its feasibility or its relevance to causes of the problems you identified. |
5 to >0 pts Unsatisfactory An action plan is not created, or if it is, does not take feasibility or relevance to causes into account. |
20 pts |
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Writing 20 pts. max |
20 to >15.0 pts Excellent Writing is wellorganized, concise, and logical. Sentences are fluent & wellconstructed. Very few or no errors in grammar, punctuation, spelling, usage or semantics are present. Submission is 3 to 4 pages in length (doublespaced). |
15 to >10.0 pts Satisfactory Writing is organized reasonably well & is fairly concise & logical. Sentences are fairly fluent & wellconstructed. There are a few errors in grammar, punctuation, spelling, syntax, or semantics. Submission is 3 to 4 pages in length (doublespaced). |
10 to >5.0 pts Needs improvement Writing is somewhat disorganized, & occasionally lacks conciseness or logical flow. Word choice is occasionally imprecise or does not reflect content. Several errors in grammar, punctuation, spelling, syntax, or semantics are present. Submission is less than 3 pages or more than 4 in length (doublespaced). |
5 to >0 pts Unsatisfactory Writing is disorganized & often hard to understand. Sentences are poorly constructed, & word choice does not reflect content. Many errors in grammar, punctuation, spelling, syntax, or semantics are present. Submission is less than 3 pages in length (double-spaced). |
20 pts |
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Total Points: 100 |
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Problem-Solving Application Case—Incentives Gone
Wrong, then Wrong Again, and Wrong Again
The Wells Fargo scandal demonstrates how a company’s choice and implementation of
performance management incentives can have disastrous side effects. This activity is important
because it illustrates why managers must never implement an incentive scheme without
considering as much as possible any and all effects that it may have on employees’ behavior.
The goal of this activity is for you to understand the link between the details of Wells Fargo’s
incentive scheme and the employee behaviors that resulted from it.
Read about how performance incentives led to scandal at Wells Fargo. Then, using the three-
step problem-solving approach, answer the questions that follow.
Money is an important tool for both attracting and motivating talent. If you owned a company or
were its CEO, you would likely agree and choose performance management practices to deliver
such outcomes. It also is possible you’d use incentives to help align your employees’ interests,
behaviors, and performance with those of the company. After all, countless companies have used
incentives very successfully, but not all. The incentives used by Wells Fargo had disastrous
consequences for employees, customers, and the company itself.
The Scenario and Behaviors
A client enters a bank branch and opens a checking account. The performance expectations of
the banker that helped open the client's checking account was that the banker needed to open
eight accounts for each customer, which meant he or she needed to persuade that customer to
open seven additional accounts! This resulted in the banker then attempting to open a savings
account and maybe a credit card account, simple enough. But the problem happened when the
customer left without opening additional accounts and many bankers did so anyway—without
the customer’s consent. Customers who had mortgages with the bank sometimes had insurance
policies opened without their knowledge. The bank also financed automobiles for many
customers, and insurance was also often added unknowingly to these. Small business customers
were frequently overcharged for credit cards and other services. More generally, customers for
one product were cross-sold other products, and along with many of these additional accounts
were fees. The increased number of accounts helped employees meet their numbers, and the fees
provided still more income for the bank.1
Even after all of these efforts, many bankers still fell short of their goals and opened accounts in
family members names. One branch manager opened 24 accounts in her teenage daughter’s
name and 21 in her husband’s. Other reports include Wells Fargo bankers canvassing employees
at stores in which they shopped.2 Pet insurance was added in some instances!3
Some sham accounts were closed once the employee received credit, but many remained open,
charging fees and affecting customer’s credit.
The Damage to Customers and Employees
Wells employees created approximately 3.5 million fake accounts; even now precise numbers
are difficult to obtain. But it seems as if 1.5 million deposit and 500,000 credit card accounts
were opened without customer consent, and it erroneously foreclosed on over 400 mortgages and
repossessed thousands of cars. Over 800,000 customers with auto loans were charged for auto
insurance.4 The list goes on.
The negative consequences within Wells Fargo also have been enormous. CEO John Stumpf
was ousted along with former head of community banking, Carrie Tolstedt. Seventy-five million
dollars in compensation was clawed back from these two executives, as it was considered ill-
gotten and due to illegal or at least unprofessional behaviors. The same executives lost additional
millions in compensation, and approximately 5300 employees were fired. Numerous regulatory
agencies fined Wells Fargo for nearly $200 million, the company’s stock underperformed its
competitors’, and it is difficult to estimate the cost of damage to the company’s reputation and
the resulting lost business.5 And then there are the incalculable cost to customers—money,
frustration, ruined credit, lost vehicles, and lost homes.
The Culprits
Much of this carnage has now been attributed to perverse incentives and poor leadership.
Investigations revealed that both Stumpf and Tolstedt were well aware of these unethical
behaviors, but they turned a blind eye or even encouraged these behaviors. It was reported that
Tolstedt repeatedly denied and resisted complaints about goals being unachievable and
problematic.6 But what about the thousands of employees that actually opened the accounts?
When writing about the Wells Fargo scandal, Professor Elizabeth Tippett noted, “research
suggests that ethical behavior is not about who you are or the values you hold. Behaviors are
often a function of the situation in which you make the decision, even factors you barely notice.7
Another interesting detail regarding performance expectations is that the eight-account
expectation for every customer was only three 10 years earlier. It also is important to note that
this sort of cross-selling—multiple products to the same customer—was something Wells was
known for and contributed to its past success. It’s been reported that the reason for eight instead
of another number was that CEO Stumpf said it rhymed with “great.”
Actions
To be fair, numerous examples exist of Wells Fargo management explicitly instructing
employees not to engage in such activities, including ethics training and the deployment of risk
professionals to identify and correct inappropriate conduct. But this obviously wasn’t enough,
and even though employees were expected to report any misdeeds, they didn’t. Incentives stayed
in place and employees continued to be pressured and even fired if they did not make their sales
quotas. Some involved in the scandal argued it isn’t the employees’ fault, they needed a
paycheck and this is what their employer required.8 Tim Sloan, who worked at Wells for
decades, was inserted as the new CEO and charged with cleaning up the mess, restoring the
bank’s reputation, and warding off a potential new $1 billion fine.9
Sloan worked in the role for two years before stepping down in 2019, presumably for not being
able to turn things around.10 Whoever replaces him has the same challenges. Assume you are the
new CEO, what would you do?
Footnotes
1. M. Egan, “The Two-Year Wells Fargo Horror Story Just Won’t End,” MoneyCNN.com, September 7, 2018,
https://money.cnn.com/2018/09/07/news/companies/wells-fargo-scandal-twoyears/index.html.
2. S. Cowley and J. A. Kingson, “Wells Fargo to Claw Back $75 Million from Two Former Executives,” The New
York Times, April 10, 2017, https://www.nytimes.com/2017/04/10/business/wellsfargo-pay-executives-accounts-
scandal.html.
3. M. Egan, “The Two-Year Wells Fargo Horror Story Just Won’t End,” MoneyCNN.com, September 7, 2018,
https://money.cnn.com/2018/09/07/news/companies/wells-fargo-scandal-twoyears/index.html.
4. G. Morgenson, “Wells Fargo Forced Unwanted Auto Insurance on Borrowers,” The New York Times, July 27,
2017, https://www.nytimes.com/2017/07/27/business/wells-fargo-unwanted-autoinsurance.html.
5. E. Wolff-Mann, “Every Wells Fargo Consumer Scandal Since 2015: A Timeline,” YahooFinance.com, August 8,
2018, https://finance.yahoo.com/news/every-wells-fargo-consumer-scandalsince-2015-timeline-194946222.html.
6. S. Cowley and J. A. Kingson, “Wells Fargo to Claw Back $75 Million from Two Former Executives,” The New
York Times, April 10, 2017, https://www.nytimes.com/2017/04/10/business/wellsfargo-pay-executives-accounts-
scandal.html.
7. Elizabeth C. Tippett, “How Wells Fargo Encouraged Employees to Commit Fraud,” The Conversation Media
Group Ltd., October 7, 2016, https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-
66615.
8. M. Corkery and S. Cowley, “Wells Fargo Warned Workers Against Sham Accounts, but ‘They Needed a
Paycheck,’” The New York Times, September 16, 2016, https://www.nytimes.
com/2016/09/17/business/dealbook/wells-fargo-warned-workers-against-fake-accounts-but-they-needed-a-
paycheck.html.
9. CBS This Morning, January 25, 2019.
10. R. Merle, “After Years of Apologies for Customer Abuses, Wells Fargo CEO Tim Sloan Suddenly Steps
Down,” The Washington Post, March 28, 2019, https://www.washingtonpost.com/business/2019/03/28/wells-fargo-
ceo-tim-sloan-step-downimmediately/?utm_term5.27bf62d146f8.
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