Last week, Wells Fargo CEO John Stumpf faced members of Congress about his company’s fraudulent sales practices. His lengthy testimony in front of the Senate Banking Committee last Thursday was particularly difficult, not only for Stumpf, but for the committee members, too.
When the hearing ended, I was in the lobby at the US Capitol. The Senate committee chair approached me, explaining that there was another inquiry to conduct that day, but all the senators and staff were ready to leave. He was clearly flustered. “It’s the hearing about the Plotzbank scam,” he said, expecting that I’d be familiar. Of course, I was.
“Could you help us by running this inquiry?” the chairman asked me. “We need to hurry back to our home districts to tell our constituents how tough we were on Stumpf,” he said, adding, “there’s an election coming up in November.” I needed no reminder. I glanced across the lobby, and noticed Plotzbank’s CEO, James J. Shmivelblatz, waiting nearby.
I saw this as an opportunity to avoid the throngs of workers heading back into Virginia. Washington’s Metro system was experiencing more service outages, and I had no plans for that evening, anyway. “Sure,” I said. “I’m happy to help out.” I introduced myself to Shmivelblatz, found a seat in the hearing room, and adjusted my mic to avoid any sound distortion. Shmivelblatz followed me in.
The following is an exclusive transcript of Shmivelblatz’s testimony at the Plotzbank hearing. Any similarity to Wells Fargo is coincidental.
Rudin: I have read the allegations concerning Plotzbank, and like many Americans, I am appalled – absolutely appalled – at the terrible fraud your company has committed. My purpose in running this inquiry is to provide answers to the American people, and to help all of us learn how this travesty occurred. More importantly, I want to help us take steps to ensure it never happens again. You have said you are accountable, but your actions suggest otherwise. You committed widespread customer abuses, and canned 5,300 of your staff. But you, and all your senior managers, have not suffered even a reprimand. My first question is, specifically, what do you think you are accountable for?
Shmivelblatz: Thank you for the question. First, I want to say how terrible I feel right now . . .
Rudin: Yes, yes, I know. You have apologized repeatedly, but what I am asking is . . .
Shmivelblatz: What do you mean apologized? Just now, I banged my head on the door frame walking into the hearing room.
Rudin: That’s unfortunate. But Mr. Shmivelblatz, I must keep to my allotted time, so I’ll move this along. We’ve heard a lot recently about the culture at Plotzbank, and its role in creating and sustaining fraud over many years. Mr. Shmivelblatz, what does the widespread fraud at Plotzbank say about your company’s culture, and why didn’t you do anything to stop it?
Shmivelblatz: Regarding our culture . . . you know, we’re really, really rich people here. We’ve made hundreds of millions of dollars. Many hundreds. Me, and all my direct reports. Lots of money. And we’re smart, too, because we’re on track to make millions more. That’s how great our culture is.
Rudin: Well, that answers both parts of my question. Turning to your Vision and Values Statement – the one that was in place while Plotzbank was busy scamming its customers. It says, “We are the trustiest company ever trusted in the bank and trust business. All of our employees are trustworthy. You can trust us with anything and everything. No competitor is trustier.” Did you approve these statements?
Shmivelblatz: . . . The board . . . The board will . . .
Rudin: I’ll take that as a yes. . . . Mr. Shmivelblatz, how will you – you personally – restore a clear, unambiguous meaning for trust?
Shmivelblatz: That question has entered my mind countless times since I learned about how our low-level employees flouted Plotzbank’s impeccable values. And I have given it deep thought. I don’t deny Plotzbank has made mistakes. I’ve made mistakes. Right now, I can assure you that as an organization, we will never, ever misspell the word trust.
Rudin: Mr. Shmivelblatz, what’s difficult to understand is your claim that you weren’t aware of the deceit taking place between your sales staff and your customers. Especially because your VP of Sales, Connie Shmeckley, was known internally as the Nanotechnologist for her meticulous attention to minute operational details, such as your operating statistics and sales compensation plans. At any time during the past eight years, did Ms. Shmeckley inform you about what she was doing?
Shmivelblatz: I don’t recall . . .
Rudin: As CEO, didn’t you meet with Ms. Shmeckley? Wouldn’t you have discussed operations and performance metrics?
Shmivelblatz: I’m sorry. I can’t recall anything specifically. But I do remember that before every staff meeting, we watched the kitchen scene from the movie, Jerry McGuire.
Rudin: The kitchen scene . . . the one where they shout, “show me the money!”?
Shmivelblatz: That one. Yes. Ms. Shmeckley and I are big fans of Tom Cruise and Cuba Gooding Jr.
Rudin: That’s nice . . . Mr. Shmivelblatz, do you know the amount an entry-level sales employee earns at Plotzbank?
Shmivelblatz: They earn a base salary, plus . . . plus . . . we offer regular contests and fun incentives for our sales staff. They just thrive on pressure! Thrive!
Rudin: You didn’t answer the question, but we’re getting to the end of our time. Let’s talk briefly about metrics. Plotzbank has been accused of high-pressure sales tactics. I haven’t seen any evidence that you care about customer satisfaction. You don’t measure it. You don’t track it. What do you measure?
Shmivelblatz: I disagree. First of all, we measure customer passion and engagement, and our analytics people tell me that we deserve to be proud. For example, we call one of our measurements Decibels, which tracks how loudly our customers talk when they call for support. High decibels means high customer passion, and we do very, very well. Another measurement, Engagement, tracks how many times a customer calls Plotzbank to chat with our friendly and helpful staff. Forty-eight percent of our customers call us over 100 times every week, and here we lead the industry. Bar none.
Rudin: Do you think you might be drawing false conclusions?
Shmivelblatz: There is no doubt that we have some . . .
Rudin: I’ll take that as a yes. Moving along – let’s talk about how Plotzbank exploited its sales force. Tell me about your sales incentives and commissions.
Shmivelblatz: Sure. Our most enduring – and I think our most endearing – contest, the one that we proudly mention in our annual report, is called Eight Rhymes with Fate. It sets demanding stretch goals, and the winners get to keep their jobs. The most flexible are nominated for membership into our Stretchers Club, and I’ve never heard any complaints. But I want to make one thing very clear: at Plotzbank, we believe strongly that there’s no I in Stretch Goals. And there’s no I in Clean Out Your Desk.
Rudin: You’ve used stretch a few times in your answer. Can’t you have goals, minus stretchiness? And at Plotzbank, how stretchy are your stretch goals?
Shmivelblatz: Stretch goals are one of Ms. Shmeckly’s many fine innovations. But you’re asking me details I don’t know. Ms. Shmeckly always said, ‘what happens in sales stays in sales.’ Who am I to argue?
Rudin: I see . . . So what happens to your staff who don’t achieve their goals?
Shmivelblatz: Thank you for the question. We’re very proud of our industry-best track record! Plotzbank fires more than twice as many sales staff as our closest competitor.
Rudin: Have you ever been fired?
Shmivelblatz: No, not yet. Why?
Rudin: In the remaining time, I’d like to know what you would say to one of your sales staff who might have been fired for not making your stretch sales goals.
Shmivelblatz: I’d say, Let them eat cake.
Rudin: Let them eat cake? Really?
Shmivelblatz: Yes! And then I’d give them a slice of real cake. Since news of this scandal went public, I instructed our staff to make things right, no matter what.
Rudin: And what about your customers – the ones you defrauded – what would you say to them?
Shmivelblatz: The same thing. Then, I’d give them a slice of cake, too! Except theirs would have our venerable red and gold logo in frosting, right on the top. As I have said, we will make things right for everyone, and no expense will be spared!
Rudin: Thank you, Mr. Shmivelblatz. I have no further questions.
At the end of the hearing, the courtly, silver-haired Shmivelblatz smiled politely, and thanked me for my questions. Putting his arm on my shoulder, he said, “It’s been a great conversation. By the way, I heard you say your Metro isn’t working. My limo driver is parked out front. Is there anywhere you’d like to be taken for a ride?”