Outsourcing in spotlight with CIBC replacing staff

Transparency, communication, outplacement support key to seamless staff transition, say experts
By John Dujay
|Canadian HR Reporter|Last Updated: 05/15/2017
CIBC faced a backlash recently after revealing it had decided to outsource some of its Canadian operations to workers in India. Credit: Chris Wattie (Reuters)

Bringing back memories of a “scandal” involving RBC in 2013 — when the bank laid off staff and transferred the work to temporary foreign workers in Canada — CIBC made the news recently.

The bank decided to have its finance department in Toronto train other staff members, who would then train replacement workers in India. The news spread quickly online, with calls for boycotts and customers claiming they were abandoning CIBC.

In a memo to staff, CEO Victor Dodig said he knew outsourcing was not a popular decision, according to the CBC.

“It’s not as simple as you may read that it’s about cutting jobs or costs,” he said, as the outsourcing complements work done by CIBC staff in helping manage peaks in demand, ensuring work can be done around the clock and helping the bank adapt to changing business needs.

But when a transition to outsourcing is handled poorly, it can backfire, according to experts.

“Companies really need to think about the reaction from not only individuals that are affected, but also how it’s viewed with their brand in the outside world,” said Lynn Brown, managing director of Brown Consulting Group in Toronto.

The impact on workers potentially losing their jobs can be devastating, said Richard Austin, a partner at Deeth Williams Wall in Toronto.

“It’s a big shift in their lives, and it’s incredibly disruptive,”  he said. “These transactions make a difference to the lives of these people and so it’s important they be done right.”

It is relatively easy to manage the technical details in an outsourcing transaction, but “making it work from a human part is the challenge,” he said.

Plan ahead

From an HR perspective, you want to do all of your planning upfront and have this as seamless as possible, said Brown.

“You still have to manage it as you would any type of situation, by doing lots of communication and giving lots of support to those that are remaining (with the company).”

And choosing the correct messaging tone is vital. “You don’t want to go in and say, ‘We’re going to be laying off staff and we are going to be outsourced,’ without giving people some concrete things,” said Brown. “Talk to those people that are being affected in a respectful manner.”

It’s often a good idea to provide multi-year employment guarantees to workers going through the transition because, otherwise, “it’s every man for himself, in which case the employees head for the hills — and they just jump quickly,” said Austin.

When the final strategy is finalized, employees should be advised of the plan and kept updated.

“You’re better to be upfront with the employees, to offer them a retention bonus to stay until closing, and get them to help you with it,” said Austin.

Transparency key

Openness is a key component of a successful plan. “The number one thing that I encourage employers to do — as difficult as it is — is to be transparent about what’s happening,” said Debby Carreau, CEO of Inspired HR in Calgary. “Be honest with the employees: Lay out a plan on what it looks like for them, and explain why you are doing it.”

When efforts are hidden from employees, this often reflects poorly on a company.

“Nobody should shy away from it: If you have made a decision to outsource, then you should transparently talk to your employees about it, you transparently talk to your stakeholders because, nine times out of 10, you’ve already put together a business case,” said Michael Sherrard, managing partner at Sherrard Kuzz in Toronto.

“You are still subject to criticism, but if you have gone through a good decision-making process, you’ve treated people fairly and with respect, you should be prepared to stand behind your decisions.”

By not being candid, speculation can flourish among workers.

“One of my favourite expressions is ‘Rumours run rampant,’” said Austin. “No matter how you attempt to keep it confidential, the employees will know. Word will get out, and the moment word gets out, you’ve created a nightmare for yourself... because anyone who is any good is going to want to jump ship.”

And the employer risks a loss of productivity from employees endlessly talking about the rumours.

“People think they are being smart by keeping it confidential and secret. I only saw one transaction in my whole career where that worked, and it was incredibly difficult for the customer in that case,” said Austin. “Keeping it confidential is really hard.”

HR should be included in communication strategy planning, considering it often will be relaying the message to the affected workers, according to Sherrard.

“I have seen a lot of HR people influencing their C-suite with respect to the decision-making process to begin with: ‘What should we outsource, what should we retain internally, how should we communicate?’ I’ve seen really good HR people assist in the messaging and the effective communications with the employee population.”

Fairness is a key way to help employees buy into the plan by “treating people decently,” said Brown.

“I have seen it done in not a good way, and it has a really negative impact on individuals,” he said.

“From a morale standpoint, if employees don’t really feel valued, that can be a real negative thing, and so I think employers need to be really aware of how their remaining staff are feeling, and are they doing things to try to keep their work life positive and that they understand that this won’t happen to them.”

For some workers, “It’s like they are being kicked out of the house,” said Austin.

“Organizations that are planning on doing this, they should really think about the consequences of what will happen, so there’s not lawsuits coming back,” he said. “What are they going to do, understanding that this is going to be a very traumatic experience for many employees?”

Social media concerns

There can be additional challenges when word of a poorly implemented outsourcing strategy gets out via social media.

“Number one is you’ve got to state the facts and be as open and honest as you can, and if you make a mistake, you need to own it,” said Carreau. “When you try to hide your mistakes, or you ignore them, that’s really where it hurts your brand.”

The ones that try to hide it are the ones that really get a bad reputation in the marketplace, she said.

“The ones who stood up and said, ‘Hey, we’re really sorry, we made a mistake, it never should have happened, we recognize that we hurt some people here and we are going to try to make amends,’ they actually got a lot more goodwill with the public at large.”

Social media response planning is important, said Brown.

“It’s all the ‘what ifs’, so you need to have some kind of contingency plan in place, so if there is a backlash in social media, you are able to respond quickly,” he said.

“If you are a smaller-sized company but you have a brand that’s noticeable, I would seriously consider getting some professional counselling from a marketing or social media perspective so you have something ready to go.”

Always offer a response when confronted by a social media backlash, said Sherrard.

“Every employer is best served to have prepared for (it), so that when I say, ‘Be transparent and back up your business case,’ be prepared to communicate effectively and answer any questions if they are posed to you on social media.”

Outplacement support

Best practice also includes providing transition and job-search counselling, said Carreau. And affected workers should be encouraged to attend interviews, she said.

“(It’s best) if they are part of the process, and they know that they are going to be able to transition in a way that maybe the employer gives them flexibility to interview during the workday, or they are going to get a great reference at the end of this, or they are going to develop some skills.”

Career transition firms should be on-site the day the outsourcing is announced, said Brown, “particularly if individuals are long-serving employees — things have really changed in how recruitment is done in the past five to 10 years. Before, everything was done all paper-based and now everything is electronic, and for someone who has been out of the labour market for a while, to try and come in and navigate that is challenging.”

HR could also employ industry relationships to source new jobs for affected workers.

“I have seen a number of HR people where they will use their contacts to assist their employee population that is being displaced,” said Sherrard. “Where an employer uses its network to help an employee locate a job, that’s always a much more successful opportunity for an employee, rather than just looking on their own to find a new job.”

It is a difficult situation, but it isn’t impossible to accomplish successfully, said Carreau.

“Because if (employees) know the end is coming and it’s inevitable, it’s how you treat them and how you approach it and what’s in it for them to transition professionally. Only if you have incentive for them to do so, and you’ve built up the trust and the goodwill, they feel like they are being treated fairly.”

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