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How to tank a business: A lesson from Wells Fargo

If you're a small business owner, you no doubt hope that the growth of your company will one day make you a large business owner. Sound ethical practices and good management along the way is the key to developing a company culture that thrives, and necessarily, succeeds. What happens when ethics in the workplace erode or become non-existent?

According to The New York Times, Wells Fargo, one of the largest banks in the country, will pay a whopping $185 million in fines for illegal banking practices. Federal banking regulators discovered that employees were using current customer information to open fraudulent bank accounts, credit cards and other Wells Fargo products.

How did they do it?

Employees accomplished this by taking a small amount of money from a customer's current account, and using it to open another account in their name. Within a short time, the employee would close the fraudulent account, and return the money to the original account. This sort of shell game allowed employees to compete for extra remuneration based on the number of new products they "sold."

Banking regulators opined that the behavior reflected a dubious corporate culture. 5300 employees have been fired.

This incident raises the question: what engenders a culture like this?

What makes a good company culture?

Any company culture starts at the top. Sound fiduciary practices, a respect for your workers, and a desire to grow solidly and steadily are the factors that can make or break a business. When you build trust within your firm, customers will naturally trust and gravitate toward you.

While many of these customers did not lose much--if any--money in the debacle, one wonders whether their accounts will soon be shuttered and re-opened at other banks in which they place more trust. It's a punitive lesson for Wells Fargo, but a proper one. After the lending practices of the '90s left many Americans underwater on their mortgages, banks need to work hard to be transparent and trustworthy, or risk losing their consumers--and their money.

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