Wells Fargo has faced allegations of racial discrimination in the past. (Image courtesy of Wells Fargo)
Allegations of race-based discrimination have prompted megabank Wells Fargo to try a new diversity program aimed at creating a fairer workplace.
As part of a $35.5 million settlement with a group of Black financial advisers, Wells Fargo agreed to create a new and more inclusive program involving both supervisors and rank-and-file staff, Bloomberg News reported. The bank borrowed ideas from Harvard sociology professor Frank Dobbin, as well as focus groups with executive business leaders and Black brokers from the firm’s private client group and wealth brokerage services sector.
“In general, these settlements don’t lead to changes in the composition of the workforce,” Dobbin, who’s now advising Wells Fargo, told Bloomberg. “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.”
The changes come after African-American brokers accused the bank of discriminatory policies and practices for client account distribution that resulted in lower pay. In their complaint, plaintiffs also claimed they were underrepresented among the firm’s nearly 15,000 brokers and systemically barred from well-paid teams, according to Bloomberg.
The bank has been no stranger to discrimination suits over the years, however.
In 2012, Wells Fargo agreed to a $175 million settlement following allegations it charged Black and Latino borrowers higher rates and fees during the housing crisis. The home mortgage lender faced another discrimination suit when the Los Angeles city government accused it of predatory lending to nonwhite homeowners, leading to a wave of foreclosures.
The news site reported that settlements in such cases typically include a consent decree, under which a bank implements mandatory diversity training for managers, or agrees to send regular updates on the amount of underrepresented groups to a sort of overseer.
For Hobbin, such a model would have likely sparked a hostile response.
“Every time you put together a program, the program failed, not because it was never implemented, but because they found a work-around,” he said, adding that managers see mandatory diversity training as a control tactic.
The professor also noted how job workshops, tests and grievance systems might also get pushback because managers view them as an insult to their judgement. To avoid all this, Hobbin said it’s better to engage managers in creating a plan aimed at preventing racial bias from easing its way into the firm’s structure.
Hobbin has already recommended that the bank hire more African-American financial advisers — one of several things he saw that needed improvement. As for his proposed focus groups, participants will discuss strategies on how to recruit and retain Black employees, Bloomberg reported. Bank managers will be in on these conversations, too.
Lastly, Hobbin stressed the use of metrics in seeing if the firm’s strategies are actually effective in bringing in nonwhite workers and assigning them to favorable projects.
Wells Fargo is still experimenting with the new plan for now. If it fails, a familiar event may come next: a lawsuit.
