Former Wells Fargo CEO talks leading business through crisis
Tim Sloan, University of Michigan alum and retired chief executive officer of Wells Fargo Bank, discussed “Building Trust in Crisis” as part of the Business and Society 2020 speakers series Wednesday morning. Sloan graduated from the University with a BA and MBA and spent 30 years at Wells Fargo before becoming the CEO in September 2016.
Sloan assumed the position following the company’s disclosure employees had opened nearly 2 million deposit and credit card accounts without customers’ knowledge, being forced to pay a $185 million fine from the Consumer Financial Protection Bureau.
Lindy Greer, associate professor of Management and Organizations and faculty director of the Sanger Leadership Center, moderated the conversation and began by discussing the mission of the Business and Society 2020 speakers series.
“We have a responsibility to honor our mission to make sure that in the sessions we’re touching on issues that are foremost in society right now, which is challenging,” Greer said. “Equality, sustainability, education, economic growth. The goal of the series is to bring together a lot of leaders, industry leaders and professional development opportunities for students to engage in structured dialogue about this intersection of business and society and how the system positively engaged society is all from these most pressing challenges.”
The discussion focused on the building of trust between businesses and society as it pertains to Wells Fargo and Sloan’s role in a leadership capacity.
“Wells Fargo, which had been one of the most admired companies in the world … The year before that (2016) we were the most valuable financial institution on earth by market capital,” Sloan said. “In fact, you can go back and look at the Wall Street Journal headlines, you can see that. But we, in hindsight, made some really big mistakes.”
Once Sloan took the role, he worked with his 250,000 person company to review and restructure the organization. He said given the situation, the bounce-back had to be a team effort. Sloan described how he had to distance himself from his coworkers in order to make difficult choices.
“What we needed to do is really step back and look at what were the issues and what we will do to address those,” Sloan said. “I needed to look at things in a very objective way. And that was hard… because I love the people. And I love the business.”
He said once he became CEO he had to reorganize the company, transitioning it from a decentralized organization to a more centralized company through consolidating enterprise functions and separate finance groups.
“We needed to reorganize the company,” Sloan said. “When you have an issue to deal and you make mistakes, sometimes that organization becomes very insular and insulated and doesn’t get to the bottom of issues doesn’t invite perspectives from across the company as it should and it makes the problem worse as opposed to better.”
Sloan explained the way the company worked to repair their relationship with their employees and their customers. He said after taking responsibility for the situation, he held frequent town halls where employees asked unscripted questions. Wells Fargo also began doing pulse surveys and receiving frequent feedback from community members. He invited people to directly send him an email or contact him, to which he would respond personally. From this feedback, the company raised member compensation, granted restricted stock rights to 250,000 employees and expanded paid parental leave.
“All this was based on the feedback we were getting,” Sloan said. “I knew that we could be successful at dealing with all the challenges and the opportunities that we have and to satisfy all our other stakeholders, unless we didn’t win the hearts and minds of our managers, our stakeholders and various businesses.”
Wells Fargo has over 70 million consumer customers — one in three Americans, Sloan added. He said repairing that relationship and increasing communication helped the company rebound.
“The key was to make sure that there was an open level of communication,” Sloan said. “The fact of the matter is that most of our customers, they didn’t care about the mistakes that we had made. They wanted to know that we are going to make them right.”
Sloan explained the power and spotlight that comes with the CEO position. He said this spotlight allows one to make an unimaginable difference. However, he described the negative effects that came with it, when he would see something negative about himself in the news. He also described an instance in which 200 protestors stood outside his California home.
He provided advice following this experience. He said it’s important not to say the first thing that comes to mind when instances like this occur, as well as how to learn to deal with it. He emphasized resisting taking the attacks personally.
Sloan circled back to the title of the conversation: leadership and trust during a crisis. He recommended companies emulate that style of leadership daily.
“I really believe that one of the things that I’ve learned as we move from being in a period of crisis to having to be much more balanced from a leadership standpoint, it was the same kind of structure, the same type of oversight, the same government governance model, the same type of feedback and the way that we interact with our team,” Sloan said. “I’ve learned is that businesses should operate as if they’re in crisis every day of the week.”
Sloan went on to say the best way to make quick decisions is to gather a diverse group of people to get varying opinions issues. He emphasized having the courage to hold a different opinion than the others in the group, but recognizing when you are wrong.
“Don’t be afraid to take a position that’s fundamentally different from the way that the company or you had operated the day before, the month before,” Sloan said. “Sometimes that change can be incredibly important and incredibly valuable.”
Finally, Greer asked Sloan how he knew when it was time for him to retire. He explained that following 32 years at the company, he no longer felt the company benefited from his leadership.
“That was a really hard decision for me,” Sloan said. “I love the people at Wells Fargo. They’re some of my best friends… Having said that, you also need to appreciate, when you’re a CEO, that it’s not about you. You work for your shareholders. And I always said to our board, and to my wife … the point at which I don’t think that I had enough value for the company, I need to not be seen.”
He said following the first quarter of 2019, he began to realize the vision of the stakeholders did not include one with Sloan at the helm. His tenure at the company could no longer push the company forward, even though he was confident in his abilities.
“I was absolutely confident in my ability to lead the company forward, absolutely confident in the progress that we were making — never making progress as fast as you’d like to,” Sloan said. “But it became very clear that I had become such an object of criticism by many of our stakeholders that it was becoming a negative to the company and more of a challenge for the team and Wells Fargo to move forward.”
He said he had to see the situation objectively and make the best decision for the company, decisions he expects his members to make regularly.
“At that point, you got to divorce yourself from your ego, divorce yourself from your connection to the company, and you just need to make a tough business decision,” Sloan said. “Just like you’re asking everybody else to make in the company every day before that. It’s just a little bit harder because you got to make it by yourself. But once you do it, you know it’s the right thing.”
Business freshman Connor Bagby said throughout the conversation he was interested in Sloan’s body language and approach to questions.
“Personally I was observing how he carried himself as a speaker and his great success in leadership positions and his hand movements weren’t restrained and how it helps him communicate,” Bagby said. “Definitely he doesn’t seem like the same guy I’ve seen on newspapers and pictures and stuff… I get a different vibe than I was expecting.”