Wells Fargo overhauls its pay plan

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. The San Francisco bank announced in September that it would get 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 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.

Accounts that are used frequently, such as those where customers set up direct deposits or use debit cards often, will help boost pay. Idle accounts will not.

“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. Annual performance raises will be based more on how customers regard and use the branch. Customer surveys done by Gallup and mystery shoppers will also provide information.

The minimum wage will be raised to a range of $13.50 to $17 an hour, the bank said.

Wells Fargo provided a summary of the plan to the Associated Press. 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 that 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 to meet targets. Federal and local authorities alleged that employees moved money between those accounts and even created fake email addresses to sign customers up for online banking.

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 basis about whether they were meeting quotas.