Wells Fargo isn’t just one of the world’s biggest banks; it has a solid reputation and an excellent track record throughout the industry. It belongs to the top 30 biggest companies in the United States and has the third largest asset value among banks.
For such a prominent corporation, you’d expect it to have a robust HR management system. But in 2016, the bank agreed to pay at least $185 million in fines and penalties; it also fired more than 5,000 employees.
What happened? It turns out the bank had been earning fees from about 3.5 million phony credit card and bank accounts. Employees had set up accounts for existing bank customers without their consent. They simply transferred money from existing to newly opened accounts. They also submitted bank applications using fake email addresses.
Employee fraud is not unusual. In fact, it cost UK businesses £40 million in 2016 ‒ and many businesses are unaware of a major motivation behind it.
In a 2017 study by the University of Georgia, the researchers cited how work pressure can force employees to lie and cheat. To be more specific, they feel the stress to meet exceptionally high or rigid targets, and worry that their jobs are threatened if they cannot achieve the management’s expectations.
In the case of Wells Fargo, the employees had to meet the unrealistic sales goal of at least eight financial products to every customer.
The bank also initiated a programme in 2003 called ‘Jump into January’. Although offering incentives, it forced employees to meet high daily sales quotas during the month. While it was initially successful, the practice became counterproductive over time.
How do businesses avoid the same problem? A review of your company’s human resource policy is a good start. Does it establish core competencies to develop a more grounded policy and procedures? Is HR able to match employee skills with business needs? An effective HR management system tracks employee performance so the business can use related data to provide appropriate skills upgrade and compensation.
Although this system doesn’t make an organisation fraud-proof, it helps set expectations that are realistic to both employees and the employer.