The rigid, relentless sales goals that prompted Wells Fargo & Co. employees to open more than 2 million unauthorized customer accounts are on their way out, the company said yesterday. The day before, Moody’s Investors Service said the bank had encouraged “pervasive inappropriate practices,” and that managers didn’t provide sufficient oversight.

Wells Fargo’s predicament was by no means novel. It was simply the latest in a long string of companies and even federal agencies that have seen the incentivizing of employee performance go terribly awry. "Indiscriminate goal-setting" can lead to increased unethical behavior, "distorted risk preferences," and "corrosion of organizational culture," the authors of a Harvard Business School paper, "Goals Gone Wild: The Systematic Side Effects of Overprescribing Goal-Setting," have argued. Their work continues to be required reading for managers everywhere, since the scandal at Wells Fargo is of a type that keeps happening.

The reason may be that coming up with incentives and quotas that don't tempt greedy consequences remains tricky. "Companies tend to forget that an incentive to perform is identical to an incentive to cheat" when coupled with lax controls, unrealistic quotas, or a weak ethical culture, says Marc Hodak, an adjunct professor of business ethics at NYU's Stern School of Business and managing director of Hodak Value Advisors.

"Every large organization in the world has got these land mines of perverse incentives," said Hodak. "It's just a matter of degree to which of these things are allowed to run amok" because of those three factors. Barry Schwartz, an emeritus professor of psychology at Swarthmore College, goes farther: "Incentives poison people's will to do the right thing. It's the worst way to get people to do the things you want to do." Wells Fargo Chief Executive Officer John Stumpf said yesterday “there was no incentive to do bad things.” He added that he and other top management felt "accountable," and that the scandal was a situation where some employees didn't hew to the company's culture. The behavior at Wells Fargo allegedly grew over the years as salespeople were urged to sell more of its products to existing customers, or "cross-sell." In order to earn bonuses and meet daily sales quotas—which the City of Los Angeles said in a complaint last year were "discussed by Wells Fargo's District Managers four times a day"—employees opened more than 2 million accounts for customers without their knowledge (PDF). The sham accounts allegedly resulted in consumers paying fees of about $2.4 million between May 2011 and July 2015.

Wells Fargo agreed to resolve allegations by the U.S. Consumer Financial Protection Bureau and other government investigators without admitting or denying wrongdoing. It will pay $185 million in fines and reimburse about $2.6 million to cover fees that may have been improperly charged. The bank has said it already told call center workers to pause in cross-selling its financial products, and starting Jan. 1, the sales goals for its consumer bankers will be eliminated.

That scandal adds Wells Fargo to a slow motion parade of companies laid low over the years by incidents where pressure to produce led to allegations of unethical or illegal behavior (or both). But how does a company accomplish that laudable goal of maximizing sales without rewarding bad behavior? Below is a small rogue's gallery of such goals run amok—and an example of one company that managed to meet an audacious goal without employees turning to the dark side.

Sears, Roebuck & Co.: A push to sell parts
What happened: Back in the early '90s, Sears switched the compensation system in its auto centers from an hourly wage to a system that had more upside potential based on commissions and sales quotas. These were set for the number of repairs or services done over eight-hour shifts, along with quotas for selling a certain number of shock-absorbers or struts per hour. Sears employees told investigators that if they failed to meet these goals, they often received a cut in hours or were transferred to other Sears departments.

In the wake of this program, and a subsequent ad campaign, customers came running for cheap brake jobs. They were often told their car needed parts including calipers, coil springs and shocks repaired or replaced. Customer complaints led the California Department of Consumer Affairs to use undercover agents to investigate. It found that 34 out of 38 times the services recommended were unnecessary, or that customers were billed for work that hadn't been done.

The resolution: At a 1992 news conference, then-CEO Edward Brennan said mistakes "may have been the result of rigid attention to goals, or they could have been the result of aggressive selling." He also said that, "It seems to me our incentive compensation programs created a wide opportunity for mistakes to be made." Sears distributed about $47 million worth of coupons nationwide and $3.5 million to various California agencies. It also had to give $1.5 million to mechanic training programs at California community colleges.The company changed compensation to focus more on customer satisfaction, and switched from quotas for specific services and parts to a broader volume quota. It also said it was eliminating bonuses and prizes given to workers with the highest sales numbers.

Bausch & Lomb: An earnings goal
What happened: The Bausch & Lomb scandal involved a maneuver called "channel stuffing." That's a way to manipulate earnings and reach financial goals that, if attained, can significantly boost an executive's bonus.