The slippery slope

By Andris A. ZoltnersPK Sinha, and Sally E. Lorimer via hbr.org   Article

Wells Fargo and the Slippery Slope of Sales Incentives

“In early September Wells Fargo agreed to pay a $185 million fine and return $5 million in fees wrongly charged to customers. The settlement stems from the bank’s employees allegedly opening more than 2 million bank and credit card accounts without customers’ permission. …

Wells Fargo has fired at least 5,300 employees for ‘inappropriate sales conduct,’ and the bank is making changes to its quota system. … One of the intriguing facts to come to light is that the fraudulent account openings continued even after the bank was aware of it and had fired employees for it starting in 2011. …

Large-scale unethical sales practices often begin with minor ethical compromises. Things escalate and spread from there. Consider the following sequence:

  • A bank account manager, under pressure to make a sales goal, pushes a customer to add a credit card, even though the account manager knows it’s not in the customer’s interest
  • Still short of the goal, the account manager asks his friends and family to open accounts. (The accounts are to be closed shortly thereafter.)
  • With the goal still not achieved, the account manager opens accounts without asking customers and transfers a small amount of money. (The accounts are closed shortly thereafter and the money is transferred back.)

As soon as the account manager gets away with the first unethical act, it’s not a big step to the fraudulent ones. The justification moves from ‘it’s legal’ to ‘no one is harmed’ to ‘no one will notice.’ When such practices are tolerated, they escalate in severity and spread throughout the organization.

To prevent that, the sales culture has to stop the first level of compromise, because the slippery slope begins there. As Wells Fargo has discovered in the last five years, even a strong compliance function — one that began firing people in 2011 — can’t counteract a compromised culture. …

What’s most insidious is that managers and leaders may be engaging in similar behaviors in their spheres and domains — in how they deal with other people inside the company, with partners, and with suppliers.”

 

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