Wells Fargo takes new tack on diversity training
Lawsuit settlement with black brokers
NEW YORK • Frank Dobbin, a professor at Harvard, has declared that most corporate diversity programs have failed. In a Harvard Business Review article last year, he said they alienate managers and endorsed an alternative: a voluntary, consciousness- raising program that includes rank- and- file staff along with supervisors.
Could it work? Wells Fargo & Co., a bank that’s faced racial discrimination allegations, is willing to try.
As part of a US$ 35.5- million settlement with black financial advisers, Wells Fargo agreed to take non-financial measures to create a more fair workplace. They borrowed ideas from Dobbin, including focus groups with senior business leaders and black brokers from the bank’s private client group and wealth brokerage operations.
“The question was, ‘ How do you get good people in a room together who all care about the issue of changing the outcome and get ideas?’” said Linda Friedman, lead counsel for the plaintiffs.
Wells Fargo’s efforts are an important experiment for the financial- services industry, which has faced accusations of discrimination for decades. MetLife Inc. agreed this year to pay US$ 32.5 million in a settlement, and in 2013, Bank of America Corp.’s Merrill Lynch resolved a racialdiscrimination employment case for a record US$160 million. The companies didn’t admit guilt.
“In general, the settlements don’t lead to changes in the composition of the workforce,” Dobbin, who’s now advising Wells Fargo, said. “That’s why both sides were kind of interested in implementing the things that we have shown to be effective in other firms: targeted recruitment and mentoring.”
African- American financial advisers at Wells Fargo said they were under- represented among the bank’s 15,000 registered brokers and systematically excluded from lucrative teams. The firm’s discriminatory policies and practices for client account distribution and assignments led to lower pay, the complaint said. Wells Fargo disagreed with the claims.
“We look forward to Professor Dobbin sharing his research with leadership as we explore new approaches for advancing an even stronger diverse and inclusive culture,” a Wells Fargo Advisors spokesperson said in an emailed statement. “We are continuing to respect and embrace new ideas.”
A typical settlement includes a consent decree, in which a bank mandates diversity training for managers or agrees to send regular reports on the number of under- represented minorities to a monitor. These programs usually last four years.
A program like that, Friedman said, “probably was going to be met with hostility. Every time you put together a program, the program failed, not because it was never implemented, but because they found a work-around.”
Meanwhile, the underlying issues persist, said Katherine Phillips, a Columbia Business School professor, who has researched diversity and ethics practices: “The first step of recovery is admitting that there’s a problem and trying to make sure they’re solving the problem and not just the symptoms.”
If focus groups and councils don’t succeed, the next step may be a familiar one.
“They will be sued again by the next generation of people whose lives are horribly impacted by the treatment,” Friedman said. “It will cost them a lot more money.”