All is Not at Well at Wells Fargo (Again)
Chapter 6 - Selection and Placement (Human Resource Management: Gaining a Competitive Advantage)
Chapter 6 – Selecting Employees and Placing Them in Jobs (Fundamentals of HRM)
Goals and timetables are often an effective means of getting hiring managers to increase the diversity of their hiring practices. Thus, the “Diversity Slate Policy” introduced at Wells Fargo seemed like a great idea. The policy required that half of the candidates who interviewed for any job that paid over $100,000 a year be female or non-white. It also called for interview panels that were diverse in terms of their own composition. The company claimed the policy was in reaction to the George Floyd murder at the hands of the police; however, it also followed an $8 million settlement that the company paid out after the Department of Labor charged it with illegal discrimination against over 30,000 black applicants.
Regardless of the genesis of the policy, this was a good idea when it came to diversifying the company in theory. In practice, however, the program just became another entry on the long list of Wells Fargo’s ethical problems because it turned out that most of the diverse candidates who were interviewed were applying for jobs that were already filled. That is, 12 employees, as part of a New York Times investigation, testified that they were told to conduct fake interviews to pad the numbers that were going to be audited by the Department of Labor as part of the earlier discrimination finding. One of the managers, Joe Bruno, noted that the sham interviews were “inappropriate, morally wrong and ethically wrong,” but that those who failed to engage in the practice were at risk of losing their own jobs.
The company claimed the Diversity Slate Policy was based on what they perceived as the successful application of this practice in the National Football League (NFL), under the title “The Rooney Rule.” However, had the company done their homework a little more closely, they would have learned that many black coaches in the NFL complained about the rule and eventually sued the league for conducting the exact kind of sham interview. Other companies such as Adobe, Best Buy, and Pinterest also found that the application of this rule – without actual evidence that members of protected groups were actually getting hired -- resulted in perceptions that it was all just useless window dressing.
Not surprisingly, the reaction to this unethical practice at Wells Fargo was swift and the New York Times reporting triggered yet another discrimination probe by federal prosecutors that week. The stock market also passed judgment on the news in the sense that the company’s stock dropped 5% in a single day. Finally, the damage that the company’s reputation took in the labor market is likely to be lasting, especially for the members of protected groups they claim to value.
Questions for Students
- Why do you think that an employer might be attracted to quotas for interviewees but not actual hires?
- Short of outright quotas, what can organizations do to help hire a more diverse employee base and how can interviews be designed to accomplish this goal?
Sources: E. Flitter, “At Wells Fargo, a Quest to Increase Diversity Leads to Fake Job Interviews, The New York Times Online, May 19, 2022; D. Reichl, “Wells Fargo is Under Federal Investigation for Conducting Fake Job Interviews of Minority Candidates, Fortune Online, June 9, 2022; E. Flitter “Wells Fargo Announces ‘Pause’ of Policy That Led to Fake Job Interviews,” The New York Times Online, June 6, 2022.
Note for Instructors
A CBS News 8 minute video, “Wells Fargo accused of conducting fake interview by former employees”, at https://www.youtube.com/watch?v=s5OvwNFM98M can be used to accompany this case. A short two minute video from the Washington Post explaining the Rooney Rule is available at https://www.youtube.com/watch?v=gZweXqn8nhg