Apply the knowledge of management presented in this chapter to the following case. The goal of this activity is to enable you to understand the challenges Wells Fargo faced and how those challenges are related to organizational culture and structure.
Read the case and answer the questions that follow.
How do you sell money? This is a fundamental challenge for retail banks, and Richard Kovacevich had a solution. He saw banks as stores, bankers as salespeople, and financial instruments as consumer products. Much like a deli worker asks if you'd like to upsize that combo or add dessert to your order, a banker should encourage you to add a credit card, savings account, or loan to your portfolio. Kovacevich called it "cross-selling," and he based it on the fact that customers with several accounts are much more profitable to a bank than customers with a single account. How many accounts should a customer have? Eight, according to the "Going for Gr-Eight" initiative he launched as CEO of Norwest in 1997. Why eight? Because, Kovacevich said, "It rhymes with GREAT!"1
SALES PRACTICES AT WELLS FARGO
Norwest merged with Wells Fargo in 1998; the bank retained the Wells Fargo name, and Kovacevich took the helm as president and CEO. He saw revenue growth as the bank's most important goal and cross-selling as the way to achieve it.2 Bankers could earn between $500 and $2,000 in quarterly bonuses for hitting sales targets, and district managers could increase their annual compensation by up to $20,000. According to former Wells Fargo worker Scott Trainor, "If you could sell, you had a job."3
The strong sales culture transformed Wells Fargo's bottom line, as evidenced by a 67% increase in the bank's stock from 2006 to 2015.4 Unfortunately, the culture had a dark side. Steven Schrodt, who worked at a Wells Fargo branch in Lincoln, Nebraska, before resigning due to severe sales pressure in 2012, remembers managers encouraging those who hadn't reached sales goals to open accounts for their family members and friends. Other former employees describe searching for potential customers at retirement homes and local bus stops.
Assume that as part of Scharf's reorganization of Wells Fargo many managers now report to both functional and divisional supervisors. What type of organizational structure does this portray?
Multiple Choice
O horizontal
O virtual
O modular
O matrix
O hollow
