Thursday, May 25, 2017

Wells Fargo Cutting Costs by Reforming Sales Practices

Ethics in Business

I found an article from the CNBC that I thought would be a good example of how managers and leaders behaviors and actions can influence the market value and price of stocks. As the headline states, Wells Fargo management wants to cut costs. Announcing cost reductions and providing a strategic plan can help attract shareholders and influence the price of stocks. Wells Fargo is trying to cut costs by reforming sales practices and improving financial performance. The actions by management show that they are serious about cutting cost and have numbers ready to provide to the audience at the bank’s investor day. Cutting cost always attracts new shareholders and therefore influences the market value and price of stocks of a corporation. Another action that can improve the price of stock and influence the market value of an organization is corporate social responsibility disclosure (Jizi, Nehme, & Salama, 2016). Voluntarily revealing information and enhancing its content to raise certainty leads, according to Jizi, Nehme, and Salama to improve in stock price because investors place larger orders.
In my opinion, no system will ever keep people from being unethical. Especially in the financial sector, someone will always be greedy and try to find a way to manipulate the system that is in place. I also think that besides greed, the intense pressure on executive management leads to unethical behavior. The pressure of showing increasing performance and maximizing shareholders wealth can cause people to act unethical in order to keep their prestige, accountability, and their position. Unethical behavior includes, but is not limited to: bribery, illegal payments, and insider trading (Long, Wann, & Brockman, 2016).
I believe the best steps a company can take are to value their employees and give their executive management shares of the company instead of a bonus. Showing the employees that they are valued and appreciated will create increase job satisfaction and create a sense of belonging. This will lead to employees being happy and pushing them to give one hundred percent at all times. In order to create a balanced and ethical culture management might have to take severe steps like laying-off the people with a negative attitude. Another strategy is to connect the executive managers with the revenue of the company by giving them shares. This will lower the chance of managers behaving unethical in any way and then leaving the company. Giving them shares means they own part of the company and are negatively affected if the company makes negative news. The commitment increases and managers can feel a sense of ownership. 
                                                 
CNBC (2017, May 11). Wells Fargo management expected to woo shareholders with new cost cuts. Retrieved May 11, 2017, from http://www.cnbc.com/2017/05/11/wells-fargo-management-expected-to-woo-shareholders-with-new-cost-cuts.html
Jizi, M., Nehme, R., & Salama, A. (2016). Do social responsibility disclosures show improvements on stock price?. Journal Of Developing Areas, (2), 77.
Long, D. M., Wann, C., & Brockman, C. (2016). Unethical business behavior and stock performance. Academy Of Accounting And Financial Studies Journal, (3), 115.

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