Wells Fargo unveils replacement for scandal-ridden pay plan
Product sales goals eliminated
Last week, reports began to emerge that Wells Fargo was in the process of finalizing its new employee compensation plan, which the bank developed in the wake of the scandal that involved 5,000 of the bank’s former employees opening as many as 2 million credit card and bank accounts without authorization in order to get sales bonuses.
Under Wells Fargo’s previous pay plan, some bank employees were incentivized to open additional accounts for current customers, but those incentives led to abuse, and subsequently, a $185 million fine from the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles.
In the aftermath, the bank pledged to change its employee compensation plan, but did not provide details on how exactly the new plan would be structured beyond eliminating sales goals.
But on Tuesday, Wells Fargo revealed how its new pay plan is going to work.
In a post on the bank’s website, the company said that new pay plan took effect on Jan. 1, 2017 and applies to “all branch team members, including managers, tellers, and personal bankers.”
In the post, the bank listed several “key aspects” of the new compensation plan, which include:
- No product sales goals
- Customer feedback and usage: A larger allocation of incentives is associated with direct customer feedback and product usage, such as customer-initiated transactions, customer retention, and household balances
- Longer-term view: Metrics in the plan take a longer-term view of customer relationships and incorporate the quality of customer experiences and customer retention
- Team-oriented performance: Entry-level banker incentive plans are based on team rather than individual performance
- Greater participation: A significantly higher percentage of team members will have the opportunity to earn incentive pay under the plan, which is expected to drive greater alignment across the Community Bank
- Stronger oversight and risk controls: Stronger controls have been put in place at the local, regional and corporate levels to monitor behavior; additional reporting is built into the plan to provide enhanced oversight of the sales process
According to Wells Fargo, the new pay plan is the result of collaboration between an “ integrated team of Wells Fargo leaders with input from front-line branch team members from around the country.”
The bank said that its “front-line retail bankers” said that they wanted to see a compensation plan that “creates the type of positive environment they can go into every day to serve their customers.”
The bank also said that these new changes help fulfill its pledge to “make things right” with its customers and fix the issues that led to the fine.
“This plan is another step in our journey to restore trust with our team members and our customers, and makes delivering a great customer experience our highest priority,” said Mary Mack, who is Wells Fargo’s new head of retail banking. “Our future success depends most of all on our ability to make the changes that will restore that trust, and this new plan is an important one of those changes.”
Mack said going forward, the bank will measure its performance based on “direct customer feedback as well as by how much our customers choose to transact with us and grow their balances, not just simply trying to sell the next product.”