Wells Fargo announced Tuesday it was making changes to the way it pays branch employees, with a focus on base pay and branch performance, as the bank tries to repair the damage from its phony account scandal last year.
Employees will now be evaluated based on the performance of a team or branch, a significant change from pay based on individual sales quotas, according to a summary of its performance goals. Branch employees also will receive a larger percentage of base pay compared with variable incentive pay. Wells raised its minimum hourly pay rate on Jan. 8 for retail bank employees to $13.50, up from $12 an hour.
The bank also plans to build in more oversight to "monitor bad behavior," including using mystery shoppers, proactive monitoring and additional oversight at the regional and corporate level. The change signals that Wells executives feel that the bank did not have enough oversight over its branches.
Wells said performance will be measured based on customer growth, feedback and product usage and not simply on opening new accounts. The bank said it is reemphasizing customer service, which has long been part of the incentive pay formula at Wells.
"Earning incentives will NOT depend on reaching sales goals," the bank said, in a summary of 2017 performance goals that included five key principles.
The performance plan also will include periodic reviews and checkpoints "to monitor any unintended outcomes or behavior prompted by the new compensation plan."
Since September, when Wells paid $190 million to settle allegations that 5,300 employees opened 2 million unauthorized accounts,
Many low-level Wells employees said they faced aggressive quotas that set the stage for ethical breaches. Wells eliminated sales quotas last year and indicated it would change its performance goals.
Wells said in its two-page summary that its new sales goals differ from past quotas because a larger share of incentives is based on direct customer feedback and product usage.
The bank did not release specific metrics nor is there a way to compare the outline of the new plan with those of the quota system used in the past.
Wells plans to measure customer growth by focusing on consumers that use Wells as their primary financial institution. It also will look at household relationships in an attempt to measure how the bank broadly satisfies customer needs.
Wells said the new goals were designed to "take a longer view of the customer relationship," by rewarding "exceptional customer experiences and retention."
In addition, entry-level banker incentive compensation plans will be based on team performance, not individual performance. The bank also said it had increased "centralized monitoring, reporting and controls" to provide enhanced oversight of the sale process.
Wells said it will continue to make changes to the plan.
"This culture change will take time and we are committed to getting it right and being thorough," said Wells' spokeswoman Mary Eshet. "It will take a number of steps to rebuild trust, not just a single moment in time or announcement."
