RBC,
Canada’s largest bank, has been under fire recently for planning to outsource 45
IT jobs through a vendor, thereby eliminating full-time Canadian positions. India-based iGate is part of RBC’s supply chain
and responsible for hiring the foreign workers.
All of this was accomplished through the proper legal and governmental channels –
although Human Resources and Skills Development Canada is reviewing the matter. As an ethics practitioner, it is the ethical
territory outside the legal boundary that is the subject of scrutiny, analysis
and interest. RBC’s decision in this matter
is legal, but is it ethical?
First,
let’s examine the components of an ethical decision. According to Crane and Matten, the following
three elements shed light on whether a decision is ethical in nature (as
opposed to the numerous decisions made each day that are not necessarily
ethically-charged: buying lunch out or brown-bagging it, black or brown shoes, jazz
or salsa, mild or spicy):
1. The decision has a
significant impact on others. Since a number of
workers would lose their positions, we can conclude this decision affects
others substantially. RBC stated that
the employees would be re-assigned within the organization, but it’s still a
major change either way.
2. The decision has viable options
available.
In other words, did RBC have a choice in
the matter? On this point, we can agree
RBC had a variety of different options concerning their IT staff – outsource
(where and to what extent) or keep jobs in-house. It wasn’t a financial deal breaker – RBC
wouldn’t be forced into bankruptcy for not outsourcing.
3. The decision is viewed as
ethical by one or more parties. Even if RBC
did not initially believe the situation to be ethical, it does not automatically
mean it’s not. Certainly, the IT staff,
unions, and the Canadian public perceived RBC’s decision as containing an
ethical component.
The
last point, of course is what makes this story media-worthy. This case is generating publicity for a
number of reasons: RBC’s profits are enormous, RBC’s employees were slated to
train their replacements (an unsavoury proposition) and RBC, to put it bluntly,
is a bank. It’s important to cut through
some of the emotionally-charged banter to achieve a balanced discussion. RBC is not alone in outsourcing. It’s a growing trend and will continue
despite public uproar. The major banks
outsource as do major retailers and service-providers. Classical economists argue that countries
with a comparative advantage in a particular industry should produce those goods
and trade with other nations. If India
and China produce goods or services of acceptable quality at a cheaper cost, Canada
should produce other goods and trade with India and China. If manufacturing or call centre jobs are lost
in Canada, re-training in growth industries will provide new opportunities (a
worthy goal, but does it work?).
I
hope it’s apparent that ethical outcomes are complex and rarely a straight-forward
proposition. Is it ethical to outsource jobs
when company survival or competitiveness is not at stake? RBC answered the question on whether the original
outsourcing decision in this particular case was ethical by introducing a new supplier
code of conduct (http://www.rbc.com/sourcing/supplier_code_of_conduct.html). “RBC will not offshore work where salary savings is the primary reason
and will make every effort to source in Canada,” the financial institution states. This flies in the face of the original mandate
and is a complete change of direction. RBC’s
PR machine says they value Canadian jobs above cost-cutting, but only time
will tell if the new policy is ethical. If
RBC respects Canadian jobs, why did this revelation emerge only after major
media coverage? Unravelling motives is
another subject altogether: Would RBC have introduced this Code without the
public outcry or government prodding? RBC
claims the Code is the first of its kind in Canada. The Canadian public helped produce this outcome
and it’s a step in the right direction regardless of motive.
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