There are myriad reasons why Royal Bank of Canada is so successful. Its balance sheet is strong, it has leading market share in all of its business lines—from banking to insurance to wealth management to investment banking—and, at a time when many of its competitors are retrenching, it continues to invest in new products, services and markets.
But not to be overlooked as a contributing factor is the diversity of its workforce. Canada's largest banking company actively targets new immigrants, women entrepreneurs, Canadian Aboriginals, the gay and lesbian community and people with disabilities, and Chief Executive Gord Nixon says the key to reaching these audiences is having a workforce that mirrors their cultures.
Of the more than 21,000 people RBC has hired since 2006, 52 percent have been women and 26 percent have been "visible" minorities. It also actively recruits immigrants and has some 2,600 interpreters on call to help translate 180 different languages, including indigenous Canadian languages like Cree and Inuktitut.
"There's no reason a man can't do a better job of serving a female customer, or a Chinese Canadian can't do a better job of serving an East Indian customer," Nixon says. "But as an organization, we need to ensure that our makeup reflects the overall makeup" of the customer base. "It just makes good business sense."
Nixon has long been a champion of diversity; one of his first orders of business when he took over as CEO nine years ago was establishing a diversity council, which he still chairs.
With Canada becoming more ethnically diverse and the company itself expanding globally, RBC sharpened its focus in 2005, embedding objectives into its hiring and promotion practices to require that every slate of potential managerial candidates includes a woman, a minority or both.
The results of the initiative have been impressive.
Women now hold 40 percent of the executive positions at RBC, up from 35 percent in 2005, and minorities hold 14 percent, up from 5 percent. Perhaps most notably, three of the nine executives who report directly to Nixon are women and two of them, chief financial officer Janice Fukakusa and human resources chief Zabeen Hirji, are minorities.
RBC's commitment to diversity has won the company acclaim. It is routinely honored as one of Canada's top employers, it's been named a "best place to work" for gays and lesbians and working mothers, and in 2008 it was recognized as having one of the most admired corporate cultures in Canada.
The most recent honor came in March, when Catalyst Inc., a leading organization promoting the advancement of women in business, named RBC as one of its four award winners for 2010. (The others were Deloitte, CampbellSoup and the Australian telecommunications firm Telstra.)
In summarizing its selection, Catalyst said RBC "has truly become a model for diversity and inclusion both inside and outside its workplace, and has emerged as an industry leader by tying the unique perspectives of diverse groups directly to its global business strategy."
That's not to say that diversity trumps talent. Hirji says that while RBC has clear goals-the embedded objective is for half of all new executives to be women and 20 percent to be minorities-"we aren't going to put an unqualified person in a job."
What the company encourages is for hiring managers to think creatively. Say, for example, a minority vying for a branch manager position in an ethnic neighborhood doesn't have the necessary technical skills for the job but speaks the language and understands the community's culture. When making the hiring decision, department heads are urged to take into account such things as how much business the less-seasoned candidate can bring in.
"Financial services is a business of trust," Hirji says. "That's what you need to earn people's business." The technical skills, she adds, can always be taught.
RBC is also big on coaching. If promising female or minority candidates are passed over the first time around, they will often be paired with mentors who can assess their strengths and weaknesses so that they'll be better prepared the next time.
Fukakusa, the CFO, says mentoring programs are particularly important because they keep department heads focused on the company's diversity objectives."What gets measured gets delivered on," she says. "If we see people that are coming up short, we work to understand how to make them more competitive for these roles."
They also help guard against complacency. "When it comes to actual decision-making," Nixon says, "there are these unintended biases where people feel more comfortable surrounding themselves with familiarity."
Nixon, who also co-chairs the Toronto Region Immigration Council, speaks often to business groups on the topic of diversity, and his message is consistent: Hiring and promoting more women and minorities is not just the right thing to do, it is good business.
From a recruitment standpoint, Nixon says RBC's reputation for inclusiveness goes a long way toward helping the company attract top female and minority talent.
From a business development perspective, he says a motivated workforce leads to better customer service, and better service leads to improved financial performance. (This link between diversity and profits is why many large U.S. firms now have put in place formal development programs aimed at hiring and promoting more women and minorities.)
John Taft, RBC's head of U.S. wealth management, adds that many customers simply want to give their business to firms that reflect their values-from which charities they support to whether they pay benefits to gay partners.
"High-net-worth individuals, family foundations, they care a lot about this," Taft says. "If you don't do diversity well, they won't give you their money."
Taft joined RBC when the company bought the Minneapolis wealth management firm Dain Rauscher and, over the past decade, his division has developed a strong niche in serving the gay, lesbian, bisexual and transgender community. (Taft developed an interest in gay and lesbian issues after learning that his daughter was gay.)
Managing money for this group can be complicated because tax and wealth management laws in this country are set up for the benefit of married couples. So a key strategy for reaching this audience has been recruiting financial consultants who target the gay community, many of whom are gay themselves.
"If you want to serve a diverse client base, you have to have a diverse workforce, and that's particularly true in the GLBT community," says Taft.
Still, while RBC is clearly a diversity leader in Canada, Nixon says that apart from the wealth management unit, it is more of a follower in the U.S.
But it is making strides. The capital markets group, based in New York, has a stated goal of hiring and promoting more women and recently established a diversity council to make sure it stays on task. Also, its U.S. banking division is looking to hire more African-Americans and is stepping up its recruitment at universities.
Julie Nugent, the senior research director at Catalyst, says that when it comes to diversity, all companies can do better. The Catalyst award, she says, "is not about perfection, it's about making change and making improvements. RBC certainly has done that."
RBC's Hirji promises that the company won't rest on its laurels.
"The award doesn't mean we've arrived, it's just raised the bar," she says.