RBC fiasco: shift blame or fess up?

Call it iGate-gate.

Before reports surfaced that RBC had laid off 45 Canadian IT employees and, through a sub-contractor, iGate, brought in foreign workers from India to replace them, the country’s most profitable bank probably wasn’t expecting to be on the receiving end of an avalanche of criticism from Canadians from coast to coast.

When the story broke, however, and calls for boycotts emerged on social media, RBC shifted into damage control.

As often the case, the scramble to ‘get ahead’ of the problem seemed to have made matters worse.

“Contrary to allegations, RBC has not hired temporary foreign workers to take over the job functions of current RBC employees,” the bank said in a statement. “Like most businesses, RBC works with many suppliers to provide certain products and services in Canada and globally.”

RBC’s attempt to shift blame from itself to iGate has been attacked by its critics, with members of the 7000+ strong ‘Boycott Royal Bank of Canada’ group on Facebook calling the response ‘misleading’ and ‘deceitful’.

RBC’s muddled response is hitting the bank where it hurts, too: the bottom line.

‪Two day after news of the story became public, Steve Stansal, 25, went to his RBC branch in Mississauga in order to close his account.  He said that the bank’s unwillingness to say sorry influenced his decision.

“After they pull something like this, the least they can do is apologize.”

But RBC’s response, though disingenuous to some, might be far more rational and prudent from an industry standpoint than it sounds to the public.

When a company is involved in a crisis, there is often a conflict between the communications department and the legal department as to how it should be handled.  Communications often push for an immediate apology in order to placate public anger, whereas legal resists that approach.

Washington, DC-based lawyer Ameet Patel says that companies are often advised to resist apologizing too quickly after a scandal breaks.

“In some circumstances, admitting to wrongdoing may come back to haunt them later on,” Patel says.  “It may be construed as an admission of liability or guilt.”

Andrew Coxhead, coordinator of the Corporate Communications program at Sheridan College, concurs.

“During a crisis, PR is going to encourage a company’s CEO to come clean and accept some responsibility.  That’s what reasonable people expect a reasonable company to do,” Coxhead said.  “In fact, PR people avoid legal at all costs because legal is always going to deflect responsibility.”

Who knows if f RBC lawyers guided the bank’s initial response to this crisis. But the PR approach clearly won the day as a few days later RBC issued an unequivocal apology and a guarantee that the Canadian IT employees will have a job at the bank.

In the meantime,  public ire is still directed towards the bankers.  And in some quarters, that news is being received warmly.

“We’re lawyers, so we usually get blamed for everything,” says Patel.  “It’s nice to have somebody else take the heat now and again.”

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