tl;dr: Wells Fargo didn't have a “bad apples” problem–it had a bad management system. Unrealistic sales quotas and fear-driven incentives made gaming the numbers easier than doing the right thing.
The Wells Fargo scandal is a textbook example of how bad management systems, fear-based leadership, and arbitrary sales quotas can drive widespread gaming of the numbers–without requiring bad people.
What Actually Happened in the Wells Fargo Scandal
In a nutshell, thousands of Wells Fargo employees across the nation fraudulently opened unwanted bank accounts or credit card accounts for customers. Two million accounts. This probably hurt the credit scores of customers and they were hit with $2.5 million in fees for the unwanted accounts.
Fear-Based Sales Targets and Arbitrary Quotas
Why would these employees do that?
They were under a lot of pressure from bank managers and executives to hit arbitrary goals… eight financial products per customer.
Why eight? The CEO, John G. Stumpf, said (I kid you not), “It rhymes with great.” Employees are lucky, perhaps, that he doesn't know that nine rhymes with “fine?” Or that eleven rhymes with “heaven?”
What Deming Would Say About Arbitrary Targets
Eight sounds like the perfect definition of an arbitrary goal, as Dr. Deming would say. Deming would ask, “By what method” would you accomplish such a goal? There apparently wasn't a method (at least a good one) provided by management.
This article summarizes and has other links:
Reports by the Los Angeles Times and the L.A. city attorney have made it clear that there has long been a culture of fear, born of threats to workers' livelihoods and impossible sales goals, at Wells Fargo.
…
Multiple employees have complained of a company culture that encouraged fraud by setting impossible goals in “crossing-selling” — ie. selling multiple accounts to the same customer — and then offering big bonuses to employees who hit them. Tuesday's hearing clarified that Wells Fargo's sales goal was eight accounts per customer, while most banks average only three.
When employees couldn't hit that arbitrary target organically, they realized they could cheat the system. You can't blame them for wanting to save their jobs. They were only being paid about $12 an hour. They weren't financial wizards or criminal masterminds. There was no grand conspiracy cooked up by the CEO or other executives… but they should have anticipated how this could go awry.
Senator Elizabeth Warren said:
“You squeezed your employees to the breaking point so they would cheat customers and you could drive up your stock,”
I heard some analysis yesterday that if Wells Fargo did conspire to commit this fraud, it was really dumb because opening and closing fake accounts added cost and didn't really add any revenue. The higher “accounts per customer” number gave the CEO something to brag about on earnings calls with Wall Street, which might have boosted the stock price… something that benefited CEO Stumpf more than the employees.
Accountability, Blame, and the Myth of “Bad Apples”
Wells Fargo says it has fired 5,300 front-line staff and managers over the past five years. There's been a lot of blaming going on… the CEO blaming all of these employees for not living up to Wells Fargo's alleged ethics and values (read their online statement to see how far off from reality this is).
The bank has been fined $185 million for the shenanigans.
Yet Carrie Tolstedt, the Wells Fargo executive responsible for the 6,000 branches during this time, received a $126 million retirement package, even though these bank practices were under investigation for a while. So much for accountability.
5300 “bad apples” certainly sounds like a system problem to me… and that's leadership's responsibility.
Here are a few links to articles I've read:
- Wells Fargo CEO Defends Bank Culture, Lays Blame With Bad Employees
- Wells Fargo Warned Workers Against Sham Accounts, but ‘They Needed a Paycheck'
- How Wells Fargo's High-Pressure Sales Culture Spiraled Out of Control
- Wells Fargo's Incentives Go Awry
- Wells Fargo under siege: Drops sales goals tied to bogus account scandal
- ‘You Should Resign': Watch Sen. Elizabeth Warren Grill Wells Fargo CEO John Stumpf
- I called the Wells Fargo ethics line and was fired
Those links should give you a good sense of the situation… and how this could have been anticipated and avoided through better management.
As we've learned in other situations, when it's easier to game the numbers or to distort the system than it is to actually improve the system, bad things will happen.
I learned this from Dr. Deming's work and from Brian Joiner wrote in his outstanding book Fourth Generation Management: The New Business Consciousness.
Three Predictable Responses to Targets
As Joiner wrote, there are three things that can happen when you have a quota or a target:
- Distort the system
- Distort the numbers
- Improve the system
What Leaders Should Learn from the Wells Fargo Scandal
What's the lesson for managers in any setting?
When you set an unrealistic quota… and then pressure people to hit the quota (through threats or promises of rewards)… you need to anticipate how people might game the numbers or distort the system.
Why This Matters in 2026: Quotas Haven't Gone Away–They've Just Been Rebranded
In 2026, many leaders like to believe we've moved past crude quotas and fear-based management. In reality, quotas haven't disappeared–they've been renamed.
Today they show up as OKRs, stretch targets, dashboards, scorecards, rankings, star ratings, productivity benchmarks, AI-generated performance alerts, and incentive plans tied to a single number. Whether in government or business, the pattern is the same: senior leaders set ambitious targets, expect improvement, and assume the system will somehow comply.
But the underlying risk hasn't changed.
When leaders set targets without improving the system, people are still forced into an impossible choice:
- Miss the number and suffer consequences, or
- Make the numbers look good–by distorting data, redefining terms, shifting work off the books, or quietly cutting corners.
In government, this shows up in manipulated wait times, compliance metrics, clearance rates, inspection counts, or case backlogs that “magically” improve on paper. In business, it appears as inflated sales figures, premature revenue recognition, artificial productivity gains, or customer experience scores that don't match reality.
What's different in 2026 is speed and scale. Data moves faster. Dashboards update in real time. Algorithms flag “underperformance” instantly. The pressure to explain variance–or eliminate it–arrives sooner and hits harder. That makes gaming the system not only predictable, but often rational.
The lesson hasn't changed since Deming:
Targets don't improve systems. Management does.
If leaders want real improvement–shorter waits, better quality, safer outcomes, healthier finances–they must design systems that make honesty safer than deception, learning safer than blame, and improvement easier than gaming.
Otherwise, we'll keep reliving the same scandals with newer tools, flashier dashboards, and the same disappointing results.
More Examples of Gaming the Numbers Across Industries
Wells Fargo is not unique. When leaders rely on fear, arbitrary targets, and incentives without improving the system, gaming the numbers becomes predictable. Here are additional examples–across industries–where bad metrics and bad management produced bad behavior.
Please scroll down (or click) to post a comment. Connect with me on LinkedIn.
If you’re working to build a culture where people feel safe to speak up, solve problems, and improve every day, I’d be glad to help. Let’s talk about how to strengthen Psychological Safety and Continuous Improvement in your organization.
From the Deming Institute blog:
“Using Outdated Management Practices Can Be Very Costly”
Comment via LinkedIn:
My response:
Right… metrics + lack of a method + undue pressure = gaming and cheating
More from LinkedIn:
Barry Alexander:
Michael Bremer:
My reply:
I think “avoiding blame” (my thought) is not the same as never holding anybody accountable. Have you studied the “Just Culture” approach from healthcare, Michael? There is a time to hold an individual accountable if they made a bad choice that they knew would cause harm. One test is “Would another person in that same situation make the same mistake?” At Wells, that certainly seems to be the case, times 5300
S. Max Brown:
Petri Huitti:
More in the news:
“Ex-Wells Fargo Employees Sue, Allege They Were Punished For Not Breaking Law”
[…] Look at what happened at Wells Fargo. […]
Stumpf is out as CEO, but is probably taking home a huge retirement payout.
This NY Times article tells some of the stories from people who lost their jobs and really had their lives affected by the quotas and pressure. Sad stories on many levels.
Upate:
Wells Fargo Fires Four Executives Following Probe of Sales-Practices Scandal
Terminated executives won’t receive 2016 bonus and will forfeit unvested equity, bank says
(via WSJ)
Wells Fargo is now running ads asking people for a second chance.
The ad says they’ve ended “sales goals for branch managers.”
I’m glad they’re focused , it seems, on the system instead of running ads saying they have fired all of the bad people.
I watched this really sad Netflix documentary on Wells… how badly their bank employees were treated and how careers were ruined because they spoke up and/or pushed back:
https://screenrant.com/dirty-money-season-2-netflix-wells-fargo-missing-information/
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