If the members of Wells Fargo’s board of directors had spent time a few years ago reading through comments on job review websites, where current and former employees post reviews of their employers, the bank might have been able to avoid its current predicament.
The phrase “sales goals” shows up in 1,253 reviews on Glassdoor.com, a popular website used by job seekers. And hundreds of those reviews were posted before Wells Fargo’s management identified sales practices as a “noteworthy risk” to the board in February 2014.
Here’s a teller in 2008:
At least on the retail side of the company, the pressure of getting sales is too high…leading to unethical selling practices which are not corrected.
Here’s a branch manager in 2009:
I saw other stores exceeding [sales goals] by 150 percent or more and initially wanted to learn from those stores . . . What I found was that they had thrown all ethics out the door. I was shocked and appalled . . . So, naturally, I alerted my manager. I reported blatant cheating to the ethics line. I alerted human resources. Nothing happened to the officers except promotions!
Here’s a personal banker in 2013:
Unethical behavior, very high sales goals, things are not done with customers’ best interests [in mind].
It isn’t easy for a bank’s directors to gauge its culture, but the fallout from Wells Fargo’s sales scandal shows how important it is to do so.
“Good news tends to travel up much more quickly” than bad news, said Elizabeth “Betsy” Duke, the chairwoman of Wells Fargo, at a recent conference on governance and culture reform hosted by the Federal Reserve Bank of New York.
One way directors can assess culture is to visit business units and attend corporate functions. “Such dip-sticking appraisal does not require detailed understanding of technology or process, but an outside board member’s opinion on the behavioral atmosphere and tone at the front line or in the engine room could be critical input,” said Sir David Walker, former chairman of Barclays plc, in his concluding remarks at the conference.
Another way is to use websites like Glassdoor. Had the directors of Wells Fargo done so, they would have known long before February 2014 that the bank’s sales practices were a noteworthy risk.
A board should also monitor job review websites because the reviews on them reflect the bank’s reputation and impact its ability to attract talent. Job seekers use these websites in the same way that diners use Yelp.com to choose a restaurant and apartment seekers use websites like ApartmentRatings.com to find a place to live.
This is especially important right now. With an unemployment rate below 4 percent, good workers are hard to come by, and the ones that are willing to switch jobs are demanding higher salaries.
We captured the challenge of a competitive labor market in our 2018 Compensation Survey, done in collaboration with Compensation Advisors, a member of Meyer-Chatfield Group, which will be published in the third-quarter issue of Bank Director magazine.
“It’s a tight labor market, and the expense to hire and retain talent is going up,” said Flynt Gallagher, president of Compensation Advisors.
A good score on job review websites helps combat this. A study published by Glassdoor in 2017 found that people who read positive reviews about a company were more eager to apply to it and recommend it to friends than they would have been if they read negative reviews.
The study also found that people are willing to accept smaller salary increases to switch jobs if they are recruited by a company with a high employee approval score relative to a company with a low score. “This is consistent with economic theory, which predicts that people will accept lower salaries in exchange for a good workplace environment or other positive features of a job,” noted the study’s authors.
It’s worth pointing out, too, that participants in the study found online reviews to be more credible than human resource awards—“The Best Place to Work in Chicago in 2018,” for example—which are often publicized by companies to attract talent.
These findings underscore the value of monitoring websites that include reviews of the company’s internal work environment. A bank’s human resources department does it, and so should its board. If Wells Fargo’s directors had done so prior to 2014, its reputation might not have since suffered so much.