Wells Fargo Case

Wells Fargo is one of the world’s largest financial institutions. Wells Fargo has been involved in a scandal concerning the legality of the entity in the recent years.

Employees were incentivised to open different kinds of bank accounts for the customers, even though the customers never agreed to this or even knew about it. Said employees were promised to get a commission or a salary bonus if they would meet the target set by the corporate of accounts to be opened. But in reality, some employees were threatened to lose their jobs if they didn’t keep up with the targets. Usually they would target people that had a low probability of examining their credit situation in a regular basis, or people who would go to open an account and without knowing about it, end up with more than one account that they didn’t ask for (and are paying for).

However the quotas set by the directives of Well Fargo were much higher than what is achievable, hence why employees resorted to illegal ways to achieve the goals. Naturally this whole process was illegal and unethical, even though it went on for years until Wells Fargo was busted.

So who are we to blame? Most people would say the employees who distorted to illegal ways in order to get the numbers. But in my opinion the employees are just regular workers who are trying to earn money the same way a carpenter or a teacher would, only in Wells Fargo’s case the employees had a massive amount of pressure on them to achieve certain targets, which led them to do what they did. In my opinion it is the top line managers and the line managers who are to blame, since they are the ones who make the goals and targets and it all starts from them and goes down onto the employees. Plus it is quite disrespectful and unethical to do what they did not for days or weeks, but for years.

The HR staff played a big role in this scandal. If the HR department had worked effectively being responsive to all the complaints that were given to Wells Fargo, and had been willing to change the conduct as soon as they got a complaint, the story would be much different.  The Human Resource department of Wells Fargo should have had helped the managers to set realistic goals and have achievable expectations, while providing training of a good code of conduct to their employees. However, in any case, it is still quite a bit of a responsibility to lay on the HR department to take a stand on the executives of the organisation.

The real lesson out of this case is to set realistic goals and not go overboard after profits, while keeping things legal and not resorting to unlawful ways of generating money.

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HR Strategy and Planning – Ethics and Outsourcing

Key points: 

  • Understanding the challenges that affect HR.
  • Learning how to plan and implement strategic HR policies.
  • Finding out the best HR practices.

Key contents:

The major challenges HR faces can be divided in environmental, organizational and individual challenges.

Environmental challenges include the rise of the internet, diversity of the workforce, globalization, legislation, natural disasters and terrorism.

Organizational challenges involve decentralization, organisational restructuring, increased number of small businesses, culture, technology, outsourcing…

Individual challenges include individual ethics, socially responsible behaviours, productivity, empowering, avoiding brain drain, issues about job insecurities, etc.

A correctly planned HR strategy brings many benefits to the company, such as proactive behaviour, identification of gaps within the company’s present situation and their future vision… but those involve some challenges. Those include creating a strategy that creates a competitive advantage for the company and avoids excessive concentration on mundane problems. The strategy also has to be able to accommodate change.

In order to be effective, HR strategies must fit with the organizational strategy, and the environment in which the company works. The HR strategy should be consistent and favour reinforcement.

Source

  • Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London, Chapter 1.

Other material read

Labor Union and Labor Law

Key points:

  • Understanding the legal environment.
  • Learn about employment laws.
  • Learn about EEO.
  • Understanding Unions.
  • Learning about labor relations.
  • Knowing why unions have such a big impact on HRM.

Key contents:

It’s important to understand the Human Resource Law since it’s simply the right thing to do, but also because it helps a firm’s HR department to realize their limitations. Furthermore, it helps a firm to minimize their potential liability.

There are many reasons why the HR law is so challenging. One of them is that the laws and regulations are all part of a dynamic legal landscape. Also, because the laws and regulations are part of a complex background. The strategies for fair employment required by the law sometimes compete with one another. And to conclude, laws often have unintended consequences.

There are also some Equal Employment Opportunity laws that a firm should be aware of, such as the Equal Pay Act, the Disabilities Act, the Civil Right Acts, etc.

Other important laws include the Inmigration Reform and Control Act or the Drug-Free workplace Act.

Employees join unions because they are usually unhappy with certain aspects of their job. They may also lack influence with the management of the company to make any needed changes. Or it may also be because they think that their pay is not competitive enough. All of those are valid reasons for an employee to see a union as a solution to their problems.

Unions impact HRM processes significantly. In a unionized workplace, decisions will be more influenced by seniority rather than by merit. Training programs are more emphasized and employees usually receive larger compensations and benefits. Other points are highly structured employee relations.

 

Source

  • Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London, Chapters 3,15.

 

Exit Management

Key points:

  • Learn about employee separations and their types.
  • Learning to manage downsizing and early retirements.
  • Knowing how to manage a layoff.
  • Learning about outplacement.

Key contents:

When employees stop being part of an organization we call that employee separation. This has to be managed properly: managers have to plan the outflow of their human resources with well-thought policies.

Employee separations include both benefits and costs. The costs include recruitment, selection, training and separation costs. The benefits are reduced labor costs, increased innovation, replacement of poor workers, and greater diversity.

When an employee leaves, it can happen voluntarily or involuntarily. Voluntary separations comprehend quits and retirements. Involuntary ones are discharges and layoffs. When an employee leaves involuntarily there is more documentation needed to terminate the employee and prove that the decision was fair by the manager’s part.

When downsizing, a manager can offer early retirements to the employees instead of layoffs. However this must be done in a way that the employee doesn’t feel like he is forced to retire.

Layoffs are usually the last resort when cutting costs in the organisation. When performing a layoff, there must be some considerations: notifying the employee, developing a layoff criteria, communicating to the laid-off employee, maintaining security and reassuring survivors of the layoff. In addition, no matter what policy the company uses to reduce the workforce, it’s always a good idea to use outplacement services to help separated employees cope with their psychological status and minimize the time they’re unemployed.

Source

  • Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London, Chapter 16.

Cases read: