EDMONTON -- The Royal Bank of Canada is more than a business; it's an icon, the very symbol of Canadian prudence and sound management. How in the heck did they get themselves in such a dither over "temporary" foreign workers stealing the jobs of Canadians?
CEO Gordon Nixon was clearly caught unaware by the violent public backlash on Monday. He quickly leapt to the defensive, doing damage control on the CBC Tuesday morning. "The issue," he proclaimed, "has been overblown and doesn't reflect the bank's policy."
And the public might have believed him had he not then suggested that: "the bank doesn't get involved in the hiring practices of the companies it hires."
Truth be told, RBC was simply doing what every large company is doing nowadays, taking advantages of cost savings from globalization. Many organizations these days are lowering operating costs by outsourcing software development, customer relationship management and basic accounting functions to lower cost service providers in India and other parts of Asia.
What's wrong with this story? Plenty. There has been a sea change in public opinion on the issue of corporate social responsibility. Public anger and anxiety over jobs in Canada are slamming headlong into the established "rules of business," which, to put it politely, are not overly concerned about sustaining the well-being of middle-class households with higher salaries than in India or China -- quite the opposite.
Modern management thinking is strongly informed by the numbers that appear on the company's profit and loss statement. Unfortunately, on this set of financials, employees appear as a cost centre; reducing these costs is considered good management. But these numbers don't tell the whole story, in fact, an over focus on the flow side of the business leaves senior management blind to many important relationship-based assets, particularly the well-being returns of their human capital assets and their social "licence to lead."
If RBC management and its investors were to shift their attention from the traditional financial profitability to a genuine balance sheet and a focus on well-being returns on its most valuable and strategic assets, its human assets and social assets (i.e. strong relationships), a different picture of success would emerge.
From this new perspective of well-being, employees are not a cost centre, but a source of genuine value. Through a different lens of optimizing enterprise well-being of its employees and customers, RBC could become a model for how financial institutions in Canada and internationally could operate differently in support of a new economic paradigm based on well-being and genuine happiness.
Understanding how RBC's workforce delivers true value and managing the relationship with employees and customers to advance a flourishing enterprise requires asking an entirely different set of questions of management and the role of financial institutions in this new economy of well-being.
More importantly, these questions generate an entirely different set of answers. They might just save this venerable institution from disaster, and help revitalize a lagging global financial sector that has seen public trust badly degraded.
The public outrage with RBC's behaviour could well be the straw that breaks the camel's back. It could also be an opportunity to RBC to reinvent itself as financial institution that will put well-being returns on investment of its employees and customers ahead of financial efficiency alone.
The Royal Bank of Canada needs to do more than be cash flow prudent; it must set an example through its behaviour, demonstrating that it cares about the well-being of its employees, their families, its customer relations and the nation that has granted it a coveted banking charter. The normal rules of business might have been enough a few years ago, today the security of RBC's "licence-to-lead" is threatened. Securing it means developing far more insight into rapidly changing Canadian values and a clearer focus on the intangible relational assets that underpin its special place in Canadian life.
Robert McGarvey and Mark Anielski are co-founders and partners in Genuine Wealth, a Canadian enterprise whose mission is to help businesses, communities and nations mature into flourishing economies and enterprises of well-being.