Organizational Complexity Wells Fargo

Organizational Complexity: Wells Fargo

1: How complex is your organization internally? Place your organization on the following chart. Defend your responses and reference sources.

Outside of the Board of Directors and the Executive Leadership, there is little information in the way of an organizational chart. Since the company is so big there are general banking organizational structures that are used to describe some of the hierarchy.

Wells Fargo is a very complex organization with many facets. It is a very symmetric organization with both high vertical and high horizontal differentiation. This can be attributed first to the size of the company. Wells Fargo is the seventh largest company in the world based off the Forbes Global 2000 ranking. In addition to this, Wells Fargo has 265,000 employees (Wells Fargo, 2018). Wells Fargo also operates in 38 countries worldwide through subsidiaries. These countries include China, France, Spain and South Africa (Wells Fargo, 2018).  Secondly the amount of services provided plays a significant part of the internal complexity, as there are managers for every aspect of service provided.

Banking, loans and credit, insurance, investing and retirement, wealth management, and rewards and benefits. Under the commercial segment, Wells Fargo offers loans, insurance for the owner as well as assets, credit facilities, merchant services, Online banking services, round the clock customer service etc. Under the small industries segment, their line of services includes banking, loans and credit, merchant services, insurance, and payroll and other services (Bhasin, 2018).

The organization provides a significant amount of services through different divisions of its company.

Executive Leadership

Wells Fargo has 10 executive officers that oversee all aspects of their business operations. These include the CEO, CFO, Administrative Officer, Wholesale Banking, Wealth and Investment management among other duties and responsibilities (Wells Fargo, 2018). The company also answers to a board of directors. There are 12 members on the board from different backgrounds. The president of the board is Elizabeth A. Duke, who was previously a member for the Federal Reserve Board of Governors. The only member of both the board and the executive officers is the CEO, Tim Sloan (Wells Fargo, 2018).

Business Banking

Wells Fargo provides retail services to 21 million households in the United States. They do this through over 5,700 retail branches and 13,000 ATMs across 39 states and Washington DC. (Wells Fargo, 2018).

Wells Fargo Business Banking division has the following 6 regions: East, Midwest, Mountain, Northeast, Pacific Northwest, Southern California and Southwest (Reuters, 2017). Each of these regions is headed up by a business banking leader that reports to the Executive VP of consumer banking (Wells Fargo, 2018).

Picture1

2: Locate your organization on the figure, what is the complexity?

Wells Fargo is a very complex organization. In addition to the size and scale mentioned above there is regulatory complexity. Banks are regulated by the Federal Reserve Act, which established the Federal Reserve System which cover laws in regards to banking and financial activities (Federal Reserve). City and State banks are subject to local regulatory charters in the areas they operate as well (Pace Law, n.d.).  The following is a brief list of the hierarchal structure of oversight.

U.S. banks, bank accounts, and banking transactions are extensively regulated. The banking industry is subject to overlapping regulations promulgated by federal and state agencies:

The Federal Reserve Board has general regulatory authority over the operations and disclosure obligations of all banks, both nationally- and state-chartered (Pace Law, n.d.).

The Office of the Comptroller of the Currency charters all national banks and is responsible for supervision and examination of those banks (Pace Law, n.d.).

The Federal Deposit Insurance Corporation (FDIC), created in 1933, is the primary regulator of state banks and has collateral authority over national banks, and insures depositors against bank losses (Pace Law, n.d.).

State banking departments charter, supervise, and examine state and community banks (Pace Law, n.d.).

In addition to the complexity of regulation, banks deal with complexities of operating in an environment of inflation and interest rate fluctuation. The different rates that are posed through the Federal Reserve change the amounts of money accessible for people to borrow. This will also change the rates for the loans on the money through the banks (Folger, 2018). This market cycle directly impacts the revenues of all banks.

#3: Does your organization’s complexity fit its structural configuration?

Wells Fargo is structured to meet the complexity of the organization. Wells Fargo complexity fits its configuration very well. This is why it is the 3rdlargest bank in total deposits, 4thlargest bank by total assets and was voted by Forbes as the 3rdmost valuable financial brand in the world (Wells Fargo, 2018). Wells Fargo operates under the matrix structure; functional at the executive level and divisional at the bank level.

Wells Fargo’s company is broken down into three distinct areas for reporting purposes: community banking, wholesale banking, and wealth, brokerage and retirement (Compton, 2018).

Broadly speaking, there are three major categories of Wells Fargo: Community banking, wholesale banking and wealth, brokerage and retirement (Compton, 2018). The functional configuration of the bank is shown in how each department is set up. Each of the three segments have an executive VP. Under these VPs are director teams that more closely manage the specific functions, such as the EVP of consumer banking will have a team of directors that specifically handles home loans. Under these directors are the department managers. The department managers will handle implementation of objectives put forth by the directors (Garcia, 2018).

The commercial banking structure is divisional in nature. The banks are separated regionally into six regions (Reuters, 2018). Each bank has a bank manager that reports to their regional manager (Garcia, 2018).

Type 1 Type 2 Type 3 Type 4
Organizational complexity Symmetric
Configuration Matrix
Environment Turbulent
Strategy types Defender
Organizational goals Effectiveness

 

#4: Is there “fit” across the organization’s components? What do we know now about how our organization aligns across these categories? What would make them more effective? Should your organization change its structure based on its complexity?

Wells Fargo is an industry leader. As mentioned in the environmental complexity, they are top in the country in multiple categories. The categories listed below are not inclusive, as there are many more to be found on the website. There are many aspects that the bank is an industry leader and these encompass all three of the major segments of the company. In the event the components were not a fit, it would be difficult to achieve all of the successes listed below.

Data provided from Wells Fargo website.

  • 3rd total Deposits (2017) FDIC data
  • 4th total Assets (2018) SNL Financial
  • 5th Biggest Public Company in the World* (2017) Forbes
  • 26th Biggest Company by Revenue in the U.S. (2018) Fortune
  • 14th Top Company for Diversity, DiversityInc.
  • 50 Best Companies for Diversity, Black Enterprise magazine
  • Best AI Companies to Work For In 2018 Based On Glassdoor, Forbes
  • Perfect Score – 100 Corporate Equality Index (2018, 15th year) Human Rights Campaign
  • #1 Largest workplace employee giving campaign in the U.S. for ninth consecutive year, based on 2017 donations (2018) United Way Worldwide
  • Most Valuable Banking Brand in North America and Retail Banking (2017) Brand Finance®
  • Third-Most Valuable Financial Services Brand in World (2017) Forbes
  • #1 Largest workplace employee giving campaign in the U.S. for ninth consecutive year, based on 2017 donations (2018) United Way Worldwide
  • #3 Most Generous Cash Donor (U.S.) (2016 – most current ranking available) The Chronicle of Philanthropy
  • #1 in the industry for mobile prowess in transfers, wallets, and security, providing customers the ability to temporarily disable new cards and use a smartphone in place of a card at an ATM (2017) Business Insider’s Mobile Banking Competitive Edge Study
  • #2 U.S. annuity sales (2017) Transamerica Roundtable Survey
  • #3 U.S. full-service retail brokerage provider (4Q17) Company and competitor reports
  • #5 U.S. wealth management provider (2017) Barron’s
  • #7 U.S. Institutional retirement plan record keeper, based on assets (2017) PlanSponsor magazine
  • #7 U.S. IRA provider (4Q17) Cerulli Associates
  • Global Best Investment Management Services (2017) Global Finance magazine

 

Wells Fargo has had two years to recover from the scandals that rocked the company. There is a new CEO in place, Tim Sloan (Wells Fargo, 2018). In the annual report the company has been transparent about changing their business practices internally from the environment that lead them to the point where they were receiving fines and a cap on account creation. If the bank really has changed for the better, it can be expected that they will continue to be an industry leader for the foreseeable future.

References

Federal Reserve. (2017, February 9). Board of Governors of the Federal Reserve System. Retrieved from https://www.federalreserve.gov/supervisionreg/regabout.htm

Folger, J. (2018, May 24). What is the relationship between inflation and interest rates? Retrieved from https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp

Garcia, M. (2018, June 26). Organizational Structure of Banks. Retrieved from https://smallbusiness.chron.com/organizational-structure-banks-73821.html

Hitesh Bhasin. (2018, June 28). Retrieved September 17, 2018, from http://www.marketing91.com

Pace Law. (n.d.). Research Guides: Banking Law: FEDERAL BANKING LAWS. Retrieved from https://libraryguides.law.pace.edu/banking

Saxena, A. (2017, June 05). Wells Fargo’s business banking group expands to four regions. Retrieved from https://www.reuters.com/article/us-wells-fargo-expansion/wells-fargos-business-banking-group-expands-to-four-regions-idUSKBN18W1Y0

Wells Fargo. (2017). 2017 International Business Indicator. Global Business Optimism Surges amid Trade Uncertainty. Retrieved from https://wholesale.wf.com/global-focus/wp-content/uploads/sites/4/2017/04/3938901-B-INTL-IBI-SUMMARY-1Q-2017-FNLe.pdf.

Wells Fargo. (2018). Leadership and Governance. Retrieved from https://www.wellsfargo.com/about/corporate/governance/

Wells Fargo. (2018). Locations and Contacts for Financial Institutions,  Supranationals, Sovereigns, and Agencies Doing Business Internationally. Retrieved from https://www.wellsfargo.com/com/international/locations/global-financial-institutions/

Wells Fargo. (2018). Wells Fargo & Company. Retrieved from http://www.annualreports.com/Company/wells-fargo-company

One thought on “Organizational Complexity Wells Fargo

  1. This is fantastic! Many of your peers who do not have access to an org. chart have already developed one. You will need to do so for your final report. You will receive 20 out of the possible 20 points for this assignment. Cheers!

    Like

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