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Final Artifact

Final Artifact

Roel D. Hernandez

South Texas College

Behavior/Ethics/Leadership II

ORGL – 3332

Dr. Andrés Molina Ochoa

May 7, 2020
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In the closing week of this semester I have been given the opportunity to write an artifact

about two different cases that involve two different CEO’s. I will implement everything I have

absorbed throughout the semester and determine the best possible solution for these events. The

two CEO’s come from Wells Fargo and Starbucks. In the case of Wells Fargo Banking Scandal,

CEO John Stumpf’s was identified by the Board of Directors for cultural, structural, and

leadership issues as the main cause of “cross-selling” (Markkula, 2017). As per the Merriam-

Webster online dictionary, cross-selling is defined as “to sell or promote a related product or

service to an existing customer” (Merriam-Webster). Starbucks CEO, Kevin Johnson’s case

involves him responding to a video that went viral when two men were arrested inside a

Philadelphia Starbuck’s for not leaving the store after they were told by the manager they had to

leave because they did not purchase anything.

To begin, in John Stumpf’s case I believe he had displayed numerous bad traits before

and after the investigation was going on. Mr. Stumpf slogan for the Wells Fargo bank was “eight

is great.” By cross-selling CEO Stumpf wanted customers to buy/invest in eight Wells Fargo

products. Consumers were sold related commodities or amenities that were pushed by Wells

Fargo employees. These tactics that were implemented by a top-down type management system

that lead employees of Wells Fargo to engage in immoral conduct. Many employees of Wells

Fargo abandoned the company due to hourly tracking, dishonorable behavior, and extremely

high pressure from supervisors to meet quotas (Markkula, 2017). Over 5,000 employees had

been fired, CEO John Stumpf, was still pushing for supervisors at Wells Fargo to implement

these unethical strategies of “cross-selling.” Although Mr. Stumpf said employees who were let

go by the company were the main cause of all the cross-selling ruckus at Wells Fargo, the Board

of Directors launched their own investigation and concluded that leadership was the root cause of
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the unsuitable selling style tactics used by division leaders at the company. The recklessness of

CEO Stumpf proves that he did not uphold the values of the Wells Fargo company when he was

overseeing the company. The Board of Directors also determined that the decision-making

authority was not being made at the top level of the company but instead was being made at the

lower level where managers had the independence to decided how assignments would be

performed by employees. This provoked lower level managers to motivate employees to “cross-

sell” which they would be compensated with rewards such as increase in pay, monetary bonuses,

or an attractive assignment (University of Minnesota, 2017). The values and beliefs of the Wells

Fargo company was diminishing under the watch of Mr. Stumpf. Poor decision making, pressure

of supervisors on subordinates, and unethical behavior are some of the key factors that damage

Wells Fargo organization’s culture. An “organizational culture refers to a system of shared

assumptions, values, and beliefs that show employees what is appropriate and inappropriate

behavior” (Chatman & Eunyoung, 2003; Kerr & Slocum Jr., 2005). At its peak the organization

was on top of the pyramid and CEO Stumpf was being reward at the same time with millions of

dollars that the Board of Director confiscated when he resigned as CEO of the company. It is

more often now a days that people in a high-power position in a company take advantage of the

authority they have. Although there is a plethora of positive consequences of power there are

also plenty of negative effects as well. So, what would Aristotle think about CEO John Stumpf?

Would he say that the action by Mr. Stumpf fall into the Aristotelian theory? Are the traits he has

displayed virtues or vices? I truly believe that Mr. Stumpf would not be considered a virtuous

person, although he does possess a trait or two that is considered a virtue characteristic. The

virtue theory does imply that an individual should follow a set of rules but should emphasize an

individual’s character (Aristotle and Virtue Theory: Crash Course Philosophy #38). Though John
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Stumpf is not following a set of rules he is not abiding to the virtue of being in the “golden

mean.” The golden mean in Aristotle’s virtue suggest that one should balance themselves

between two vices (deficiency and excessive). The difference between these two vices is that

deficiency is too little of something and excessive is too much of something. To be virtuous CEO

John Stumpf and division leaders of Wells Fargo should have found himself in the middle but

instead he favored the side of excessiveness. The type of excessive behavior that was displayed

by these people lead the subordinates to quit over the enormous force of sales practices and some

employees were let go for filing complains on the company’s ethical hotline (Markkula, 2018).

While Aristotle’s virtue theory advocates that a person who is virtuous does need to follow any

set of rules because they will know what to do when the time is right. In this article the author

implies that Mr. Stumpf and his supervising staff is not following the company’s values and rules

so could we conclude that they are practicing Aristotle’s virtue theory? The answer would be no

because part of the virtue theory is “doing the right thing at the right time, in the right way, in the

right amount, towards the right people” (Aristotle and Virtue Theory: Crash Course Philosophy

#38). Then CEO John Stumpf and his higher up employees did not demonstrate doing what is

right at Wells Fargo during the time frame. Learning what to do when the time is right is defined

by Aristotle as “practical wisdom”. Learning what is the correct thing to do is comes from years

of life experiences this is can also be defined as street smarts.

Furthermore, Mr. Stumpf had a few decision models at his disposal that he could have

implemented at Wells Fargo. As defined in our book “decision making refers to making choices

among alternative courses of action which can include inaction” (University of Minnesota,

2017). The best decision model I believe that he should have incorporated at his company should

have been the rational decision-making model. This model consists of eight critical steps that
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helps the decision maker(s) figure out the best route when making a critical decision for the

business/organization. Step 1 is identifying the problem which in this case would have been the

pressure of supervisors to employees to “cross-sell.” Once the problem is acknowledged by CEO

and top management, they can move on to step 2, establishing decision criteria. The criteria

should include what is best interest for the company as a whole and not for certain individuals

within the corporation. In the Wells Fargo example, the decision criteria should come down to

what needs to be changed to reestablish the values of the company and consumers. Weighing out

the criteria of which needs need to be changed first is the decision of the committee, this is step

3. In step 4, the decision-making group will come up with alternatives ways which the

problem(s) can be solved. The Wells Fargo decision committee should generate all alternatives

from the best-case scenario to the worst scenario and everything in between. Based on all

alternatives produced by the team they will evaluate and choose what is the best fit for the

company and their customers, this is step 5 and 6. When steps 1 – 6 have been completed Mr.

Stumpf and his decision committee would need to apply the decision(s) that have been chosen

and monitor the progress. The last and final step in the rational decision-making process is

evaluating the decision. By monitoring the progress of the when the decision(s) was

implemented to the time frame they gave to evaluate it if the organization is going up, down, or

staying the same can display if the right decision was made. If they organization has been

progressing than the decision that was made was the correct choice. If no movement or if Wells

Fargo sees a decline than the entire decision-making model process must be started over in

search of a solution. I firmly believe that this is the best decision model because it is a step by

step process that can be followed by decision makers, in this case John Stumpf and staff

members, to obtain the best choice possible for the organization.


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Moreover, the CEO of Starbucks, Kevin Johnson was amidst in a situation when a video

went viral from a Starbuck store in Philadelphia. The video was of two black males being

arrested at a local Philadelphia Starbucks after the manager addressed the two men that they

would have to leave because they did not purchase anything at the store. After the manager told

the men several times to leave, they refused to and this led the manager to call the police

department to have them arrested (Markkula, 2018). As the video circulated around the internet

CEO Kevin Johnson, took a very different approach as opposed to former Wells Fargo CEO

John Stumpf who denied what was going on with the “cross-selling” within his company. Within

four days of the arrest of the two males Mr. Johnson released a statement saying that the manager

who was at fault for the arrest was no longer working at the store (Markkula, 2018). A day later

he followed up with a video that where he apologized to the two men, city of Philadelphia, and

costumers around the world. He also took full responsibility for the action by saying “I am

accountable” and “I ensure that it is fixed, and will never happen again” (Starbucks, 2018). CEO

Kevin Johnson additionally created a companywide policy that would make Starbucks a

community hub where anyone could visit without having to purchase anything from their store

(Markkula, 2018). The power that Mr. Johnson had over the company was used in a positive way

that where as Mr. Stumpf, abused his power of CEO for personal gain. Depending on the leader,

leadership, which is defined as the act of influencing others to work toward a goal, can be

positive and negative (University of Minnesota, 2017). The decision that was made by the CEO

of Wells Fargo was on the opposite side of Starbucks CEO, Kevin Johnson. The leadership style

that Mr. Johnson has established is focused on the company as a whole and not on the individual.

Like utilitarianism, which is a moral theory that focuses on results and/or consequences of our

action and treats objectives as irrelevant (Utilitarianism: Crash course philosophy #36). Reading
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the article and watching the “follow-up message” by Kevin Johnson you can be sure that his

values and beliefs are other regarding. Though he is the CEO of Starbucks his ethics, values, and

beliefs for other people are the number one priority for him. John Stumpf, former CEO of Wells

Fargo, number one priority was making money for the company by giving regional supervisors

the freedom of autonym which led to pressuring employees to commit unethical actions that

were not part of organizations values. Being a Chief Executive Officer (CEO) Both, Kevin

Johnson and John Stumpf have legitimate power of the companies. Being in this type of

role/position these men have entitlements that can be implemented within the company by

choosing to do so if they want. I honestly believe that the character values and beliefs of the

CEO’s in a company will reflect on how the business/organization is perceived by the general

public, this is called impression management (University of Minnesota, 2017) If the CEO of a

company does not have a good set of core values than a trickle-down effect will occur

throughout the organization. The opposite can be said about a CEO who can build

trustworthiness and sustain dependability. What also makes these two CEO’s different is the way

they handled their employees when the conflicts surfaced. Mr. Stumpf fired over 5,000 +

employees expecting the problem to go away, which I did not, and in reality, it led to the Board

of Directors launching their own investigation that steered to the firing of John Stumpf.

Starbucks, CEO Kevin Johnson, used the power in his position to temporarily close down 8,000

stores to train employees to conduct unconscious bias training (Markkula, 2018). What Mr.

Johnson did was find a solution to the problem that occurred in Philadelphia and develop what is

known as the “Use of Third Place Policy” which allows anyone to go inside a Starbucks store

and use its facilities without the need of purchasing anything from the store (Markkula, 2018). I

firmly believe that this is one of the main factors that sets both Johnson & Stumpf apart.
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Additionally, if I was appointed CEO of Wells Fargo one of my main goals would be to

regain the trust of our employees and customer. Making a new mission statement with values and

beliefs that the company would and should abide by would be the first thing on my list. By

creating a new mission statement, I would highly be in route in building a new organization

culture which had been lost by the former CEO John Stumpf. Building a new culture involves

not only stating what is appropriate for our organization/company but it also contains what is

inappropriate for employees/workers in the organization. As a company organization culture is

very important because it can make you or break you as a business. If the company has a bad

reputation then sales, stock, and profits can be on a decline because investors/buyers/consumers

have an untrustworthy belief about the organization. The reverse can be indicated if a company

has a good culture and respectable reputation. My next step would follow the direction that

Kevin Johnson chose to do with the incident in the Philadelphia store which is find a solution the

problem. Taking over as the CEO of Wells Fargo I would address the multiple problems that

were dishonorable by supervisors on employees and employees on customers. I would meet with

various employees ranging from the top tier to the bottom layer of the company and find out

what positives and negatives they have experienced on the job what they would suggest when it

comes to the work environment. Next, I would create a decision-making team where we have

gathered all data and come up with a plan of action and create rational decision-making models

that would suit the organization and employees as a whole instead of only catering to top

employees. Being that Mr. Stumpf gave Wells Fargo a bad reputation, I, as new CEO of the

company will have to build and create a new social network within Wells Fargo. With the power

invested in me by the Board of Directors I would use the downward influence approach that

could improve the organizational culture at Wells Fargo. With this approach I will inspire my
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vision into the employees and hope they will buy into the new culture of Wells Fargo and follow

me. I will lead by example and will not go against the values and beliefs that I have set for the

company and hopefully this will discourage unethical behavior by all employees. Like Starbuck

CEO Kevin Johnson, I would temporary close down certain branches to properly introduce the

new innovative ideas that the decision team and I came up with. During this time, I would train

employees the company’s new version on how to handle certain situations at the bank. I would

personally be there to build relationships with employees in that region. Once the training is

done, I would have a supervisor evaluate and send me data every few weeks to see if the

guidance I have given has been implemented and if that branch is showing progress.

Finally, former Wells Fargo Chief Executive Officer (CEO) John Stumpf and regional

supervisors tainted the company so bad that former employees claimed that immeasurable

pressure from co-workers led them to engage in these types of immoral actions. I truly believe

that these former employees did act in that way out of fear and pressure. Some but not all

employees choose to go with the flow even though they know that what they are doing is

immorally wrong. They choose to stay quite than to speak up because they might be afraid of

what the person in the higher position is capable of doing. The Milgram and Asch studies

conclude that these claims by the former employees have truth behind it. The Milgram study was

conducted by Stanley Milgram, a psychologist, who set out to study the conformity to authority

(University of Minnesota, 2017). The study involved three people, the experimenter, subject

(teacher), and actor (learner) (University of Minnesota, 2017). The teacher who is the authority

would ask the learner a question, if they did not have the correct response the teacher would

instruct the experimenter to shock the learner while increasing the power after every shock. The

key factor is that the teacher told the experimenter that they would not be held responsible for the
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outcome of the research. What was resulted from this study was that only 35% of the participants

did not go up to the max shocking voltage and the rest did. This study shows that subordinates in

an organization can be easily manipulated by bosses by simply saying that they, the subordinates,

would not be personally responsible for and unethical action that someone in a higher position

suggested they should do. The comfort level that workers have at the lower end in the workplace

with higherups can be illustrated by this study. Solomon Asch, Asch Study used a group of

people in his experiment to determine if the group could influence the experimenter into

selecting the wrong answer (University of Minnesota, 2017). Though 63% did not change their

answer 37% of participants did get influenced by the group and stated that the reason they went

with the group answer was because of they believed they had more information about the answer

(University of Minnesota, 2017). I firmly believe that all sorts of pressures do exist in the

workplace especially if they pressure is coming from a person who has more authority than you.

Subordinates in the Wells Fargo case might have felt the pressure of authority or might have

been told by their supervisor not to worry about who’s responsible for the unethical practices in

the workplace.

In conclusion, there are many different types of leaders and followers in the work

environment. Being in the workforce I believe everyone has a choice to accept or decline what

kind of values, beliefs, and morals they choose to go along with. Organizational culture is the

backbone of any company, business, and organization. CEO’s are the face of an organization and

can choose to be like former CEO John Stumpf of Wells Fargo or current CEO of Starbucks

Kevin Johnson the choice is yours.


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Reference:

A Follow-up Message from Starbucks CEO in Philadelphia. (2018, April 15). Retrieved May 7,

2020, from https://stories.starbucks.com/stories/2018/a-follow-up-message-from-

starbucks-ceo-in-philadelphia

Aristotle and Virtue Theory: Crash Course Philosophy #38. (2016, November 21). Retrieved

March 27, 2020, from https://www.youtube.com/watch?v=-a739VjqdSI

Chatman, J. A., & Eunyoung Cha, S. (2003). Leading by leveraging culture. California

Management Review, 45, 19–34.

Merriam-Webster. (n.d.). Cross-sell. In Merriam-Webster.com dictionary. Retrieved May 7,

2020, from https://www.merriam-webster.com/dictionary/cross-sell

The CEO of Starbucks and the Practice of Ethical Leadership. (2018, August 29). Retrieved May

7, 2020, from https://www.scu.edu/leadership-ethics/resources/the-ceo-of-starbucks-and-

the-practice-of-ethical-leadership/

University of Minnesota Libraries Publishing. (2017). Organizational behavior. Minneapolis.

Utilitarianism: Crash Course Philosophy #36. (2016, November 21). Retrieved March 27, 2020,

from https://www.youtube.com/watch?v=-a739VjqdSI
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Reference:

Wells Fargo Banking Scandal. (2018, July). Retrieved May 7, 2020, from

https://www.scu.edu/ethics/focus-areas/business-ethics/resources/wells-fargo-banking-

scandal/