wells fargo, leadership, lessons
Wells Fargo CEO and President Charles Scharf testifies during a hearing of the House Financial Services Committee on Capitol Hill in March 2020. The company faces another scandal as Scharf's comment about there not being enough Black talent to recruit from became public. (Alex Brandon/AP/Shutterstock)

What Leaders Can Learn from Wells Fargo CEO’s Recent Comments About a Lack of Black Talent

Wells Fargo CEO Charlie Scharf came under scrutiny after Reuters broke the news of him making racist comments in a Zoom call with staff. Some Black employees on the call told the news outlet they felt “exasperated” when Scharf made a remark about there being a lack of Black talent in the pipeline.

“While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black talent to recruit from,” Scharf said in a follow-up memo which Reuters also gained access to.

DiversityInc CEO Carolynn Johnson said that based on the Top 50 survey data, Wells Fargo has been historically strong at recruiting Black talent — which makes Scharf’s comments more unfounded.

“Wells Fargo’s Top 50 application shows that they have historically done better than most companies in recruiting Black talent,” DiversityInc CEO Carolynn Johnson said. “There is Black skilled, educated, ready-right-now talent for critical, revenue-generating, high visibility roles in various industries. The erroneous thought of a ‘limited pool of Black talent to recruit from’ exasperates several inequalities.”

Wells Fargo has consistently ranked in the DiversityInc Top 50 Companies for Diversity, and earned the No. 11 spot in 2020. The Top 50 survey focuses on numbers, metrics and the existence of policies and programs that support diversity and inclusion. Rankings are based on a combination of:

  • Human Capital Diversity Metrics:gender and racial/ethnicity breakdown of representation in overall workforce representation, overall management, senior management, new hires, promotions and 10% highest paid populations
  • Leadership Accountability:CEO/senior leadership commitment and accountability, board of directors, office of diversity and inclusion, diversity council practices and representation metrics
  • Talent Programs:employee resource groups (ERG), mentoring, high potential and sponsorship programs, practices and participation metrics
  • Workplace Practices:talent acquisition, talent management, onboarding, diversity training, workforce development and engagement, LGBT, people with disabilities, military community and employee benefits policies and practices
  • Supplier Diversity:spend with companies owned by people from underrepresented groups, accountability and practices
  • Philanthropy:contributions to non-profit organizations focused on people from underrepresented groups, employee volunteerism and matching programs and practices

After less than a year in his current CEO position, Scharf’s comments demonstrate a failure of leadership accountability as well as a poor commitment to diversity and inclusion. While Wells Fargo’s workforce representation numbers are trending better than many of its competitors, those numbers now come second to Scharf’s attitude and comments — both in the public eye and in establishing the culture of the company.

As business and management expert Peter Drucker famously said, “Culture eats strategy for breakfast!”

In a Sept. 9 DiversityInc Best Practices webinar featuring Peter Kouzmov, the vice president of enterprise diversity & inclusion learning at Wells Fargo, Kouzmov spoke about the importance of leadership in reducing bias in the workplace from hiring to promotion.

Related: Webinar Recap: Reducing Bias in the Workplace: Hire, Retain, Train, Promote

“We make sure that the diversity and inclusion and monitoring for bias is the responsibility of the entire company all the way up to the top,” Kouzmov said.

In the webinar, Kouzmov said Wells Fargo has an Enterprise Diversity and Inclusion Council, which is made up of its CEO and CEO direct reports. Across the company, there are also other diversity and inclusion practices in place, such as diversity and inclusion consultants and heavily promoted ERGs. But the work of diversity and inclusion leaders and departments is compromised when a leader discredits diverse talent.

The backlash Scharf has faced is a lesson for leaders in the importance of communicating the values organizations say they stand by. Like Drucker said, even if the strategy and numbers are there, a negative culture will negatively impact an organization’s ability to foster inclusivity.

Scharf’s explosive statement is also a lesson in understanding the facts that are at the root of diversity recruiting: There has always been enough talent from Black and Indigenous communities, other communities of color, women, LGBTQ+ individuals and people with disabilities — organizations just need to look in the right places and commit to developing these professionals throughout their pipelines in the same way they’ve historically done for white men.

As congressmember Alexandria Ocasio-Cortez tweeted, “Perhaps it’s the CEO of Wells Fargo who lacks the talent to recruit Black workers.”

In a March 2020 DiversityInc Best Practices webinar titled “Insights Into Effective Diverse Candidate Slates and Goal Setting,” BASF’s Chief Diversity Officer and HR Communications Patricia Rossman said her company addressed its lack of diverse candidates by adjusting its recruiting efforts. The company (No. 14 in 2020) created a Diverse Leaders program in 2018 to help develop diverse talent and create a pipeline toward the top, as well as partnering with other organizations to help bolster its cause, including the Executive Leadership Council, the National Hispanic Council, the National Black MBA, Hispanica, Society of Women Engineers and a number of historically Black colleges and universities (HBCU).

“The talent was out there. It was out there all along. We just were not doing a good job of finding it and recognizing it,” Rossman said.

Related: Insights Into Effective Diverse Candidate Slates and Goal Setting

In an April 2020 DiversityInc Best Practices webinar covering the importance of diversity recruiting, Marion Brooks, the vice president and U.S. country head of diversity and inclusion at Novartis (DiversityInc Hall of Fame) discussed the importance of leadership buy-in, where leaders are actively engaged in and supportive of diversity and inclusion efforts. The bottom line: Diverse teams are simply more successful.

Related: Webinar Recap: Limiting Bias in Diversity Recruiting

“Research shows that diverse teams deliver three key things that more homogeneous teams don’t,” Brooks said. “Number one, they’re more innovative. Number two, they deliver higher results. And number three, they’re more responsive to customer needs.”

According to Wells Fargo, 44% of the workforce is “racially/ethnically diverse,” 57% are women and 8,380 are veterans. Its ranking on the DiversityInc Top 50 list reflects its success, but without leadership that demonstrates support for Black professionals, a culture of inclusion will be difficult to cultivate.

“I’m sure a lack of talent is a concern for corporations and large employers, I would want to know what are they doing about it?” Johnson said. “Is their philanthropy aligned with their talent needs? Is the corporation communicating effectively and has positioned themselves as a worthy corporate citizen to the people they want to recruit. It’s not effective to say you ‘want’ somebody, the critical question is do they want you?”

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