In 2016 Wells Fargo agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals. Soon after, the Observer and other media outlets reported that the U.S. Attorney’s offices in Charlotte and San Francisco, where the bank has major employment hubs, were also probing the practices. Meta Viers McClatchy
In 2016 Wells Fargo agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals. Soon after, the Observer and other media outlets reported that the U.S. Attorney’s offices in Charlotte and San Francisco, where the bank has major employment hubs, were also probing the practices. Meta Viers McClatchy

Banking

A year after scandal, claims of sales pressure linger at Wells Fargo

September 02, 2017 4:08 PM

Nearly a year after a fake-accounts scandal toppled its CEO, Wells Fargo has overhauled its branch and call center practices and ended product sales goals. But even with such changes, some employees say the pressure to push products and services is still a daily reality at the bank.

Wells Fargo has repeatedly said since the scandal that its focus is on how employees treat customers rather than how many accounts they open – a shift in approach after the bank agreed last Sept. 8 to pay $185 million in fines for accounts opened without customer knowledge.

But some employees interviewed by the Observer say selling more products to customers remains the clearest path to advancement at the bank, and they point to practices they say create the impression that selling remains the overriding priority at Wells Fargo.

Employees spoke of branch managers standing nearby to observe their interactions with customers, and afterward quizzing the employee on what additional products they might have offered.

To be sure, any customer-facing company has to emphasize selling or it will go out of business. San Francisco-based Wells Fargo in particular is trying to boost its bottom line, which has been hurt by the scandal. And no one is suggesting that employees are creating fake accounts again.

Still, the employees’ comments underscore the challenges in changing the culture at Wells Fargo and carrying out executives’ promise to shift the priority from sales to customer service. The bank’s culture remains a critical issue a year after the scandal, as new revelations keep coming up. In the latest twist, Wells on Thursday disclosed that the number of potentially fraudulent accounts could total 3.5 million – a nearly 70 percent jump over its initial estimates.

Steve Bond, head of compensation for Wells Fargo’s community banking unit, said in an Observer interview that “the sales pressure’s gone” at Wells.

Bond pointed to Wells’ overhaul of its quarterly bonus plan, a move the bank made after it eliminated sales goals in October. The new plan, launched in January, is intentionally weighted the heaviest toward results of customer-experience surveys, Bond said.

“There’s not a number of accounts that are being sold that are in our performance-management plan,” Bond said, noting that a key focus is on retaining customers. “This is not a sales plan, and it’s not a sales environment.”

‘It was their job to sell’

The Observer spoke with more than a dozen current and former Wells employees in nine states about whether the bank’s culture has evolved in the months since the scandal. Some said the sales pressure has completely disappeared. Others weren’t so sure.

Erica Robinson, who left her teller job in California in February, said her branch at that time was still emphasizing a target of five products per customer. She said her branch manager would sometimes mention that figure during morning “huddles” with the staff.

“It was, ‘Hey, just remember we need the five product relationships with each customer,’” Robinson said. The list could include a checking account, savings account, debit card and two types of loans, like a mortgage or credit card, she said.

“Even though the minimum sales goals were dramatically reduced for bankers, they were still expected to produce, as it was their job to sell,” Robinson said. She said she quit because of stress created in her branch to meet the new customer-service measures.

This is not a sales plan, and it’s not a sales environment.

Steve Bond, head of compensation for Wells Fargo’s community banking unit

The Committee for Better Banks, a coalition of industry workers that pushes for better working conditions in the industry, cited “blatant examples of continuing pressure” at Wells this year in a petition to the bank.

Ending sales goals “on paper” has had a positive impact, but “sales pressure still exists in many workplaces,” says the document by the group, which had criticized Wells Fargo’s sales practices before the accounts scandal blew up.

In one example, Erin Mahoney, organizing coordinator for the committee, said the group has received reports of Wells Fargo call center employees in Arizona being allowed to leave work early in exchange for opening credit-card accounts.

In January, the employees had goals only on Fridays, Mahoney told the Observer. But by April the goals had expanded to every day of the week, she said. Workers have been allowed to go home an hour early if they got two credit card applications in that day, she said. And as soon as they got three applications, they could leave right away, she said, noting the goals have changed often “to keep the pressure up.”

In a statement, Wells Fargo disputed such claims, saying, “We don’t require a number of products per customer and we do not offer go home early goals.”

“Our focus is on ensuring a positive customer experience and meeting their financial needs,” the bank said.

...It seems to be that the way to get promoted, the way to move up, at Wells Fargo hasn’t changed, and that way is to prove yourself by sales and not so much by customer service.

California attorney Jonathan Delshad, whose office continues to hear from former Wells Fargo employees who describe sales pressure as remaining at the bank

Bond, the compensation head, said quarterly bonuses are based on customer surveys, growth in customers who use Wells as their primary bank, and growth in customer balances in areas like deposits and investments. And those goals aren’t tied to individual performance, he said, but to each branch as a whole. That rewards the entire branch for taking care of customers, he said.

“To me, I think that profoundly shifts how our employees work together in the branch,” said Bond, who is based in Charlotte.

In a statement, Wells Fargo also said its new bonus plan “includes greater oversight and controls than ever before, and helps foster an engaging environment for team members where they can succeed.”

Laura Hay, of New York-based compensation-consulting firm Pearl Meyer, said it’s important to keep in mind that branch jobs remain sales positions at Wells Fargo, the same as most other banks.

“Wells Fargo is a for-profit business,” said Hay, who is based in Charlotte and heads Pearl Meyer’s national banking team. “There should be expectations of the branch staff that they are appropriately selling the bank’s products and services. Producing revenue is their role.”

She said Wells Fargo’s new compensation plan is better than the old because of its focus on customer experience and branch growth in measures like deposits and loan balances. That’s different than Wells’ prior plan, which the industry would call a “widgets” approach, focusing sales on account openings and volume, she said.

‘Prove yourself by sales’

California attorney Jonathan Delshad said his office continues to hear from former Wells employees who describe sales pressure as remaining at the bank, even after the scandal arose.

“We still do receive emails and interest from people who have left this year saying that they’re still asked to do things that they feel are unethical as far as their sales practices go,” said Delshad. He represents former Wells employees who sued the bank last year in a class-action case over claims they were demoted or fired for not meeting sales goals.

“The feeling that we get from former employees is that while they may have done away with actual quotas ... it seems to be that the way to get promoted, the way to move up, at Wells Fargo hasn’t changed, and that way is to prove yourself by sales and not so much by customer service,” he said.

Wells Fargo has taken a growing number of steps to turn itself around since revelations that sales quotas pushed employees to open possibly millions of deposit and credit card accounts without customer permission. Just last month, the bank’s chairman announced plans to step down after receiving weak support from shareholders who had voted on his re-election in April.

Leading the turnaround of the community banking division embroiled in the scandal is Charlotte-based Mary Mack, who in July took on the role after heading Wells’ brokerage operation. Under Mack, the bank has taken various steps, including changes to community banking leadership structures to help tighten controls. Wells has also said it will rely on mystery shopping and other means to monitor bad behavior.

In July 2016, Wells Fargo named Charlotte-based Mary Mack the new head of community banking, as the bank changed leadership right before its sales scandal blew up.
Diedra Laird dlaird@charlotteobserver.com

Timothy Taylor, a Wells Fargo personal banker in the branch at Third and Tryon streets in uptown Charlotte, is among employees who say they feel no pressure to sell.

“We’re definitely making it a little more customer-friendly, a little more customer-focused,” said Taylor, who joined Wells in 2012 as a teller in Gaston County. He said even before the scandal erupted he never felt pressure to sell customers products they didn’t want or need.

“The changes that we have made definitely are moving in the right direction,” said Taylor. “It’s continuing to align with our original objective, which is to help our customers succeed financially.”

But some current and former employees told the Observer that sales pressure plays a role in discussions conducted by branch managers with employees after they talk to customers.

“They were tracking every interaction that you had throughout the day,” said a personal banker who left the company earlier this year and didn’t want her name published because she’s a part of a class-action lawsuit against Wells.

“If the conversation didn’t yield any sales, then it was, ‘Well, what did you do for this client, and what else could you have done, and how else can you bring them back to see how we can help them?’” the personal banker said. “They wanted the results, and the results were still, of course, sales.”

They’re still asking, ‘What did you do with the client? Why did you do that? Why didn’t you do this?’

Financial adviser who works in a Wells Fargo branch in California

One financial adviser who works in a California branch described seeing bankers meeting throughout the day with the branch manager to talk about what products were offered, even though sales goals were gone.

“How is that any different?” said the adviser, who didn’t want his name published over concerns about retaliation. “They’re still asking, ‘What did you do with the client? Why did you do that? Why didn’t you do this?’”

“If you’re sitting with a client and you forget to do something and you’re getting reprimanded because you didn’t talk about a credit card, that’s still getting pressured for not doing something,” he said. “They still want them to open new accounts and refer the business to a business partner like myself or a mortgage banker.”

Bond, the Wells Fargo compensation head, said the bank “absolutely” wants branch managers observing and coaching employees to make sure they are providing a good customer experience.

“It’s around service,” Bond said. “We’re not coaching for sales. Sometimes that might result in a sale. But that’s not always the outcome.”

In the coming months, the bank plans to provide all branch managers with training to be more effective at handling such conversations, he said, noting that the bank had quickly rolled out the new compensation plan earlier this year.

Senate Banking Committee member Sen. Elizabeth Warren, D-Mass., center, questions Wells Fargo CEO John Stumpf, foreground, on Capitol Hill in Washington last September.
Susan Walsh AP

‘Culture reinforces behavior’

Even as Wells Fargo marks one year since the scandal and keeps overhauling its practices, the company remains under investigation for the fake accounts and other practices disclosed since the scandal, including claims that it improperly charged customers to lock in mortgage interest rates. The company has also come under scrutiny this summer for its auto-insurance practices.

Wells’ mounting issues have fueled calls by some members of Congress for new hearings into the bank, whose then-CEO testified twice on Capitol Hill last year about the accounts scandal. On Thursday, after the disclosure that even more fake accounts might have been created, some of those lawmakers renewed demands for hearings.

“Congress also can’t look the other way,” Massachusetts Democratic Sen. Elizabeth Warren tweeted. “We need the Wells Fargo hearing Dems called for earlier this month.”

Congress also can't look the other way. We need the @WellsFargo hearing Dems called for earlier this month. https://t.co/hkgsDJt8V4

— Elizabeth Warren (@SenWarren) August 31, 2017

Hay, the compensation expert, said even with all the changes Wells Fargo has made to its bonus structure, the potential for bad behavior remains, as it would with any company’s compensation plan. The key is for Wells Fargo to avoid the high-pressure sales culture that got it into trouble and to have proper controls in place, she said.

“The culture was so pressurized for those individuals where they were having inappropriate behaviors come out of it,” she said. “Culture reinforces behavior.”

Richard Clayton, research director for CtW Investment Group, which advocates for labor union pension funds that own shares of Wells Fargo and other companies, said work remains for the bank to reach its vision of becoming a company where sales are no longer the chief focus.

“It’s going to take a while to reorient the corporate culture at Wells Fargo toward customer service,” he said. “You can’t turn an ocean liner around in just a second.”

Deon Roberts: 704-358-5248, @DeonERoberts

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