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Inside the Stagecoach
March 1, 2020

Wells Fargo’s new CEO: ‘We will get it done’

In his first few months on the job, CEO Charlie Scharf has instilled the company with a sense of urgency in addressing its priorities.

Charlie Scharf
Wells Fargo CEO Charlie Scharf
Charlie Scharf
Wells Fargo CEO Charlie Scharf
Inside the Stagecoach
March 1, 2020

Wells Fargo’s new CEO: ‘We will get it done’

In his first few months on the job, CEO Charlie Scharf has instilled the company with a sense of urgency in addressing its priorities.

Updated May 18, 2020 | This story has been updated to include leadership changes and major company announcements.

Speaking at his first town hall in October, one week into his role as Wells Fargo CEO, Charlie Scharf’s message for the company was clear: “We all have to demand more from each other. The seriousness of what we do brings tremendous responsibility. Our work has tremendous impact upon people. We need to recognize that and make sure that we're doing everything we can to operate the company to the highest standards of operational excellence.”

In the four months since, Scharf has been focused on doing exactly that, bringing on new leaders and reorganizing the company’s structure to ensure clear responsibility and accountability at every level.

Scharf describes that as “the price of admission for what we do.”

“We all have to demand more from each other. The seriousness of what we do brings tremendous responsibility. Our work has tremendous impact upon people. We need to recognize that and make sure that we're doing everything we can to operate the company to the highest standards of operational excellence.” — Charlie Scharf

Building the right foundation

Scharf brings more than 24 years of leadership experience in the banking and payments industries to Wells Fargo, including CEO roles at Visa and Bank of New York Mellon, and has a demonstrated track record in leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape. At Wells Fargo, Scharf has stressed urgency, accountability, and execution as what will drive the company forward.

Scharf has made addressing Wells Fargo’s regulatory requirements the company’s top priority, acknowledging the mistakes that were made in the past. In February, Wells Fargo entered into agreements with the United States Department of Justice and the United States Securities and Exchange Commission to resolve these agencies’ investigations into the company’s historical Community Bank sales practices and related disclosures. As part of this resolution, Wells Fargo agreed to make payments totaling $3 billion.

As Scharf acknowledged, “At the time of the sales practices issues, the company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct,” he said. “This was inexcusable.” While the settlements mark a significant step in bringing this chapter to a close, Scharf said there’s still more work to be done to rebuild the trust the company lost. “We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward,” he said.

Wells Fargo CEO Charlie Scharf stands behind a lecturn to address an audience of employees. A red silhouette of horses is in the background behind him on stage.
“The company was not prepared to prevent inappropriate conduct. This was inexcusable, and we must ensure such failings never occur again at Wells Fargo.” — Charlie Scharf

The focus on strengthening the company’s control environment goes beyond just meeting the expectations of its regulators. Scharf sees these changes as fundamental for the business going forward. “Meeting our regulatory requirements remains Wells Fargo’s top priority, because it builds the right foundation for all that lies ahead,” he said. “We recognize that what we want and what regulators want are not different. Our future depends on our ability to get this work done.”

A culture of accountability and operational excellence

Also foundational to the future are the cultural changes Scharf is leading at Wells Fargo. In his messages to the company’s employees, he has encouraged them to embrace candor, deliver on their promises by executing flawlessly, and always do the right thing. “Words are nice, but actions are what matter,” he said.

In his first week, Scharf also signed the Statement on the Purpose of a Corporation issued by the Business Roundtable, which acknowledges that businesses are responsible to a broad set of constituents including customers, employees, suppliers, and the communities in which companies operate. He said, “In order to be a great employer, a great and involved partner in the communities where we operate, and contribute in meaningful ways to the growth of the U.S., we must be guided by delivering for our customers every day in a manner that will make us and our stakeholders proud.”

Flatter structure for clearer responsibility and authority

In early February, Scharf unveiled a flatter organizational structure for Wells Fargo, designed to provide leaders with clear authority and responsibility. The new organizational structure has five principal lines of business, each with a CEO who reports directly to Scharf and is represented on the company’s Operating Committee.

As part of the reorganization, Scharf aligned control executives with each of the company’s businesses who will have a dual line of reporting to their respective CEOs and up through a separate operations team. This integrated operations organization is designed to enable the lines of business to work more collaboratively and consistently across the company while ensuring the right level of oversight.

“These changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work,” said Scharf.

Leadership overhaul

To help chart the company’s future, major changes have been made at the senior leadership level. This has included recruiting top talent to bring fresh perspectives and deep experience to critical roles. Most notably, six current members of the Operating Committee are new to the company, having joined Wells Fargo in January 2017 or later.

Scharf has also moved quickly to bring in a number of new senior leaders who have been tasked with making fundamental changes to improve the culture of the company, including a chief operating officer, CEO of Consumer Lending (expected to join the company in May 2020), and vice chair of Public Affairs, and a new general counsel.

Additionally, searches are underway for a head of the newly formed Corporate Strategy, Digital Platform & Innovation team; a lead control executive; and a new CEO for Wealth & Investment Management.

Click or tap to learn about the new leaders at Wells Fargo >>

In addition to the changes made at the senior leadership level, the Board has focused on enhancing its composition, oversight, and governance practices. The Board has conducted a thoughtful, deliberate refreshment process. Over a majority of the Board’s independent directors joined the Board since January 2017, and the Board has rotated six of seven Board committee chair roles. On March 9, 2020, the company announced that Betsy Duke resigned as Chair and member of the Board; Jim Quigley also announced his resignation from the Board. Chuck Noski, is the new Chair. Noski is a retired vice chairman and former chief financial officer of Bank of America Corporation.

Investing in employees and expanding diversity and inclusion actions

Recognizing the criticality of employees in making the changes underway at the company successful, on March 4 Scharf announced that Wells Fargo will be raising the minimum hourly pay in a majority of its U.S. markets. Minimum pay will be tiered based on various factors, including the cost of living in different areas of the country, with the minimum hourly pay ranging from $15 to $20 depending on employee location. The pay increases will go into effect by the end of 2020.

Additionally, Scharf announced a series of expanded actions the company is undertaking to accelerate efforts to build a more diverse and inclusive workforce. Among the commitments:

  • A focus on recruitment, hiring, and promotions to increase diverse representation in senior-level roles, particularly with female and racially/ethnically diverse employees.
  • A “returnship” program focused on diverse talent who have been out of the workforce for an extended period to support their return to the industry.
  • A formal development program for high-potential employees to build a more diverse and inclusive talent pipeline.
  • More responsibility for senior leaders to sponsor and lead diversity-focused programs.
  • A consistent and regular way to measure diversity and inclusion progress across the company.

The opportunity ahead

While Wells Fargo is undergoing a tremendous amount of change, Scharf is quick to point out that it was his admiration for the company that led him to join as CEO, and he still sees the outstanding potential that lies ahead.

Part of the company’s potential lies in its ability to help customers achieve their own potential. An example of that can be seen in Wells Fargo’s recently announced plan to introduce two new bank accounts that will offer secure banking services and customer support while eliminating or limiting overdraft fees.

The accounts are designed for consumers seeking low-cost bank accounts that help them avoid overspending and keep to a budget, while also providing access to Wells Fargo’s mobile, online, ATM, branch, and phone banking services. The new offerings are a way for the company to help satisfy the financial needs of more customers and further expand access to mainstream banking services, said Mary Mack, CEO of Consumer and Small Business Banking.

On March 5, the company also announced plans to provide access to a suite of credit products to Deferred Action for Childhood Arrivals (DACA) recipients, beginning this year and continuing into 2021. The efforts includes access to education loans, personal lines and loans, credit cards, auto loans, and small business credit. In addition, Wells Fargo will make mortgage and home equity loans to certain eligible DACA customers except where prohibited by specific investors. This expanded credit access was informed by ongoing engagement with the Mexican American Legal Defense and Education Fund (MALDEF), which helped give the bank valuable insight into the needs of young DACA individuals.

Additionally, on March 10, Wells Fargo announced that it is seeking to invest up to $50 million in African American Minority Depository Institutions (MDIs). These investments are part of Wells Fargo’s commitment to supporting economic growth in African American communities where MDIs, often community based banks, provide mortgage credit, small business lending, and other banking services. MDIs play an important role in providing banking services to minority and low and moderate income (LMI) communities. Compared with other financial institutions, MDIs tend to serve communities in which a higher share of the population lives in LMI census tracts and in which higher shares of residents are minorities.

This investment complements Wells Fargo’s Diverse Community Capital (DCC) program, a five-year, $175 million program to empower diverse small business owners with greater access to capital and technical assistance so they can grow and sustain local jobs. The DCC program is a collaboration with Opportunity Finance Network and CDFIs (Community Development Financial Institutions) across the country. To date, the CDFIs in the program have made 124,000 loans, delivered 322,000 hours of technical assistance, and benefited 49,000 small business owners who collectively sustain more than 183,000 jobs in rural and urban markets nationwide.

“I firmly believe we have a great future in front of us,” Scharf said. “We have a group of businesses that are the envy of the industry. We have great market positions in an industry that will continue to grow as we enable our customers to succeed financially. We can and will do the work necessary to create the right environment inside the company to allow us to grow successfully. We know we have some challenges in front of us. I feel very confident that we know what we have to do, and we will get it done.”

For more about the company’s progress, see “Wells Fargo: Charting a New Future” (PDF).

 

 


New leaders at Wells Fargo

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