May 20, 2013
Lessons from RBC outsourcing
controversy
Bank hardly alone but will experience cause employers to re-evaluate tactics?
By Sarah Dobson
Having a disgruntled employee vent his frustrations in a national CBC broadcast did no
favours for RBC recently. David Moreau, who
works in IT, claimed he was among a group
of employees in Toronto who were being terminated after they trained a group of temporary foreign workers to do their jobs.
RBC’s initial response to the CBC story
came from Zabeen Hirji, CHRO, who said
it was outsourcing provider iGate that was
supplying the workers for the transition and
“moving your processes and operations to
other suppliers is a business practice both
within Canada and globally that is very wellestablished.”
But the situation garnered further attention, with Human Resources and Skills Development Canada (HRSDC) saying it was “unacceptable” if RBC was replacing Canadian
workers by contracting with iGate, which was
filling some of the roles with foreign workers.
“The purpose of the Temporary Foreign
Worker Program is to fill acute labour needs
when Canadians are not available for the
work required,” it said.
There was also a backlash from consumers and calls for boycotts. A group of union
pension plans in British Columbia warned it
would withdraw funds invested or managed
by RBC if the bank did not stop using temporary foreign workers to replace Canadians.
“If RBC doesn’t get that Canadians are furious about this and change course, then we
will be forced to relocate over $1 billion in
investments with another firm that wants to
build our economy in Canada and keep jobs
here,” said Lee Loftus, business manager of
the BC Insulators Union.
Responding to the growing controversy,
RBC CEO Gord Nixon emphasized in a CBC
interview that offshoring certain jobs is part
of doing business.
“This is not nearly the story that it’s been
made out to be but it’s very difficult to get
that message across to the Canadian public,”
he said. “That’s how you have to run a global
company if you want to compete, if you want
to be productive.”
But in a full-page newspaper ad on April
11, Nixon apologized to the employees affected by the outsourcing arrangement, saying the bank “should have been more sensitive and helpful” and they would be offered
comparable job opportunities at RBC. The
CEO also said RBC was reviewing its supplier
arrangements and policies “with a continued focus on Canadian jobs and prosperity,
balancing our desire to be both a successful
business and a leading corporate citizen.”
The incident involved several HR-related
issues — outsourcing, temporary foreign
workers, social media and employer branding — but will the outcry see employers reconsidering their outsourcing efforts?
Employers are now wondering if they’re
vulnerable, if they’ve done the right thing
or if they’ll get caught, said Michael Dunn,
president of public relations firm Dunn & Associates in Halifax.
“All the other CEOs were very happy to
let RBC take the hit on this so… somebody’s
passing memos around saying, ‘Double check
on our outsourcing policy and our outsourcing activities. What are we doing? How do
we measure up?’” he said. “Whether or not
you’re doing things well is fine, but you can
be tarred by the same brush. So this perceived stumble by RBC — which was somewhat confirmed by the letter by Gord Nixon
— everyone’s looking at that.”
The negative experience that was very
public in the case of RBC will certainly see
senior managers and boards wanting to make
sure that they are acting in a way that will
be seen as fair and reasonable within their
communities, said Finn Poschmann, vicepresident of research at the C.D. Howe Institute in Toronto.
“That doesn’t mean broad and searching
questions about outsourcing,” he said.
n OTTAWA ACTS
Changes to TFWP
On April 29, the federal government announced reforms to the Temporary Foreign
Worker Program (TFWP). The changes will: •require employers to pay temporary foreign
workers at the prevailing wage by removing the
existing wage flexibility
•temporarily suspend the Accelerated Labour
Market Opinion (A-LMO) process
•increase the government’s authority to suspend and revoke work permits and Labour
Market Opinions (LMOs) if there is misuse
•add questions to employer LMO applications
to ensure the TFWP is not used to facilitate
the outsourcing of Canadian jobs
•ensure employers have a plan in place to
transition to a Canadian workforce, over time,
through the LMO process
•introduce fees for employers for the processing of LMOs and increase the fees for work
permits
•identify English and French as the only languages that can be used as a job requirement.
“Outsourcing is a fact of life — it’s just
contracting out, make or buy — but any business manager, board member or folks in similar roles will have observed the bad public
fallout in this situation and likely will have
questions about… whether their own institutions face similar risks because, there’s no
question, bad reputation is bad for business.”
Employer branding
While RBC said iGate was responsible for
bringing in the employees, it’s all semantics
when it comes to the employer brand, said
Cissy Pau, principal consultant at Clear HR
Consulting in Vancouver.
“At this point, they are, from the public
perception, an extension of RBC,” she said.
“For an employer, you really need to be care-
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ful if you’re even going down this path. Just
be aware that if it’s not done well, the message can spread very quickly through social
media and other means.”
This situation has arguably left a stain on
the RBC brand, said Dunn.
“It doesn’t help that it seems to reinforce
the cliché or stereotype of bankers as ‘profit
first, people second.’ Whether that is true
or not is not relevant anymore,” he said.
“Whether you’re an employee in a huge organization or someone thinking of joining,
you’re going to wonder, ‘Is RBC going to invest in developing me and my value and my
productivity, or are they just going to use me
to a certain point and then if I can be easily replaced by a temporary foreign worker or
somebody else, they will?’”
Changing role for HR
When employers are making major opera-
tional decisions, areas such as legal, finance
and HR have to work in sync and not do
things in isolation of context, said Dunn. And
when it comes to social media and big HR
decisions, they have to think: “This is going
to go out quickly, how are we going to position it?”
If an employer has to do a major termination or restructuring, it should look around
first to see if there’s another place for the employees, said Pau. And it should treat exiting
employees well so they are champions for the
company after they leave.
“It really goes to what’s the value that the
company puts on its staff and the retention of
those staff? The company can say one thing,
like ‘We value our employees, they’re our
greatest asset.’ But how is that perceived out
in the market? Is that an authentic message
or is that just lip service? So the actions have
to support that value.”
The good news is RBC already has a very
strong employer brand and Nixon’s apology
was excellently crafted, said Stacy Parker,
managing director at Blu Ivy Group in Toronto.
But when it comes to employer branding,
HR is not the sole communicator and should
not only look at the legalities of a situation.
“(HR) needs to interact with marketing, IT,
communications and really have a strategy
when there are downsizing and restructuring efforts to talk about ‘What if this hits the
press tomorrow, how are we handling this?
And is the way that we’re addressing this
situation consistent with what our employer
brand is?’” she said.
And the traditional role of HR is changing
rapidly.
“They need to also be incredible marketers, incredible communicators and, essentially, economists,” said Parker.
Page 2 © Copyright Thomson Reuters Canada Ltd. - May 20, 2013 - Toronto, Ontario, (800) 387-5164 - Web Site: www.hrreporter.com