To modern workers everywhere,
Wells Fargo CEO Charlie Scharf had to backpedal last week after Reuters surfaced details of a June memo in which he regretted the shortage of diversity on the company’s operating committee. “[T]he unfortunate reality,” he wrote, “is that there is a very limited pool of Black talent to recruit from.”
One had to wonder whether Scharf or his handlers even stopped to think about the demoralizing effect a message like that might have on the company’s existing Black workforce. And it could certainly be argued that the head of America’s most reputationally challenged bank ought to be a lot more careful in general using words with the potential to offend.
But was Scharf actually wrong? Leadership in the US banking sector is 81% white at senior levels. Had Scharf suggested that the operating committee in fact has ample Black talent to choose from, would he not have sounded equally tone deaf, and inexplicably complacent with the industry’s makeup?
Perhaps the problem with Scharf’s statement is that it triggers a long-held—and by now widespread—frustration with executives who reflexively invoke the “pipeline” to explain poor progress on diversity. It’s a flimsy excuse for anyone to use, but especially for CEOs, who are the very people who should be held to account for the state of the pipeline. Maybe future public handwringing by CEOs lamenting their candidate pools ought to be preceded by a checklist that encourages the executives to first ask themselves:
- Have I scrutinized and successfully overhauled my company’s hiring process to root out bias and actively recruit Black candidates?
- Have I created a culture of inclusion to keep the pipeline I have from leaking?
- Have I personally mentored, or given internships to, or made connections for young people? Have I done this for young people beyond the children of friends and associates who look just like me?
- Have I only supported political campaigns, legislation, and tax policies that would limit what my company owes society and preserve more of my own wealth, or have I lobbied for things that would expand opportunities for more people?
Scharf’s characterization of the situation hardly makes him an outlier. PwC’s annual corporate directors survey, published this week, finds that 41% of US board members say a lack of qualified candidates has impeded efforts to increase board diversity—tying it with long-serving directors’ reluctance to retire as the most-cited reason for the boardroom diversity holdup.
In his mea culpa last week, Scharf apologized “for making an insensitive comment reflecting my own unconscious bias. There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise.”
But notably, the apology memo didn’t backtrack on his assessment of the talent pipeline. “I’ve worked in the financial services industry for many years,” he wrote, “and it’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels.”—Heather Landy
Five things we learned this week
To fix racial bias in the gig economy, we should start with the rating systems. Read Aquent CEO John H. Chuang’s prescription for rooting ratings in objectivity.
There are three common mistakes to avoid if you’re hoping to hire Black college graduates. Handshake VP Kamal Thakarsey explains.
Persistently nice people can be much stronger managers than they’re given credit for. Just ask nice guy Kevin Walkup, the newly installed CEO of the data firm Harmonate.
How the staff at the Met prepared the museum for its recent reopening. Quartz at Work’s Anne Quito introduces the workplace heroes who helped a cultural institution move past its 169 days of lockdown.
The psychological fallout of a layoff can drag on even after re-employment. Quartz’s John Detrixhe asks: What are governments doing to protect people from the trauma of losing a job?
It’s a fact
Hero MotoCorp’s CEO earns 752 times more than the median salary at the Indian motorcycle manufacturer. That was the largest of the CEO pay gaps found by a pair of economists studying pay at 40 listed companies in India. For comparison, in the US, the average CEO-to-worker pay ratio in 2019 was 320-1, according to the Economic Policy Institute.
Onboarding, 17th-century style
The Hudson Bay Company, founded in 1670, was a pioneer of early employee onboarding. It happened, quite literally, onboard a ship transporting employees across the Atlantic to Hudson Bay in Canada.
The company created organizational culture in a variety of ways, including by sending British employees off to North America with elaborate send-offs, such as a farewell breakfast and cannon salute. While sailing, new recruits were encouraged to talk to and learn from their colleagues, and get a sense of life working for the company. They then had a formal ceremony on arrival, and an introduction to the rules and ranks of the company.
This intense onboarding process, in addition to other techniques such as careful recruiting and management training, helped the company establish norms, build bonds, and face challenges that are remarkably consistent with the challenges we face today. Read more in our field guide to the virtual, borderless team.
+ Not a member? Get full access to Quartz, including all of our membership-exclusive field guides, today. Subscribe now and take 40% off your first year of membership.
Speaking of culture…
What happens when the office is no longer at the center of #officelife? Join us Thursday, Oct. 1, at 11 am US eastern time for advice on building company culture in the current environment. It’s another free, one-hour Quartz at Work (from home) workshop and you can register for it here.
30-second case study
As Netflix’s longtime vice president of original content, Cindy Holland was responsible for developing a powerhouse slate of programming, from House of Cards and Orange Is the New Black to Stranger Things. Nonetheless, Netflix co-CEO Ted Sarandos initiated a restructuring that left Holland without a role at the company, and named Bela Bajaria, who had previously overseen non-English TV programming at Netflix, the new head of global TV.
It was a shocking development, made less surprising perhaps by the timely reminder, courtesy of Netflix co-founder Reed Hastings’ new book No Rules Rules, that the company loves the Keeper Test. As the book explains it, the test asks managers to consider the following:
“If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now and look for a star, someone you would fight to keep.”
Like other Netflix executives who were “moved on” after their stars had fallen, Holland apparently no longer passed the Keeper Test.
The takeaway: Holland is likely to land on her feet. But what about employees without a similar track record, connections, or financial cushion? (And not just at Netflix; Hastings has suggested the company offers a model to other businesses in creative industries.)
No one would argue that it’s wise to hang onto underperformers. But a company that writes off people in the way Netflix does—Hastings endorses “firing a good employee when you think you can get a great one”—may not be devoting sufficient time to the question of how they might invest in good, hardworking employees to help make them great.
+ Read more in Quartz at Work senior reporter Sarah Todd’s new piece, Is the controversial Netflix “Keeper Test” good management?
Words of wisdom
“I don’t want to say that 2050 statements are meaningless, because it shows [a company is] onboard with science, but anything longer than five to 15 years is an aspiration, and what really matters is action now.”—World Resources Institute economist John Sottong
+ Read more in Quartz climate reporter Tim McDonnell’s piece on how to call BS on corporate climate pledges
ICYMI
The first questions to ask yourself when your team is struggling. In this gem from our archive, Quartz at Work contributor Cate Huston offers sound advice on giving your team the clarity and capacity needed to succeed.
You got The Memo!
Our best wishes for a productive and creative day. Please send any workplace news, comments, antique onboarding documents and nice CEOs to work@qz.com. Get the most out of Quartz by downloading our app and becoming a member. This week’s edition of The Memo was produced by Heather Landy and Sarah Todd.