Last week, Wells Fargo announced it had terminated upwards of 5000 employees and agreed to pay $185 million in penalties in a widespread scam involving thousands of illegally opened accounts by employees. In articles published after the announcement Wells Fargo personal bankers, detailed the high-pressure sales tactics encouraged by an aggressive incentive-based compensation plan and unscrupulous management. Bonuses, merit increases and other perks were awarded to employees who opened multiple accounts or sold additional services to customers. Investigations completed both internally and by external regulators found illegal ghost accounts, unauthorized funds transfers and forged documents. In addition to actions already taken, Wells Fargo stated it will also change hiring and training practices, cancel their incentive-based pay program (next year), and conduct ethics training for all employees.
Where was HR in all of this? I am left to assume that HR at best, voiced their complaints but were then forced to gag themselves by leadership in the name of what was best for the shareholders, or, at worst, actively supported the pay scheme, the unrealistically attainable goals and thus the degrading employment culture of Wells Fargo, where employees had to choose a job or their integrity. In one fell swoop, Wells Fargo Human Resources failed its employees, the company and gave the HR profession a kick to the groin.
1. Where was HR when this incentive-plan was introduced, vetted, approved and rolled out? In a post-2008 financial crisis world, how was there not someone in HR warning Wells Fargo leadership of these inevitable negative and illegal consequences?
2. Does Wells Fargo have complaint procedures? I would assume so, especially for a company based out of California. I’m assuming that at least one employee had to have witnessed the behavior and reported it to the attention of his or her manager and HR. What did HR do with the employee complaints?
3. What about Whistleblower provisions? Publicly traded companies are REQUIRED to have whistleblower provisions and are REQUIRED to communicate these policies to employees, usually by way of a Handbook or Governance Manual that is acknowledged at time of hire. Did HR encourage or discourage protected whistleblower activity?
4. Did HR conduct an internal investigation at any point leading up to this ? If so, what actions were taken? If 5300 employees have since been terminated, the behavior was widespread, chronic and conspicuous. Even if an employee did not make a complaint, HR had to have known what was going on. The unethical and illegal practices actually had names, for example, “bundling” and “pinning”. If these practices were so blatant as to have been named, how did HR not know? Did they turn a blind eye? Or, were they oblivious? In this scenario Wells Fargo HR was either complicit or ignorant, and neither are a defense for illegal or unethical behavior.
5. How were employees promoted to management? Based on reaching sales goals? If promotions were based on performance and performance tied to meeting sales goals outlined in the incentive pay plan that is under fire, then Wells Fargo’s management was populated by unethical and unscrupulous individuals. No wonder they had an environment where employees were encouraged to do whatever was necessary to fulfill sales quotas. And, no wonder employees with questionable or flexible ethics were hired by said managers. Again, where was HR’s involvement in internal Wells Fargo hiring and promotion procedures? Did they have any oversight of hiring practices at all?
6. Right or wrong, HR is the cultivator of culture. HR with the partnership of leadership, intentionally brands company culture by designing missions, visions, company values and standards of conduct. HR is charged with measuring that engagement to culture and fixing it when it’s broken. How could Wells Fargo tout Company Values all the while knowing its employees were fraudulently opening accounts, and receiving monetary incentives for doing so?
7. In a more recent article, the CFO of Wells Fargo pointed the finger at underperforming employees. Not management and not HR. Who hired these under performers? Who was in charge of monitoring their performance? Did these employees get put on progressive discipline or PIP’s when their performance did not meet expectations? All of these things sound like stuff HR handles. Was Wells Fargo’s HR department on vacation during all of this or completely inept? In this case, they are not even worthy of a good
finger-pointing by their own CFO.
It is clear that there is plenty of blame to go around at Wells Fargo. As I continue to read all of the articles about the continued fall-out from Wells Fargo, the question I continue to ask myself is, Where was HR?