Wells Fargo Financial Analysis

Wells Fargo

For this project, we researched Wells Fargo's performance in the last couple of years as a way to check on its progress to greatness. What we found was an overwhelmingly charismatic company that not only puts down its values in ink, but also strictly abides by them. Much to our surprise, a huge chunk of their thick annual report for 2002 was an honest listing of all the threatening factors that stand in the company's way rather than its exceptional rankings in its sector. In this paper, we will focus specifically on Wells Fargo's leadership, company culture, SWOT analysis, and financial performance analysis. We will try to link our findings to Jim Collins's book as a way to prove that the company has really made the jump from good to great.

Charismatic Leadership

The CEO Dick Kovacevich became the head of the company in 1998 after its merger with Norwest Corp. "Business Week" classifies him as one of the best managers: "While many of his peers have been embroiled in one scandal or another, Wells Fargo & Co. CEO Richard M. Kovacevich, 59, has kept his bank safely out of the fray" (BW). Kovacevich obtained his MBA from Stanford after an injury in his shoulder kept him from becoming a pitcher for the New Yorker Yankees. Nevertheless, Kovacevich transports his athletic attitude to his business "pitching hard and fast" in his industry (RMA Journal). For him, mistakes are unavoidable part of business but he treats them as opportunities to learn and grow. His core strategy is to sell as many products as possible to each customer. Currently, four products are sold on average to each customer, which is double the industry average. Furthermore, Kovacevich admits to his willingness to sacrifice a little profit margin for the purpose of building lasting and trusting relationships with their customers. Kovacevich has also invested in building better relationships between the management and the workers because for him having the right people on the team is crucial. He acknowledges the need for decentralization in such a big company, for the purpose of which the right people have to be picked and allowed to run the segment as if they own it. Ever since becoming a CEO, he has made worker satisfaction a top goal for Wells Fargo. He has also introduced incentives for his "people goals" expressed in the generous bonuses (ranging from 10 to 30 percent of base salary) the managers receive for listening and tending to their workers. Wells Fargo employees take an automated phone survey every 18 months in which they answer basic questions about their satisfaction with the management. The responses to these surveys are used to analyze the management style and to see if there is any need or opportunity for further improvement.

In other words, the management of Wells Fargo has already passed from good to great. Kovacevich strives to create an atmosphere of employee satisfaction and trust. It is true that he finds it profitable to maintain happy workers who execute their jobs better but we saw much more than the pure profit added to these open management - employee relations: we saw a caring leader, humble enough to risk his authority to be undermined by critiques. Several years after Collins' book was published, the management at Wells Fargo is still approachable, humble, humane, and very charismatic.

Company Culture, Values and Visions

We found Wells Fargo as charismatic a company as its CEO Kovacevich is. It has preserved proudly its values for 150 years now, and anyone can look at them on their homepage (www.wellsfargo.com). Wells Fargo places its employees above their customers and above their products. An employee is what makes a service company successful. As Kovacevich says for RMA journal, " Our ability to provide outstanding sales and services all gets down to our people - they're our one true sustainable competitive advantage." On top of the values for Wells Fargo is maintaining outstanding relationships with customers, team members, and stockholders. They also encourage open communications among managers and workers as well as among customers and members. The company views corporate governance as a team project and inspires honesty, trust and integrity among its members.

Like the research team of Collins, we stumbled upon the words "culture" and "values" many times in our research. It is overwhelmingly convincing that Wells Fargo has maintained its spirit of a good to great company for a century and a half already. Our personal experience with the company further convinced us that these values are not cited just for decoration - every new employee is trained to appreciate and adhere to the company's values.

Company products and services

"We are a diversified financial services company. In addition to banking, we provide insurance, investments, mortgages and consumer finance" (Annual Report 2002). Since Collins' research, Wells Fargo has only continued to grow and add new sectors in its business. Its visions contain growth as a consequence of getting