Wells Fargo CEO Scharf comes under fire over diversity comments

Sep 23, 2020 | Banking Dive

When Wells Fargo CEO Charlie Scharf announced in June the bank would aim to double Black leadership over the next five years and tie operating committee members' diversity efforts to their pay, the banking industry saw it as a cutting-edge line in the sand.

Jeanne Branthover, global head of financial services at headhunting firm DHR International, said more companies may follow Wells' lead.

"Change will happen if you tie it into someone's compensation," she said, adding that more companies may follow the San Francisco-based lender's lead.

But the way Scharf presented the case appears to have gotten under the skin of employees and others who attended a summer Zoom call on the matter.

 

"While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black talent to recruit from with this specific experience as our industry does not have enough diversity in most senior roles," Scharf said in a June memo, seen by Reuters and Bloomberg.

The "specific experience" part refers to adding nonwhite members to the bank's operating committee. Since Scharf's arrival at the bank nearly a year ago, the bank has added two Black executives: Lester Owens, its head of operations; and Ather Williams, head of strategy, digital and innovation.

However, it's the "very limited pool" part that has some fuming. Scharf allegedly reiterated the statement in a Zoom meeting in which he discussed the bank's difficulty reaching its diversity goal, two participants told Reuters.

The executive apologized Tuesday night in a company tweet, saying his comments were misinterpreted.

“The financial industry and our company do not reflect the diversity of our population,” Scharf said in a statement. “We, at Wells Fargo, are committed to driving change and improving diversity and inclusion.”

Blowback continued to accumulate, and Scharf issued a separate statement Wednesday.

“I apologize for making an insensitive comment reflecting my own unconscious bias,” Scharf said Wednesday. “There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise.”

Scharf set out a qualifier in announcing the company's diversity goal in June, indicating he knew it wouldn't be easy. "Our progress will not be a straight line given the experience required in some of our roles, but I would ask that you judge our progress two years into my tenure as CEO," he said.

Not everyone left the tete-a-tete upset. "The meeting was incredibly constructive," Alex David, president of the Black/African American Connection Team Member Network, told Reuters. "I walked away being incredibly surprised at how genuine and sincere [Scharf] is."

But others saw the "limited pool" comment as indicative of restricted professional and social networks.

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