By Alec Hogg
America’s biggest bank, Wells Fargo, has been fined $185m after disclosures that 5 300 employees had secretly opened 2m accounts for customers who didn’t ask for them. Wells reacted by firing those who did the deeds (average 377 each). Critics believe it is the CEO and his top team who should have been bulleted because staff were incentivised to act dishonestly by an excessively aggressive sales policy.
You have to wonder when companies like Wells Fargo will realise old style capitalism is dead. Since the Global Financial Crisis in 2008, progressive companies have been adopting business guru Michael Porter’s “Shared Value” business model – where customers, society at large and the business all benefit.
Porter’s most quoted example, incidentally, is South Africa’s Discovery Group which pioneered the concept in the late 1990s through giving tangible incentives for clients to become healthier. The Vitality programme is scientifically designed to drop the client’s health and life insurance risk with savings shared between the parties – and society also benefitting.
Discovery has successfully applied its Shared-Value business model to car insurance and is now poised to enter banking. There are some more hard lessons in store for Wells Fargo clones.
