RBC foreign workers controversy won't affect bottom line, PR experts say
Bank caught in 'perfect storm' of public and political anger
Since CBC News released an exclusive report on Saturday revealing that foreign workers were being brought in to replace Canadians at the Royal Bank of Canada, the country's largest bank has been dealing with a PR crisis.
For five days now the upper echelons of the bank have been rolling out their responses to try to reverse the tide of negative public opinion. (The RBC story went viral and was one of the most-commented-upon stories ever on CBCNews.ca.)
But however much this has damaged the banking giant's reputation, PR experts say there should be little financial repercussion both in the short term and in the long run.
"They’ve done a good job getting their message out," says Barry Waite, a professor of corporate public relations at Centennial College in Toronto. But, he also adds that "no matter what they do, it's like screaming at a rock concert."
"They're kind of caught in a perfect storm. They've become the symbol of a bigger issue surrounding temporary foreign workers."
After the story broke, RBC's public relations staff swooped in to try and explain the situation in the face of the media flurry engulfing the bank.
A statement was released the next day on the bank's Facebook page as well as on Twitter, explaining the situation from the bank's point of view.
RBC president Gordon Nixon visited media outlets on Monday to say that, of the 21 employees used by California-based iGATE, the firm RBC has contracted IT services from, six are local, while 13 are from India but are only here to manage the transition.
Only one, Nixon said, is a "temporary foreign worker" employed by iGate under the controversial immigration scheme set up by the federal government.
Nixon's intervention showed how seriously RBC was taking this controversy.
According to Barbara Jesson, president of Jesson + Company, a public relations firm in Toronto, corporations have a hierarchy of who speaks to the public on an issue, depending on the severity of the crisis.
By that point, however, the story had already hit the viral point and seems to have incensed many Canadians who expressed their anger and outrage in a social media maelstrom.
The company's response was being drowned out by the backlash on social media sites, which seemed to be rocketing around the world.
For big media storms like this, corporations usually have plans and strategies in place to get their message out, says Waite, particularly through their own customer service personnel and especially when it comes to sensitive issues such as outsourcing and downsizing.
But "the truth is," he says, "you can't prepare for every eventuality."
To quell a public relations storm, companies usually send out a letter of explanation immediately. They outline the situation from the company's perspective, publish it via social media and attempt to drive customers back to their website for more information; then they send a spokesperson out into the public eye.
In the face of public anger, corporations must also show a certain amount of empathy, and Waite notes that studies suggest that the effects of an apology can placate an angry mob of critics.
"People understand that things screw up … that things go wrong. If you apologize and acknowledge the impact that it's having, it will go a long way," he says.
Trumped by emotion
This complex story has been trumped by emotion for many Canadians, with social media commenters and others promising to close accounts and move patronage to another bank.
According to Waite, this kind of outrage tends not to amount to much. The online word for this is "slacktivism," where action is promised, pages are "liked" and pictures are posted in protest, but real action rarely materializes.
"Anyone can like a Facebook page, but at the end of the day, are they going to go down to a rally? Are they going to write their member of Parliament? Probably not," says Waite.
In the case of RBC, he suggest the bank will likely manage this crisis mainly on a one-on-one level using tellers and local managers to get the bank's message across.
As a few make good on their promise to close their accounts and withdraw their money, they will likely be met with a representative pleading the bank's case and imploring them not to move their business elsewhere
Drop in a bucket
The few accounts closed will amount to a drop in a bucket, according to Waite, who suggests that, in the long run, the company's crisis plan coupled with the short-term memory of the online world will serve to keep the bank in good standing and will leave little to no damage.
"They don't like to have their reputation besmirched. No one does," adds Jesson. "But, I don't think it will hurt them. It's going to take an awful lot to hurt the bank."
"It won't hurt them over the long haul. The challenge is that banks are so big that it's going to take a lot to knock the wind out of their sails."
Outsourcing and the use of foreign workers is commonplace in large organizations such as banks, airlines and retail outlets, says Waite. Once the spotlight is shone on the operations of other financial organizations, the public will see that RBC is not unique to this.
"People's lives are so intertwined with the banks. I think the other broader issue here is that Canadians have always had a love-hate relationship with their bank," he says.
Foreign workers increase by 40%
According to economic immigration lawyer David Cohen, the influx of temporary foreign workers has increased by 40 per cent in the last four years.
There were over 300,000 temporary foreign workers in Canada in 2012, a category that encompasses 44 occupations including veterinarians, machinists, secondary school teachers, licensed practical nurses and software engineers.
"This is, in our view, part of a strategy to place significant downward pressure on wages in Canada," said Mark Rowlinson, assistant to the Canadian director of the United Steelworkers.
Jesson notes that in the current economic climate, which has included big job losses, companies ought to be thinking through their policies on job-related issues and be more thoughtful of them.
"In this case, the banks are obviously making money on the backs of the Canadian taxpayers so there's an expectation that they'll be a good employer," she says.
The elements that make the RBC issue controversial is not necessarily the use of foreign workers, but also that the outgoing employees were training their replacements; and that a company such as RBC, which is not financially hobbled, was cutting Canadian jobs.
"We can shout at the ocean that we don't want jobs transferring overseas, but that's going on in a lot of sectors," says Cohen. We may not like it, in fact we don't like it, but if we're going to be a part of the global village then that's the way things operate now."
"We need to accept that Canadian manufacturing jobs have gone overseas, and the likelihood is that a lot of these jobs are never coming back."