In 2020, Wells Fargo paid $3 billion to settle claims that employees had committed widespread consumer abuses, including opening millions of unauthorized or outright bogus accounts, forging signatures, and moving money from real accounts to fake ones. Regulators zeroed in on Wells Fargo’s incentive system, intended to juice sales. Employees “secretly opened unauthorized accounts to hit sales targets and receive bonuses,” according to the director of the Consumer Financial Protection Bureau. The scandal highlights how workplace incentives “can be a cure as well as a poison,” according to Tae-Youn Park, lead author on research published in the Academy of Management Annals that explores how incentive programs can unintentionally encourage bad behavior at work.
This is a fascinating study and it's very timely because so many holiday or year-end bonuses are tied to hitting a number. Do incentive-based programs encourage employees to lie? Do companies need to rethink how they motivate employees?