Wells Fargo overhauls pay plan for bank branch employeesThe Associated Press — By KEN SWEET - AP Business Writer
NEW YORK (AP) — Wells Fargo announced a complete restructuring Tuesday of how it pays tellers and other bank branch employees, with incentives now tied to how often customers use their accounts, as the company tries to right itself after a scandal over its aggressive sales practices.
The long-anticipated plan has been considered a high priority for CEO Tim Sloan and Mary Mack, the head of Wells Fargo's community bank division — both of whom took those jobs after the scandal emerged. Wells Fargo had already announced in September that it was getting rid of the sales goals that led employees to open up to 2 million unauthorized accounts.
Wells Fargo's 70,000-plus front-line bank employees will no longer be given incentives for how many new accounts they open or for meeting sales goals. They will instead receive part of their overall salary based on how the products they sell are used, with one component also based on independently measured customer service scores for their branch locations.
"Do they use the products they have with us? Do they think of us as their primary bank? Are we growing customers who consider us their primary bank? These are the metrics we are now measuring," Mack told The Associated Press.
Accounts that are used frequently, such as those where customers set up direct deposits or use debit cards often, will be a positive factor for an employee's pay. Idle accounts will not, and an account won't be a factor toward incentives until it's been open three months.
"Our goal here was to create a pay plan that would restore trust with our customers, team members and the public," Mack said.
Wells Fargo employees will also receive more of their overall compensation as a base salary, rather than in one-time incentives and bonuses. A teller, the lowest-level position, will have about 95 percent of his or her total pay as a base. Annual performance raises can still have an effect, but those will be based more on how customers regard and use the branch. Customer surveys done by Gallup and mystery shoppers will also provide information on how employees perform and how customers view their local branches.
San Francisco-based Wells Fargo had also said earlier this month it was boosting its minimum wage for employees to a range of $13.50 - $17.00 an hour, depending on geography and experience.
Wells Fargo provided a summary of the plan to the AP. But compensation plans, particularly at large companies like Wells, can run hundreds of pages long. Without all the details, it is tough to see whether the changes will make a significant impact, said Lisa Barrington, a consultant in organizational psychology and compensation issues who has worked with companies like UnitedHealthcare and American Express.
"By itself, this plan is not going to solve the problems at Wells," said Barrington. "It can only be one piece of an overhaul of Wells' corporate culture."
Mack acknowledged the bank still has work to do to restore its image, saying the new compensation plan is "an answer, not the answer."
"This is just one step to restore trust," she said.
The bank was fined $185 million in September in an agreement with regulators who said bank employees opened the millions of customer accounts fraudulently in order to meet the targets that called for every customer have eight products with the bank. Federal and local authorities alleged that Wells Fargo employees moved money between those accounts and even created fake email addresses to sign customers up for online banking — all without customer authorization.
When the allegations became public, Wells Fargo employees said the bank's pay plan was partly to blame. Employees described a constant and compulsive pressure to sell, with managers checking on a daily — or even hourly — basis about whether they were meeting the targets. Quotas varied by branch size and other factors, but generally were so high that they could not be met without skirting the rules, employees at the time said.
The new pay plan tries to address that pressure from bosses by restructuring the salary and bonuses for branch managers as well. Managers will be measured on how well they develop their employees, and by how much the branch is increasing deposits, loans and assets — instead of on how many new accounts are opened.
Wells Fargo is set to report its quarterly results on Friday, when it is expected to give more details about the compensation plan.
Ken Sweet covers banks and consumer financial issues for The Associated Press. Follow him on Twitter at @kensweet.