Wells Fargo: In the News Again, and It's Not Pretty

A year ago I posted a hopeful article about Wells Fargo’s improved effort to be trustable with its customers. After the scandal caused from its employees signing customers up for extra checking accounts or other services without their knowledge, the company had introduced a promising new feature in their banking app designed to help customers figure out how to avoid paying various fees and charges. Very customer-centric, I said, to act in the customer’s interest even when it might result in lower fees for the bank.

But over the weekend the New York Times broke yet another story about the continuing troubles caused by the bank’s sales-at-any-cost culture. Wells Fargo’s leaders are saying that the company has become more customer-centric, but in reality their argument is beginning to remind me of the famous Wizard-of-Oz scene in which Dorothy and her comrades find out that the “wizard” is in fact just a loud mouth behind a curtain. 

“Pay No Attention to That Man Behind the Curtain”

At Wells Fargo, “that man behind the curtain” appears to be the senior management of the company, who are either cluelessly unaware of what their own bank’s culture is actually like, or trying to hide behind the curtain until the bad press disappears. The CEO pulled down more than $17 million last year (a 36% increase over the year before), but the company has somehow not been able to replace any of the cancelled incentive compensation that its rank-and-file workers strove for. Apparently, if cheating to meet the numbers is no longer going to be possible, well, that’s going to hurt the workers, not the managers who architected the system.

And the Times article cited several examples of company policies or practices that still put employees in the vice of making sales and getting ambitious results, no matter what, even when it isn’t in the customer’s interest:

• While the bank has eliminated the practice of providing incentive compensation to retail branch employees for signing customers up for new services themselves, they still use a carrot-and-stick approach to get them to refer more customers to the bank’s sales executives, who do it quite aggressively. 
• At least one financial adviser working for the bank said that she and others are sometimes pushed to sign clients up for products that would pay Wells a recurring fee, even when those products might not be best for the customer.
• In one of its contact centers, charged with collecting bad debt, the bank has just increased the number of calls workers are expected to handle, and the amount of credit card or other debt they must collect, by 10% to 20%, from $34,000 in debt collected per hour to $40,000 per hour, and from 30 calls handled per hour to 33.
• Not surprisingly, one of the employees the Times interviewed said that there is “a sense among the workers that most of the reforms the bank has made are very superficial and only being done for P.R. reasons.” 

Unfortunately, this kind of story is not unique to Wells Fargo. According to a McKinsey study (cited in Brave New Work by Aaron Dignan), “only 26 percent of transformation efforts succeed in the eyes of the people involved. If you ask frontline employees only, that drops to just 6 percent.” Indeed.

And why is this? Because, when undertaking a customer-centric transformation, it’s relatively easy for a company’s leadership and executive team to announce the initiative and to publicize their commitment to act in the interest of their customers. They are trying to build the brand back, and then to support their argument all they need to do is introduce a few programs, or maybe a special app or a piece of software that does indeed represent a more trustable customer experience, as Wells Fargo has done. So this raises everyone's expectations, especially those of the company's frontline workers.

But because such one-off policies and apps are “top-down” initiatives, they are relatively easy to implement, while changing a company’s internal culture requires more of a “bottom-up” effort and is extremely difficult. A genuine customer-centric transformation usually calls into question a whole network of incentives, financial priorities, and alignment issues, and it requires a great deal of work to restructure them. 

Wells Fargo is rightly proud of its 167-year history, but it won’t succeed in the 21st Century by continuing to flog a 20th Century mass-marketing business model, based on commissioned product sales. This is a model in which customers represent obstacles lying between it and a profit. This bank needs to support its new customer-oriented strategy with a business model based on engaging their employees in the effort, rather than simply changing the settings on the “Skinner Box” that their employees are required to navigate.

Because in the end, if you want a worker to treat customers the way they’d like to be treated if they were the customer, then you have to treat the worker the way you’d like to be treated if you were the worker.