Wells Fargo Case Raises Ethical Questions for Sales Managers

The real world keeps handing us interesting marketing ethics issues. Yesterday we laid out the Mylan EpiPen case.  Today we will try to tackle Wells Fargo’s missteps.

In chapter 14 we describe how sales managers motivate salespeople with compensation plans based on commissions, bonuses, and sales quotas. While these compensation practices are quite common, they can have unintended consequences and should therefore be closely monitored. Wells Fargo found this out the hard way — and it will cost the company hundreds of millions of dollars, and a huge hit on its reputation.

For a nice overview, you can listen to or read this story at NPR Morning Edition, “Wells Fargo Fires 5,000 Employees Over Fake Accounts” (September 9). For a more detailed examination and harsh review of Wells Fargo’s practices over the years, see “The mind-blowing stupidity of Wells Fargo” (The Week, September 12, 2016).

While Wells Fargo offers an egregious example, salespeople often game comp plans. My wife used to work in sales for a well-known consumer packaged goods firm. End of year gamesmanship was not uncommon at this company. Faced with falling just short of their quota — or needing more sales to win an end of year “prize” — some salespeople would intentionally place an unusually large order for a customer. Sometimes salespeople worked out a “wink-wink” deal with a friendly customer and other times the salesperson did it on their own. Either way, the salesperson would late claim it was a mistake and process a return. Of course the return was in the new year and the “sale” was booked in the previous year. This company moved salespeople so often, that it was not  unusual for a salesperson to be transferred into the new territory and already have “negative” sales for the year. The company incurred the extra expense of shipping and returns and a dishonest salesperson made quota or earned a trip.

Examples like these can lead to a discussion of ethics in personal selling and sales management.