By now, the Wells Fargo scandal is already beginning to become a memory. While the public may forget their costly mistake in time, theirs is a lesson you should definitely commit to memory. Wells Fargo’s failure could easily be your own without taking proper steps to avoid mistakes made by management.
Besides not keeping track of employees as they should have, Wells Fargo made the tragic mistake of incentivizing sales over the interests of their customers. Rather than reward employees for providing the services customers need (and thus earning the trust and loyalty of customers), they rewarded employees exclusively for numbers.
In the short term, customers bore the brunt of the damages. Their accounts were breached not from without but from within. However, the predatory practices of the employees only became a major issue because of the company’s greedy policies to begin with. In this case, I’m referring to the fees and charges for the dummy accounts created by the Wells Fargo employees.
Predatory Fees Are Problematic for All Parties
For Wells Fargo, it seemed like a good idea to charge customers for not having “enough” money in their bank accounts. On top of that, overdraft fees piled additional fees onto customer accounts, effectively draining their funds. From their company’s bottom line, that probably seemed like a good and fair way to generate revenue.
What those kinds of policies really create is customer dissatisfaction. To begin with, punishing your customers is already bad practice; it creates headaches on both ends of the spectrum and costs man hours to maintain. In this case, fees actually allowed employees to perpetrate criminal activity.
Creating policies that exist exclusively to profit the company at the cost of your customers is a mistake. Customer needs should always be put first; placing your company’s interests above those of your customers demonstrates a lack of understanding that your customers’ interests are your interests.
The Blame Game
Nothing helps to build a case against a company than lack of accountability, and that’s exactly what happened with Wells Fargo. Following the countless examples dating back through history, Wells Fargo’s CEO and other top executives tried to pass the buck by claiming they didn’t have oversight and therefore weren’t responsible.
Unfortunately, even when that succeeds in placing the blame elsewhere, customers and potential customers always get the same message: this company’s management doesn’t take responsibility for its employees or the actions of the company at large.
Any good manager will tell you that being the boss frequently means taking the blame. Where would we be in the world if it were okay for our leaders simply to shrug and claim it’s “not their problem”? Scandals can be heavily mitigated if company execs take responsibility from the very beginning.
Avoiding Similar Scandals
Wells Fargo may be the most recent scandal, but it certainly wasn’t the first, and it definitely won’t be the last. Corporate scandals happen far too frequently, and the reasons vary every time. While mismanagement is often the problem, there are other instances of corporate loss that occur because of ignorance.
Take the number of data breaches in past few years. In these cases, consumers are frequently the victims of identity theft because stolen information tends to be billing information such as credit card and billing address information. But where do these breaches come from?
All too often it’s because employees fall victim to scams and malware. At times it’s from lack of education, and other times it can be from a lack of property security software being installed. Firewalls and anti-malware software are known to both companies and individuals, but both parties frequently miss out on encryption techniques such as those employed by Virtual Private Networks.
Other problems occur when companies try to smooth over an issue without actually fixing the problem. Recent news about the Galaxy Note 7 may be a good example of this as just recently a replacement device caught fire on an airplane. This is an indication that Samsung didn’t necessarily fix the real problem but rather fooled customers into believing it did—at least temporarily.
The message is strong enough here. If you say you’re fixing a problem, you actually need to fix it. The truth will come out sooner or later, and the blowback is not likely to be pretty.
What are you doing to prevent scandals in your company? Have you already devised a strategy? Tell us how you plan to do it in the comments.