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  1. #1

    Wells Fargo case highlights need to monitor employees with stressful performance goals

    One of the more difficult tasks for compliance officers is to question employee success, even if those achievements come against almost insurmountable odds. The disclosure that Wells Fargo employees, in order to meet sales targets, signed up more than 2 million of its customers for new accounts and credit cards without their knowledge, is an example of employee performance that should be questioned even though the impulse is often to look the other way.



  2. #2

    Wells Fargo case highlights need to monitor employees with stressful performance goals

    “The key is that few people ever question good news,” says Walt Pavlo, co-founder of Prisonology, a consulting firm that supports legal professionals and defendants. Pavlo, who has written widely on compliance issues, adds: “If the news is good it typically lowers our level of professional skepticism . . . and makes it difficult for compliance to challenge the news, even if they should.” On Tuesday (Sept. 13) Wells Fargo, the largest U.S. bank by market capitalization, said it would eliminate all product sales goals in retail banking, starting next year. The move comes days after the Consumer Financial Protection Bureau (CFPB) and two other regulators fined the bank $185 million over its abusive sales practices.One of the other regulators, the Office of the Comptroller of the Currency, said in the agency’s consent order that the bank “lacked an enterprise-wide sales practices oversight program and thus failed to provide sufficient oversight to prevent and detect the unsafe or unsound sales practices . . . and failed to mitigate the risks that resulted from such sales practices.”While such an oversight program clearly should have been in place, there are other facets to the Wells Fargo case that apply across the industry, particularly in an environment where many employees are under stress to meet performance goals that may actually be designed for failure. At root, the problem rests with behavior and accountability.”I don’t think (bank behavior) has changed enough,” said Federal Reserve governor Dan Tarullo in an interview with the CNBC network, citing the Wells Fargo case.”There is a need for a focus on individuals as well the fines on institutions. In appropriate cases, I think that fines against individuals, prohibition orders, and … Justice Department prosecutions are things that do need to be pursued,” Tarullo said.

  3. #3

    Wells Fargo case highlights need to monitor employees with stressful performance goals

    While Wells Fargo illustrates what may still be lacking in the cultural reform of large banks, a contributing factor to the temptation by employees to cut corners is the workplace they are operating in. Among some of the largest U.S. financial institutions there has been a growing tendency to avoid mass redundancies amid an environment of shrinking margins and need to control costs. Instead, what some industry participants point to is a more selective process, where certain employees are continually forced to achieve ever higher performance goals, whether in sales or trading. The hope is, say some, that the frustration will build to such an extent that the employee will simply leave the firm.

  4. #4

    Wells Fargo case highlights need to monitor employees with stressful performance goals

    “Nobody wants to let go of thousands (of employees) if they can avoid it,” said one senior employment recruiter at a large New York firm. “What you tend to see more are small groups – two or three – leaving a firm, or individuals quietly giving up.” By giving up the bank or firm can avoid severance packages, which are often quite expensive if the employee has numerous years of service.

  5. #5

    Wells Fargo case highlights need to monitor employees with stressful performance goals

    “Especially in sales, a lot of people are put under massive pressure, to the point where what they are being asked to do simply can’t be done,” said a senior fixed-income trader at a large New York investment bank.

  6. #6
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