RBC CEO Gord Nixon
You have likely read the headlines already as the Royal Bank of Canada found itself the centre of media attention this week for its outsourcing arrangements with foreign workers.
RBC chief executive Gord Nixon responded with an open letter (see link at bottom of this story) and a strategy for a newspaper ad campaign to apologize to employees affected by outsourcing. The storm hasn’t passed but that doesn’t mean we can’t start learning the lessons from this stumble. To that end, Marketing has collected the blunt insights of a few of Canada’s leading PR professionals. Here’s what they told us:
Geoffrey Rowan, partner/managing director, Ketchum Public Relations Canada
After this week’s over-the-top, lawyer-crafted, non-apology apology by RBC, wouldn’t it be refreshing and inspiring to hear straight talk from a leader? RBC bungled its initial handling of its temporary foreign worker crisis this week, which forced it to bring out its biggest gun – CEO Gord Nixon – and even he couldn’t fix the mess. The story will blow over, with the occasional zing every time there’s an update on the government review of foreign worker regulations, but I suspect the root cause is self-absorbed navel gazing and lack of internal communication – too many silos.
Outsourcing is so common, but RBC forgot to think it through. Did corporate communications, HR, IT and the business strategists who decided this was a good idea ever sit down and discuss its implications? If RBC doesn’t fix that it will again find itself muddling a response to something that should have been buttoned down. RBC understands the value of its reputation, so the issue isn’t that corporate communications doesn’t have a voice on matters like this. More likely the issue was sloppy execution.
The fact is that for decades Canadian businesses have been outsourcing jobs to low-cost countries. Especially IT jobs. Even newsrooms outsource editorial jobs. This should not have been a story, let alone a story that is now bleeding on for a third day and is seriously eating into the CEO’s time. The right people didn’t sit down together and review potential scenarios, the most obvious of which is that an unhappy employee would complain to the media. Without scenario planning, the first-day spokesperson didn’t have all the facts at hand, which created a second day story
The crisis is unfortunate not just for the tarnish it adds to RBC’s solid reputation, but because it undermines Nixon’s primary non-bank leadership platform. He has been a strong proponent for immigration and bringing new Canadians into mainstream society, economically and socially. That’s a topic he’ll have less credibility on for a while now that he’s so visibly connected to a willingness to use cheap labour in other countries rather than keep jobs in Canada.
And now RBC is vulnerable to any other complaints by any of its 57,000 employees who see a Canadian job being cut or moved. That’s a lot of pain and cost that better internal connections could have prevented.
Bruce MacLellan, president & CEO, Environics Communications Inc.
Let’s be clear; RBC does a lot of good for Canada and Canadians. Despite employing 57,000 people in Canada, donating millions of dollars to charities and generating dividend income for thousands of shareholders, RBC won’t be picking up awards for issues management and crisis communications anytime soon. Even a rookie communicator would recognize the bank misread the explosiveness of bringing in foreign workers to be trained by outgoing laid off workers.
This crisis is likely due to not involving communications people, for reasons that may include silos, insensitivity or cost-cutting. Compounding the issue was the bank’s sloppy response, such as blaming the “vendor” and having to be goaded into an interview on CBC Metro Morning via a Tweet from the host. The bank needed to find simpler, plain language, avoiding biz school jargon such as, “In keeping with standard business practices, when transitioning activities, our vendor has temporarily assigned a number of their employees onsite at RBC to affect this transition with a small number remaining on a go forward basis” which was in the CEO’s letter to employees.
Finally, the business community should recognize we have a federal government so committed to helping businesses, in areas ranging from pipeline approvals to using foreign workers, that government approval does not equal public approval. In short, be wary of what Ottawa lets you do. The full-page ad apology in national newspapers is sincere and shows the bank is taking this situation seriously, but the cost would likely cover the salaries of two or three solid PR people to help prevent such missteps in future.
David Gordon, managing partner, Cohn & Wolfe
While I agree that the RBC temporary foreign worker issue will eventually blow over – and that the root cause is a lack of internal communication between the left and right hands (and feet) of the bank, the very vocal public, media and policy maker interest in this points to broader issues facing Canada’s venerable financial institutions.
While we are accustomed to criticism of our resource-based industries for their business practices and impact on the community (ranging from the east coast sealing and fishing industries to our western lumber, oil and gas sectors), it is a more recent and growing occurrence for our financial institutions to face the same attacks.
Extractive industries are very aware of the philosophy of the “social licence,” in which support from the community is an essential element of business practice. To date, this has largely been a non-issue for the Canadian banking sector – which we often point to with pride for its stability and embodiment of Canadian values of common sense. However, over recent years public attitudes have shifted and changed toward the banking sector, most notably with the global “Occupy” movement.
This is a new environment for our banks, filled with many opportunities for misstep. All banks should look to RBC’s experience and perform some serious self examination of their business practices – reflecting on how relatively small (in scale) missteps can have monumental consequences in the court of public opinion. It goes without saying that those most aware of public opinion, the PR team who manage the banks reputation in front of its critics in the press, should be at the centre of this process, helping the different appendages of the organization communicate with each other.
Gord Nixon may well be reminding his team of the words of Warren Bufffett, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Daniel Tisch, president, Argyle Communications
It’s easy to know when a Canadian company is in reputational trouble: it’s when they’re featured on U.S. PR blogs and associated with the ubiquitous term “PR disaster.” Much of the analysis focuses on whether this week’s controversy will cause lasting reputational damage to RBC. Predictions are pointless and premature, because that depends largely on the bank itself, its 57,000 employees and their innumerable stories. The big danger for RBC isn’t this story; it’s the next one that reinforces bad judgment or a tin ear for public opinion.
We live at a time when small operational risks can become massive reputational risks – the reality of a world where all employees and stakeholders carry global publishing power in their pockets. The smartest companies have PR embedded at the highest levels of management, with the authority and access to lead interdisciplinary collaboration on communication. They also have sophisticated listening and engagement strategies for swift detection of both risks and opportunities. RBC is no doubt reviewing these structures and strategies now. Gord Nixon’s acknowledgement that stakeholder expectations should guide business practices was very smart.
The other challenge for RBC is being identified with issues – outsourcing, offshoring and questionable HR practices – that are far bigger than even the biggest bank. This means they will be caught in the slipstream of stories driven by high-profile stakeholders, as they were by the Prime Minister’s comments on Thursday.
Authentic communication can help them lose that tag (anyone who uses the phrase “on a go-forward basis” should be suspended). They need strong internal policies, and to play “error-free ball” in their PR. RBC also needs a little luck, such as another big Canadian brand misstep on foreign workers. With the media looking hard for this right now, I’ll bet they won’t have long to wait.
