Wells Fargo CEO’s Gaff: Diversity’s Ends and Means

Wells Fargo CEO Charles Scharf and Admiral Michelle Howard, USN (ret.)

Wells Fargo’s CEO Charles Scharf recently apologized for attributing lack of diversity at his bank to “a very limited pool of black talent to recruit from.”

Comments like Scharf’s trigger rapid pile-ons and pushback. Many critics addressed his remarks directly. Coming from a different angle, I would ask whether, had Wells Fargo’s sale numbers disappointed, Scharf would have blamed “a very limited pool of customers to sell to”?

My point is that we expect businesses to compete for talent as well as customers. Here, we must bear in mind that from a business-ethics perspective, diversity represents a means to an end, which is better performance through advancing merit and creating synergies. These won’t happen, though, if we wear blinders, or if we simply count noses.

Advancing merit: Addressing false positives and false negatives in recruitment and development

Recruiting and leadership development can suffer from false positives and false negatives. These arise from basic human foibles. The false positive: “I am talented; this candidate reminds me of me; therefore, this candidate is talented.” The false negative: “I am talented; this candidate does not remind me of me; therefore, this candidate is not talented.”

Thinking through what makes people talented in various roles and at various levels isn’t easy. Developing metrics and processes to identify, cultivate, and reward talent takes enormous effort, but is probably senior managers’ most important task.

Synergy: Making the whole greater than the sum of its parts

Diversity can also create synergy. In basketball, for example, height is generally an advantage. But, a lineup wholly comprising seven-footers, would probably lose to a team with lower average height but better ball-handling, fast-break, and three-point-shooting skills.

A great lesson in diversity driving synergy comes from retired Deputy Chief of Naval Operations Admiral Michelle Howard. Howard commanded Combined Task Force 151. She oversaw rescue of a merchant marine captain kidnapped by Somali privates. The rescue was depicted in the Tom Hanks movie Captain Phillips.

Howard faced enormous time pressure to stop the hijacked lifeboat without escalating the situation. She put together a team with diverse backgrounds and experiences to brainstorm ideas. It was a common sailor who suggested stopping the lifeboat with water from high-pressure but non-lethal fire hoses.

Howard’s leadership teaches that diversity properly implemented relates to the skills and experiences of team members as they bear upon a specific task. This required her to consider potential team members as individuals, and what each of them could contribute to the concrete challenge before them.

Wells Fargo can do better. And, so can the rest of us. We must start by treating diversity as means to an end — and working towards that end by advancing merit and creating synergy.


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