WFC Wells Fargo and Company

By Emily Glazer 

Mary Mack arguably has the hardest job in banking today.

The head of retail banking at Wells Fargo & Co., Ms. Mack must change the sales culture at the scandal-scarred firm. To do so, she will have to figure out how to incentivize employees without spurring the kind of improper behavior that led to the bank's $185 million fine, regulatory enforcement action and abrupt retirement of Chief Executive John Stumpf.

In the wake of the bank's settlement with regulators and its public drubbing, Wells Fargo scrapped sales goals for retail-bank employees. At the same time, Mr. Stumpf and his successor Timothy Sloan have said Wells Fargo won't abandon cross-selling, or efforts to sell multiple products to individual households.

That has left bankers wondering how they will be evaluated and paid. The urgency to craft a new approach was apparent during an internal conference call at the bank late last week with Ms. Mack, 54, and about 800 retail-banking managers and executives.

"This is real-time, we've got teams that are responding; we know you need more," Ms. Mack said, according to a review of the call by The Wall Street Journal. "The very first thing," she added, is to remove incentives that might lead to bad behavior.

From there, though, it is less clear what the future holds for the roughly 100,000 employees in Wells Fargo's 6,000 some branches across the U.S. Figuring out the retail-bank incentive structure is vital given the role overambitious sales goals played in the bank's problems, according to former employees and others.

"Wells Fargo pushed aggressive sales goals for low-wage employees that were so unrealistic and so unattainable that some felt pressured to commit crimes just to keep their jobs," Rep. Maxine Waters (D., Calif.) said during one hearing.

Previously, branch employees had opened as many as 2 million accounts without customers' knowledge. Former Wells Fargo employees have said this occurred as bankers tried to meet lofty sales goals. The bank also fired 5,300 retail-bank employees over a five-year period.

Wells Fargo has said it regrets the behavior and is working to refund any improper fees charged to customers.

"There are clearly things as a company that we've got to work on," Ms. Mack said in an interview Wednesday. "I really want to make sure we get this right by our team members, investors customers and other audiences, I want to make sure they understand the changes going forward."

Ms. Mack was named head of community banking in July when the bank said Carrie Tolstedt would step down from that position and retire at year's end. Ms. Tolstedt was roundly criticized by members of Congress for the sales practices. The bank's board subsequently clawed back $19 million of her compensation and said she was no longer with the firm.

Ms. Tolstedt hasn't responded to requests for comment. Ms. Mack said she hasn't talked to Ms. Tolstedt since the regulatory settlement in early September.

A 32-year Wells Fargo veteran who previously ran the bank's brokerage operation, Ms. Mack told employees on last week's call that the bank is working on a new performance plan based on updated metrics around customer service, growth and risk management.

There is some talk within the retail bank of creating new kinds of sales goals based on combinations of product lines, one retail-banking executive said. But the executive added this could be "kind of tone deaf" given the bank's current reputational troubles.

Ms. Mack said in the interview nothing has been finalized, but the bank is examining loans, deposits and investments in terms of how it is aligned with customers growth and providing value to them.

Already, the scandal appears to be taking a toll. During the bank's third-quarter earnings report, it said customer visits with branch bankers fell 10% in the August-to-September period compared with a year earlier. Consumer checking-account openings fell 25% and credit-card applications dropped 20%.

As she tries to reverse this, Ms. Mack has been traversing the U.S. on a dozen "listening tours," planning to hit 20 cities by month-end. The point: figure out what went wrong and how to fix it, according to employees, executives and internal calls reviewed by the Journal.

"I do want team members to know that I want to know if there are situations not congruent" to what the bank thinks is acceptable, she said.

On the call, midlevel managers asked repeatedly about how to measure employees' performance, and, in turn, how they would be paid. Managers have recently received average weekly numbers by "team" but not individuals.

In the past, such performance figures have dictated parts of employees' salaries. With sales goals now scrapped, Ms. Mack said the bank would calculate fourth-quarter performance by averaging the first three quarters of incentive compensation. But there will be weight on customer-service scores, and bankers who do better on that metric may be able to earn more than the three-quarter average.

"We wanted to make sure people felt comfortable that they would be paid at a like amount," Ms. Mack said on the call.

Personally, Ms. Mack, who jogs regularly, is known for her perseverance within the bank. After one of her daughters died unexpectedly from meningitis two years ago, Ms. Mack took a leave from work. She returned a few months later with her same focus and drive, current and former executives said.

Among her many roles at the bank, Ms. Mack has led wealth brokerage, been a retail banking regional president and a managing director of health care and corporate banking, garnering favor with former Wachovia chief Ken Thompson, executives said.

(END) Dow Jones Newswires

October 19, 2016 17:59 ET (21:59 GMT)

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