Investigative Report on Wells Fargo Fake Accounts Scandal

Executive Summary

This report examines how corporate structure issues and culture contributed to the Wells Fargo scandal of fake accounts. Wells Fargo had a successful community bank with a long history of high performance. There is generally nothing wrong with a sales-oriented culture or a decentralized corporate culture, but these failed significantly in this case. The corporation’s vision & values conflicted with its sales goals. The sales model encouraged the sprouting of low-quality sales and unethical behavior. The sales model called for significant annual growth in the number of products sold each year. The senior leaders failed to acknowledge that the sales goals were unrealistic, even when challenged by their regional leaders.

As sales goals became harder to achieve, the quality of accounts created deteriorated with time, raising the number of sales integrity-related allegations and terminations. When the corporation identified misconduct, its solution was to terminate the offending employee without considering the causes of such misconduct. The sales model meant the senior leaders had to exert extra pressure on employees to meet unrealistic goals. Employees saw that the individuals most likely to be praised and considered sales models for others were the high sales performers. The only way the corporation could have addressed issues in the sales model was to emphasize other metrics for performance and abandon exerting pressure through the sales goals on employees. The report concludes that the practice of publishing and prioritizing employees’ sales performance created pressure to engage in unethical practices to achieve unrealistic goals. The management did not carry out necessary risk management practices and continually tolerated low-quality accounts as a by-product of the sales goals.

Factual Findings

Wells Fargo operated a decentralized organization structure for a long time, which encapsulated the freedom of independently exercising staff and control functions. The bank’s sales model relied on consistent year-over-year sales growth.[1]In many instances, the leadership recognized that the sales goals set for the employees had become more and more unattainable. Employees got ranked against one another on their performance relative to sales goals, and their eventual promotion relied on those goals.[2]This system created intense pressure on employees both at the local and regional levels.

There were daily and monthly “motivator” reports that created regional pressure. Retail scorecards measured how an employee was performing compared to the sales plan. There was pressure on employees from sales campaigns, especially in January when the bank imposed higher sales activity levels.[3]Even after some managers acknowledged the pressure such sales campaigns and targets created for employees, the bank was hesitant to end them because the senior leaders thought it could eventually harm the sales figures of the entire year.

How employees received promotions and incentives created a significant additional risk to the bank’s sales model. The senior leaders’ view was that there were always people willing to work for the company. As a result, the bank increasingly worked with inexperienced employees ready to go beyond ethical practices to keep their positions. These bankers were promoted based on their sales success and ended up becoming inexperienced managers. Incentive compensation plans emphasized sales performance, and many complained that the goals were too focused on sales, encouraging unethical behavior.

The case shows a failure of the management in many aspects. Even with sales targets and other criteria to assess performance, corporations should not sacrifice quality at the expense of quantity. Obsessing the numbers is not the only way a company can grow. Customers are always watching and waiting to get an excuse to switch to a competitor. It is crucial to ensure regulatory compliance so that the bran does not get damaged at the end. The bank’s mistakes will likely remain as examples of What Not to Do for organizations of all kinds.


[1] Cavico, F. J., & Mujtaba, B. G. (2017). Wells Fargo’s fake accounts scandal and its legal and ethical implications for management. SAM Advanced Management Journal, 82(2), 4.

[2] Elson, R. J., & Ingram, P. (2018). Wells Fargo and the unauthorized customer accounts: A case study. Global Journal of Business Pedagogy, 2(1), 607-639.

[3] Lilly, J., Durr, D., Grogan, A., & Super, J. F. (2021). Wells Fargo: Administrative evil and the pressure to conform. Business Horizons.