Organizational Environments and Corporate Culture Issues -Course Content Objective:  Describe current issues in business

Organizational Environments and Corporate Culture Issues –
Course Content Objective:  Describe current issues in business and use course concepts to analyze them.
Chapter Content Objectives:  Identify different types of organizational structures and their strengths and weaknesses;  Explain how organizations organize to meet external market threats and opportunities.
Part I:  You have been selected to lead a team to decide on a different type of structure in your organization to better serve customers who are complaining about poor service that is slow, impersonal, and not meeting their needs to be heard.  Presently, the functional structure isn’t working well.  Outline some information from your knowledge using this chapter that would help the team in its assignment.  List and discuss at least four issues that need to be considered in suggesting a different type of structure.  
Part II:  Read the case study below entitled “Wells Fargo, Crisis and Scandal.” After reading the case study, submit your answers to the five critical thinking questions at the end of the case study.  Make certain to clearly identify your answers to each question and be complete in your responses.
Wells Fargo, Crisis and Scandal
The recent widespread scandal at Wells Fargo jolted and shocked the corporate world. How could such
internal corrupt and outrageously illegal and unethical activities by professionals have occurred? Wells Fargo
is “an American multinational financial services company headquartered in San Francisco, California” with
offices nationwide and “the world’s second-largest bank by market capitalization and the third largest bank in
the U.S. by total assets.” In September 2016 it was discovered that the company was continuing to create fake
customer accounts to show positive financial activity and gains. 5,000 salespeople had created 2 million fake
customer accounts to meet high-pressure internal sales goals, including a monthly report called the
“Motivator.”
The out-of-control sales leadership pressured sales employees to meet unrealistic, outrageous sales targets.
Dramatically unrealistic sales goals propelled by continuous pressure from management coerced employees
to open accounts for customers who didn’t want or need them. “Some Wells Fargo bankers impersonated
their customers and used false email addresses like noname@wellsfargo.com, according to a 2015 lawsuit filed
by the city of Los Angeles.”
The “abusive sales practices claimed in a lawsuit that Wells Fargo employees probably created 3.5 million
bogus accounts” starting in May 2002. Wells Fargo is awaiting final approval to settle that case for $142 million.
However, regulators and investigations found that the misconduct was far more “pervasive and persistent”
than had been realized. “The bank’s culture of misconduct extended well beyond the original revelations.” For
example, regulators found that the company was (1) “overcharging small businesses for credit card
transactions by using a ‘deceptive’ 63-page contract to confuse them.” (2) The company also charged at least
570,000 customers for auto insurance they did not need. (3)The firm admitted that it found 20,000 customers
who could have defaulted on their car loans from these bogus actions; (4) The company also had created over
3.5 million fake accounts attributed to customers who had no knowledge of such accounts.
Wells Fargo has had to testify before Congress over these charges, which have amounted to $185 million
dollars, and more recently the company has been ordered by regulators to return $3.4 million to brokerage
customers who were defrauded. The CEO and management team have been fired and had millions of dollars
withheld from their pay.
In the aftermath of the scandal, even though Wells Fargo executives were not imprisoned for the extensive
consumer abuses committed by the company, the CFPB (Consumer Financial Protection Bureau) and Office of
the Comptroller of the Currency (OCC) imposed a $1 billion fine on Wells Fargo for consumer-related abuses
regarding auto loan and mortgage products. The OCC also forced the company to allow regulators the
authority to enforce several actions to prevent future abuses, such as and including “imposing business
restrictions and making changes to executive officers or members of the bank’s board of directors.” The new
president of the company, Tim Sloan, stated, “What we’re trying to do, as we make change in the company
and make improvements, is not just fix a problem, but build a better bank, transform the bank for the future.”
Critical Thinking Questions
1. What happened at Wells Fargo with regard to past activities that led to this major scandal?
2. What internal dimensions of the company were part of the problems that occurred?
3. How might the organizational structure of the company have been part of the problems that occurred?
4. . Identify and use relevant concepts from this chapter as well as your own thoughts and analysis to
diagnose the scandal at Wells Fargo. How could such a scandal have occurred in the first place? Who and
what was at fault?
5. Suggest some solution paths the company might consider, using knowledge from this chapter and your
own thoughts/research, to avoid such a scandal from reoccurring.