Compensation Cafe has covered Wells Fargo's pay practices since 2009, when the Bank canceled prefunded employee recognition and rewards events in the midst of the Recession, blaming it on federal government restrictions on bank practices following the subprime mortgage crisis. We also covered the headline news on employee incentives that eventually brought their CEO down. I thought it would make sense to bring us up to date for early 2017 since their pay practices are back in the news.
The new employee pay practices were just announced in January, earning headlines like "Wells Fargo Revamps Pay Plan After Fake-Accounts Scandal" in USA Today and "Wells Fargo's Notorious Sales Goals to Get a Makeover" in CNNMoney. (Just imagine if your company's pay practices were receiving coverage like that?)
The Bank reports that the new program's primary focus is on customer service and growth. As reported by USA Today, the new plan features: No product sales goals; performance evaluation based on customer service, usage and growth; incentives associated with direct customer feedback and product usage; total comp balanced toward base pay rather than variable incentives; branch-based performance objectives rather than individual measures.
It all sounds pretty mainstream although I wonder how they are defining and measuring "growth," especially given their past practices. If someone out there knows the answer to that question, could you drop us a comment? Or if you know anything about employee reactions?
As a short reminder, the previous compensation design and management environment inspired branch employees to create as many as two million fake bank and credit card accounts over a few years. Employees reported that their sales goals were so unrealistic, they could only be met by cheating.Those who got caught were fired -- about 5,000 which is a number that as it passed say as few as 25, should have flashed "Danger" signs in a few HR offices. As a part of their termination, these employees were also designated in the industry as high risk for other financial service roles, essentially halting their careers. Their department managers did not receive any performance guidance.
(While it's not the topic of this update, it's worthwhile to take a second to acknowledge how much the world has changed. It doesn't take imagination to put any company's pay practices in the headlines in 2017. That means your compensation plan, too.)
Compensation Cafe writers have helped you keep an eye on Wells Fargo's employee compensation news not because they are a favorite target, but because their public persona enables us to learn about missteps our profession can make that have serious business consequences. Here's what you'll find in Compensation Cafe archives, each article emphasizing what can be learned:
What About Recognizing and Rewarding the Little Guy? by Becky Regan, April 13, 2009
Trick or Treat? I've Emailed 200,000 of our Coworkers About our Compensation by Margaret O'Hanlon, October 7, 2014*
Implementation Planning. What's the Point? Just Check the Headlines. by Margaret O'Hanlon, September 12, 2016
Excessively Successful Incentives by Jim Brennan, September 14, 2016
The Real Cost of Mismanaged Incentives: Wells Fargo by Dan Walter, September 29, 2016
* Also announced in January, the Bank increased teller and customer-service rep minimum pay. Hourly rates have moved up from $12.00--$16.00 to $13.50--$17.00.
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career paths and communications at the Café. Her firm, re:Think Consulting, provides services that include market pay information, base salary structures, incentive plan design, career paths and new plan implementation. Margaret is a Board member of the Bay Area Compensation Association (BACA). Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular ebook, Everything You Do (in Compensation) Is Communications, which can be found @ https://gumroad.com/l/everythingiscommunication.