Management 101
Congress, the Media and Depositors are outraged at Wells Fargo Bank for starting phony accounts in their customers' names and then charging them fees for services they never asked for nor authorized. Everyone is demanding an explanation of how such a thing could have happened! Well, here's how:
My first management job was in newspaper distribution. The publisher told me that the newspaper had an excellent service record — only one complaint per thousand deliveries. I was happy to hear this because it would allow me to concentrate on sales. I was then introduced to my office staff and instead of sitting behind my big desk in the big office, I decided to talk to the staff — starting with my senior clerk. I told her I had heard about our great service record and she confirmed the good news.
I then said that I was still interested in what types of complaints we were getting — wet, late, missing or torn papers, and so I would like to see a copy of all the complaints just to familiarize myself with what issues we were having. The clerk turned to me with a horrified expression and asked in a shocked voice "All OF THEM!" I suddenly was not so sure that I really did want to see all of them, but I bravely replied, yes — somewhat meekly.
Ten days later I had a week's worth of data and handed the publisher the results of my audit. We had 1.92 complaints per thousand — almost double what the publisher had been led to believe. It turns out that he had gone to a seminar and heard that one per thousand was excellent service, and wanting to provide the best service possible to his readers — he let his delivery manager know that he was expected to achieve that goal.
The manager was a young fella in his mid-twenties and had a house payment, car payment, wife and new baby — so, he gave the publisher the one per thousand he was demanding. Of course, the rest of the complaints went in the trash. What was he going to do, tell the publisher that one per thousand in that community was quite out of the question and maybe lose his job, car and house, with his wife and child to follow? If you lean hard enough on someone vulnerable, don't be surprised if they give you exactly what you're asking for!
Worse yet, in my second management position I ran into some major sales issues. This newspaper had recently experienced a large increase in readership which made it an attractive property for the media company that purchased it. Besides running the customer service function, they wanted me to clean things up. I had previously run a number of sales promotions using door to door sales teams and telemarketers to offer introductory delivery specials to new customers and was well acquainted with the pitfalls of such promotions. If no one called the next day to congratulate the new customers — that is, verify the sales, some enterprising sales personnel might simply write up orders for an address at which no one answered the door or the phone. This was an even bigger problem if the paper had hired an outside marketing outfit as this newspaper had done.
A hint that this had been taking place was the fact that the paper had close to a 400 percent turnover of youth carriers. I was reassured by the marketing director that kids were just not willing to work like we did when we were young. Of course, I reserved comment — ignored the claim, and began to investigate. The previous owners had offered a three for two month delivery special and had the kids deliver all month long and then try to collect from people who had never ordered the paper. Of course, few would pay but the kids were required to pay the newspaper's wholesale price for each month's delivery. After delivering for a month or two and making nothing, the kids would quit the route, often owing money to the newspaper. As it turned out, the company had paid for a 10,000 readership newspaper and had bought a 3,600 readership paper.
The point is, if you do not audit the sales and service functions you will truly have no idea what in the Hail Mary is happening! But it doesn't take a genius to know one of the largest banks on the entire planet would require at least as much oversight as a small town newspaper. That’s why banks have outside auditors who are professionally trained to look for fraud waste and abuse. If a young fella fresh out of college as I was could spot fraudulent service and sales numbers, it is absurd for one of the world's largest banks to claim, as Wells Fargo has, that no one in charge had a clue as to what was going on. But, if taken at their word, that they really are a bunch of incompetent fools, they should be paid as little as possible — if hired at all — and certainly not hundreds of millions of dollars! If the company really cannot find someone with the skills to manage their banking function, I'm willing to make the ultimate sacrifice and come out of retirement for half the wages and a somewhat reduced benefit package. Résumé available upon request!
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Steve Novak is a resident of Coeur d'Alene.