RBC makes strategic deposit into the bank of reputation
Canada's largest financial institution applied the principles of issues management, deftly avoiding prolonged stories - and a possible crisis of confidence - when it suddenly fired its CFO.
Let me say at the outset that unless employed by an organized crime syndicate, people are rarely terminated at work. Their employment may be terminated, but not their person. You’ll read in the media how this person or that was terminated, full stop, as though employers are going around offing Terry in Accounting and Pat in Security without legal consequence, or at minimum a story.
This week’s “HOT Takes” doesn’t go swimmin’ with the fishes, instead it takes the side of a Canadian banking giant for getting its communications pitch perfect on the employment termination of its CFO, Nadine Ahn, a 20-plus year veteran of the bank.
On April 5, the Royal Bank of Canada – the country’s largest bank with 20 million customers and more than 100,000 employees globally – managed a significant personnel matter with strategic deftness, wiping the issue from the front pages almost as quickly as it landed, all by simply embracing the concept of honesty, openness and transparency. Yes, Virginia, there is a HOT bank in Canada.
On that Friday, RBC issued a five-paragraph news release announcing Ahn’s departure, “whose employment was terminated by RBC earlier today, effective immediately.”
“RBC was recently made aware of allegations involving Ms. Ahn and immediately launched an internal review and engaged outside legal counsel to investigate. The investigation found evidence that, in contravention of the RBC Code of Conduct, Ms. Ahn was in an undisclosed close personal relationship with another employee which led to preferential treatment of the employee including promotion and compensation increases. As a result, the two individuals have had their employment terminated.
“The investigation found no evidence of conduct by the former CFO or the other employee with respect to the bank's previously issued financial statements, RBC's strategy or its financial or business performance.”
No one takes joy from someone’s world imploding, as Ahn’s, and the individual receiving preferential treatment, surely had by this point, but RBC’s communication’s strategy was a textbook case of crisis avoidance via sound issues management. Through its statement, the bank notified the public and shareholders of an immediate change in the c-suite and, importantly, why. It outlined the facts that an independent investigation had concluded, allowing no room for speculation, rumour or innuendo.
Locked down and owned, plainly and clearly stated, the bank delivered a message of confidence in the institution, noting “financial and business performance” was unaffected by a relationship for which its CFO had just been dismissed. It also assured one and all that the bank’s processes and policies, specifically its code of conduct, were applied swiftly and without fear or favour.
Owning bad news means disclosing it yourself before someone does it for you. Yes, the statement was issued late on a Friday, but being HOT doesn’t mean strapping yourself into a pillory and having it wheeled it out onto the town square well before reporters’ deadlines. It’s an endless news cycle today, making a late Friday news dump less cynical a move than it once was. Reporters will still complain, but plus ça change. Media seeking comment were referred to the statement, which was flush with enough detail for a thorough first draft of history.
Some organizations might have opted to tersely report that the executive was no longer with the organization, wishing them well in their future endeavours, or allowed them to announce their resignation in hopes of a quiet, scandal-free departure. Both these tacks would engender far too many public questions given the profile of the organization and Ahn’s own role, serving to prolong the story, hammering reputations and market confidence for weeks to come.
No, RBC had no choice but to be HOT. In some organizations this would be a crisis. RBC proved it needn’t be. I have no special insight as to how events unfolded, but we can safely make some assumptions given the adeptness with which this all played out:
Phone rings. Bay Street, we have a problem
Issues management principles kick in
Communications head summoned forthwith
Communications strategy (expertly) crafted
Comms and legal quarrel over said strategy, HR mediates
Comms prevails.
There may well have been a regulatory requirement for RBC to disclose as they did, making a comms and legal standoff moot, though such standoffs can be only too real when lawyers fail to appreciate when something is a communications matter first, legal second. This was a master class in dispensing with bad news swiftly, limiting continuing media coverage and avoiding it from devolving into tabloid fodder. This isn’t about killing the story - that was never going to happen; it’s about mitigating the fallout.
Protecting your organization is job one. But it’s important to approach your communications around employment terminations with empathy, remembering the players are all human: Nadine Ahn, of course; the person she was/is in a relationship with; their families, possibly; Ahn’s boardroom peers; her staff; the CEO, whose watch this happened on; and the communications team charged with making public the most personal of matters, while simultaneously announcing the end, at least for now, of a once stellar career.
Far too many companies don’t want to “own” the bad news and subsequently decide less is more. It’s a recipe for a “drip, drip, drip “ of bad news over many news cycles. RBC comms is smart and clearly influential.