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Wednesday, October 14, 2015

Strategic CSR - Wells Fargo

The article in the url below focuses on an initiative at Wells Fargo to measure the happiness of its 260,000 employees. The goal is to improve the general perception of the industry on the assumption that happy employees are less likely to act in a way that damages the finance industry's (and, by extension, Wells Fargo's) reputation:
 
"At Wells Fargo, managers have dreamt up a new ratio to track alongside such banking stalwarts as provision coverage and capital adequacy. It is called the happy:grumpy ratio, and measures how many cheery staff the bank employs for every curmudgeon."
 
And Wells Fargo is happy to report good progress:
 
"Only five years ago happy bankers (measured by their own assessment) outnumbered the grumpy ones by 3.8 to 1; by last year there were eight times as many Pollyannas at Wells Fargo as there were miserable sods."
 
In spite of Wells Fargo's optimism, others are less sure the bank is capturing what it purports to be measuring:
 
"If what makes bankers happy is taking risks and making money, they will be even happier when they are up to no good — provided it results in lots of money falling into their laps. Furthermore, if you are the sort of person who thinks it fine to diddle your bank out of billions of dollars, you are not going to worry about giving misleading answers on a staff satisfaction survey."
 
Perhaps the task is unrealistic simply due to many humans' attitude about their work:
 
"According to a Gallup survey of 25m workers there are twice as many unhappy as happy ones in the world."
 
And surveys, even if anonymous, are notoriously difficult methods to gauge the accurate intentions/beliefs of the individuals who are being asked:
 
"… there is little point in asking employees whether they are happy or not. The answer surely depends on who is asking, on what mood the subject is in, on their temperament and on what they consider 'happy' to mean. To aggregate 260,000 unreliable answers and then treat the result as data on a par with tier one capital, is really quite frightening."
 
In contrast, the author offers three alternative metrics that she believes represent a more effective measure of whether employees are truly content (and, therefore, less likely to commit harm):
 
"The first is staff turnover. If people are more than normally unhappy, they tend to leave. … The second measure is the ratio of what the bank's hotshots get paid to what the security guard gets. We know that perceived unfairness and inequality both make people unhappy; so when this gap gets wider the culture worsens. … [The] third measure … is to monitor how many friends people have at work. All the general happiness data show a powerful correlation between the number of close friends and happiness."
 
Whether these alternative measures of 'happiness' would enable firms (and regulators) to prevent future scandals is less clear. What it would do, however, is give an effective measure of the firm's culture, which "would give prospective employees an excellent idea as to whether they would like to work there, or not."
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
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The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Wells fargo's happy:grumpy ratio is no way to audit staff
By Mark Binelli
March 29, 2015
The New York Times Magazine
Late Edition – Final
36