Wells Fargo Puts Stress on ‘Retail’ in Retail Banking : Bank Looks for Experts in Consumer Businesses to Fill Management Posts
The executive in charge of consumer banking at Wells Fargo was preparing to interview a candidate for a branch manager’s job last August when something on her resume confused him.
“What’s haute couture ?” William F. Zuendt, the Wells Fargo vice chairman, asked a female bank executive. The reply: high-fashion clothes.
“Great,” Zuendt said. And he meant it.
Wells Fargo has tried to build its image as a consumer bank in California. As part of that effort, the bank created one of the industry’s most aggressive incentive compensation plans for branch managers to reward them for bringing in more consumer business.
Some managers at Wells Fargo branches earn more than $100,000 a year, half or more in bonuses for increasing branch business. The program has attracted applicants from outside the industry, which is not known for high pay outside the executive suite.
Those applicants, and the retail mind-set they bring, are just what Bill Zuendt wants.
Last August’s prospect had never worked in a bank. She was the manager of the haute couture department at an expensive specialty store, I. Magnin. She was accustomed to coddling wealthy, demanding customers, not describing checking accounts or loan packages.
But Zuendt hired the woman as a trainee. Six weeks ago she was promoted to branch manager, joining a list of recently hired branch bosses that includes former stockbrokers and insurance agents.
“Retailers are a lot better than we are at understanding what customers want,” Zuendt said. “Their whole orientation has been toward the customer, which is what banking has to get to.”
The banking sector that deals with individual customers and such items as home and auto loans has long been called “retail banking.” But it has shared little with the retail world, preferring the stodgy stiffness of the traditional bank.
Only recently has competition within the industry and from such outside institutions as brokerage houses forced retail banking to try to adopt 20th-Century marketing tactics before the century ends. One such tactic is incentive pay.
The Council on Financial Competition, a Washington market research firm, has studied banking industry incentive plans and found that institutions are beginning to address the need for an active, commission-based sales force. But the council found that banks are reluctant to pay enough to make the plans work.
Set Quarterly Goals
“Banks expect a lot for a very little,” said Matthew S. Olson, council president. “For stockbrokers, commissions are a pretty high return. Bank commission structures are usually not large enough to motivate the staff.”
San Francisco-based Wells Fargo is clearly willing to pay for performance. Although Wells executives are loath to disclose specific figures, they acknowledged that top-producing branch managers earn more than $100,000 a year, as much as half based on bonuses.
Wells Fargo can reward managers who produce, and identify and work with those who are not meeting goals. Some underachievers have left the bank; others have moved to different jobs. It is a management strategy that reflects the bank’s cost-conscious style as well as its emphasis on consumer business.
Zuendt is so enthusiastic about success of the 4-year-old program that he was reluctant to divulge details about how it works. He said he was afraid that rivals would steal his ideas and snatch his top producers. However, interviews with Zuendt and other Wells Fargo officials provided an outline of the system.
Wells Fargo branch managers and their supervisors negotiate quarterly goals for the branch in three important areas: deposits, loans and fee income. Within those areas are several subgroups that bank officials declined to break out. Instead of simply rewarding the biggest branches with the most growth, the quarterly goals reflect expectations based on the branch’s market area and its past performance.
Worked Her Way Up
Managers are paid bonuses based directly on performance, and they are ranked within the Wells Fargo organization. The top producer among the bank’s 443 branches wears designer clothes but never worked in a haute couture department.
Yet Jacqueline R. Harrell, 38, seems to embody the retail spirit of customer service that Zuendt and other Wells Fargo executives say is what the bonus program aims to develop.
“Service has to be the No. 1 priority because, after all, what else do we have to sell?” Harrell asked in an interview at the Wells Fargo branch on Barrington Place in the affluent Brentwood neighborhood of Los Angeles. “We want our customers to say that they can’t think where it would be happier to bank, except Disneyland.”
Although she has been with Wells Fargo since 1974, Harrell was an atypical candidate when she joined in 1974. She had a master’s degree in French and German and a teaching credential.
Instead of going to the international division, as might have been expected of a language specialist, Harrell became a management trainee in the trust department and worked her way through many bank divisions. She was promoted to branch manager in 1981, taking over an office in Rancho Park. Three years later she moved to the Brentwood branch.
Since her arrival, the branch has grown at least 10% a year and now has about 6,000 accounts. Harrell and the Wells Fargo public relations man who sat in on the interview declined to disclose exact figures.
Harrell said the growth is not the result of her constant eye on numbers that translate into a sizable bonus, but on service to customers.
“The natural result of that (service) is that the customers are comfortable doing business here, so they do more,” Harrell said.
She said that there is no secret to success, except treating customers as individuals and friends. “Like dogs and children, customers can tell whether you are sincere, and they obviously perceive us to be sincere,” she added.
And some retail spirit also is evident, as Harrell explained: “You’ve got to be able to sell yourself. You have to demonstrate that you know what you’re doing and that you listen to what the customer wants.”
Yet some tricks of the trade do emerge from conversations with Harrell and branch employees.
Visits Customers at Home
Harrell uses her teaching abilities to imbue new employees with a simple philosophy: You can never win an argument with a customer, and a problem should be fixed on the spot. Coffee and doughnuts are often available in the lobby. Many customers are known to tellers by their first names.
Last month, Harrell said, she visited almost all of the bank’s customers at their homes or offices as she does each year, bearing a small gift and the message that their banker cares about them outside of the lobby on Barrington Place.
The result of all this is a branch where the atmosphere is closer to a mom-and-pop grocery than an antiseptic financial institution. And customers seem to recognize that the branch employees are trying to be more than just bankers.
A Philippine businessman who once lived in Brentwood sent his daughter to open her account at the branch, even though she was enrolling in college in Northern California. A physician telephoned his personal banking officer at home late one night with an alarming report.
Rochelle L. Goldstein, the banker who fielded the call, remembers it well: “He said, ‘My lights are out. The electricity is out. What do I do?’ I said, ‘Get a flashlight and call the power company.’ ”
