HR at Royal Bank of Canada (A)

CASE: HR-42A
DATE: 06/16/15
ROYAL BANK OF CANADA:

TRANSFORMING MANAGERS (A)
INTRODUCTION
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At the end of 2014, Shauneen Bruder, executive vice president and head of operations of
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Canadian Banking at Royal Bank of Canada (RBC), was reflecting on the company’s
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achievements and the numerous accolades it had received for superior performance in the
previous two years: best bank in Canada (Global Finance), most trusted investment bank
globally (the Economist), and fourth strongest bank in the world (Bloomberg’s Markets
Magazine). As the largest financial institution in Canada, RBC had almost 80,000 employees
and 16 million clients. Revenues in 2013 were C$30.9 billion (US$27 billion). Bruder also took
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a look back at the initiative she had championed at RBC’s Canadian Banking Operations
between 2011 and 2012 to improve managerial effectiveness for people managers with large
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performance gaps. Canadian Banking Operations had 10,000 employees, including 1,000
managers, who worked in two divisions: Advice Centers (sales and service by phone) and Retail
Operations, which included risk operations for credit adjudications, back- and middle-office
functions, and processing for Personal Banking and Business Financial Services.
In 2011 Canadian Banking Operations was at a turning point. Revenues were slowing as RBC
recovered from the 2008 financial crisis; customers were tapped out in terms of their credit
appetite and were significantly changing their expectations of the way they wanted to bank with
RBC. In addition, the bank was facing both traditional and non-traditional competitors. Bruder
said all these conditions created a perfect storm that led her to develop what she called the
Simplicity Roadmap, a five-year strategic plan aimed at transforming operations through
technology process improvements and cost savings. Key elements of the Simplicity Roadmap
Debra Schifrin and Professor Kathryn Shaw prepared this case as the basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation. Special thanks to Ivy Chiu at Royal
Bank of Canada. All information in this case is based on interviews and data provided by Royal Bank of Canada
unless otherwise noted.
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Royal Bank of Canada: Transforming Managers (A) HR-42A p. 2
included automation through digitization and workflow; cost and process transparency; and new
and revised risk strategies.
As Bruder and her team were rolling out the Simplicity Roadmap, they wanted all of Canadian
Banking Operations’ managers to be performing at their full potential. To make that happen, she
collaborated with thought leaders in Human Resources (HR), in particular HR vice president Per
Scott, whose team had developed a robust quantitative analysis for ranking managers based on
managerial effectiveness. Bruder and HR then designed and implemented individualized plans
to improve the performance of 100 managers with large performance gaps. By mid-2012, the
Simplicity Roadmap was already seeing success and the program for improving managers was
showing positive results. At that point Bruder was waiting to gauge the full impact of the
managerial effectiveness initiative.
TRAITS OF GREAT MANAGERS
To align company practices with what it meant to be a great manager, RBC developed a People

Management Framework (Exhibit 1).
The People Management Framework had four categories:

1. Sets Direction
 Includes embracing change and maintaining RBC’s competitive edge

2. Acts with Integrity

 Includes authenticity, humility, and resilience
3. Inspires and Develops People
 Includes team leadership and collaboration
4. Delivers Superior Results
 Includes delivering personal and team performance
All of those included foundational managerial practices, including knowing how to coach for
performance, give formal and informal feedback, and understand direct reports’ development
needs to help them be successful.
Bruder said she also wanted Canadian Banking Operations managers to understand the business
context, “They needed to understand why we are doing the Simplicity Roadmap and the sense of
urgency so they could speak confidently about the changes we were asking them to lead. They
also need to know how to create meaning and purpose in the work for their direct reports.”
MANAGER EFFECTIVENESS PROGRAM
With RBC’s People Management Framework in place, (See Exhibit 1) Scott began asking
himself, “How can we drive a step change in manager performance that could impact company
performance? Can we frame an opportunity that will capture the imagination of leaders and
compel change?” Scott said that the Framework was a great asset for the company, “but how do
we know that it really matters, and are we aware of what it is that employees feel about
managerial effectiveness? Can we tap into some of the data that we have to determine that?”
He then turned to RBC’s Employee Opinion Survey (EOS), which was conducted annually and
had an employee response rate of about 90 percent. He and his team collaborated with
consulting firm Towers Watson to create the Manager Effectiveness Program, which (1) used the
EOS data to measure managers’ effectiveness, (2) analyzed the results, and (3) created a manager
effectiveness index for all managers with four or more direct reports.
The first step of the Manager Effectiveness Program was for Scott, along with Catherine Beagan
and Bonnie Adams, RBC’s leaders of engagement management practices, to choose from the 70-
question Employee Opinion Survey the 12 questions that they believed correlated most closely
with the manager traits RBC wanted to see (as determined by the People Management
Framework shown in Exhibit 1). The EOS questions fell into three subcategories to measure
manager effectiveness:
1) Driving Results
2) Enabling High Performance
3) Strengthening Partnerships & Relationships

The 12 targeted questions asked how much employees agreed with statements including: “I have
the information, tools and resources I need in order to achieve my goals” (Driving Results); “My
manager helps me find opportunities for professional growth and development” (Enabling High
Performance) and “Differing opinions are openly discussed in reaching decisions in my unit”
(Strengthening Partnerships & Relationships). (See Exhibit 2 for all 12 questions). Based on
the responses of their direct reports, managers were given scores weighted across the three
subcategories, and then ranked on the managerial effectiveness index. At that point, those
managers were segmented into four effectiveness cohorts (roughly in quartiles).
At the same time, RBC and Towers Watson looked at a multitude of factors to determine if there
was something in a manager’s profile that influenced which cohort he or she ended up in. Those
factors included the manager’s age, gender, tenure at RBC, tenure as a manager, tenure of their
direct reports, size of their team, and the manager’s own performance rating (as evaluated by his
or her manager). They found there was no single factor that sufficiently explained the variation
in managers’ performance.
However, what did correlate was how engaged a manager’s direct reports were, as measured by
the eight questions on the EOS that were specifically about engagement. Bruder described how
RBC viewed highly engaged employees: “Those who are prepared to bring their full energy and
effort and their hearts and minds to work every day. They are excited about the work that is
being done and their ability to make an impact.” The analysis showed that managers who were
very strong on the attributes determined by the 12 questions had employees with very high
engagement scores. In other words, more effective managers had more engaged employees. The
results were disproportional: the bottom 20 percent of managers had 41 percent of the actively
disengaged direct reports. Employee engagement was a strategic measure of performance for
RBC. (Scott had done separate research with Canadian Banking Operations’ Sales Division that
showed a positive correlation between employee engagement and business performance.)
The manager effectiveness index was separately correlated with two external measures: Client
Loyalty (how likely a client was to recommend RBC) and Credit Quality (the percentage of bad
loan rates1). Both showed positive correlation.
PUTTING THE DATA TO WORK
Scott talked with business leaders across the company about creating manager effectiveness
indexes for their divisions, and Bruder was one of the first leaders to jump on board. She
partnered with Senior Human Resources Business Partner Russ McNally, who began by
presenting her with the manager effectiveness index for Canadian Banking Operations. Bruder
said the data proved very useful:
It helped us understand the ranking of our managers at a point in time where I
needed to make sure that we found out who were the weakest links in the chain.
So it was a very data-driven asset that we had to help us identify, “Where do we
have lower-performing managers for whom the survey results were telling us their

employees were less engaged?”
She added that she and other senior managers intuitively knew which managers needed the most
improvement, but due to the many factors affecting business results, the line of sight to being a
good manager was not always clear.

Beyond the manager effectiveness index and cohort information, McNally presented Bruder with
a spreadsheet with managers’ performance reviews from the previous two to three years, as well
as other supplemental data such as: How big was the manager’s team? How long had the
employee been in a managerial role? While such factors did not drive the effectiveness rating,
they were important for context. Bruder and McNally could use the spreadsheet—along with
factors such as whether the manager entered into a challenging or turn-around situation—to
make determinations for a course of action for individual managers. They then did a triage on
the managers in the bottom cohort, dividing them into three categories: 1) a manager likely to
improve through ongoing coaching and feedback, training and an individual action plan, 2) a
manager who already had an action plan in place, or 3) a manager who was not likely to succeed
as a people manager in that role. For managers in the latter category, McNally worked with the
individual’s managers to decide whether the individual should be moved into a sole contributor
role that was more closely aligned to their strengths.
ACTION PLANS
Once they did the triage on the bottom-cohort managers, Bruder and McNally chose 100
managers (from categories one and two) whom they wanted to focus on for training. Bruder
explained that many of the managers with the largest performance gaps in Canadian Banking
Operations were both new and tenured managers who had missed some of the core training on
what it takes to be a great people leader at RBC. Often in RBC, first-time managers were drawn
1
“Bad” refers to any loan that has experienced one of the following at some time during an 18-month period:
Delinquent 60+ days, Non-accrual, or Written off. Source: Royal Bank of Canada.
from the group or area that they worked in, based on their performance. “So they had been great
sole contributors, and now they’re being asked to take on a leadership role.”
Given that the lack of manager training seemed to be a common trait among many of the bottom-
cohort managers, McNally proposed the first action step be the same for all 100 managers—
putting them through a 360-degree assessment, which many of them had never done before. In
360-degree assessments, employees received direct feedback from direct reports, peers, and
supervisors. They also did a self-assessment. The 360s helped create very specific development
plans based on managers’ individual needs—correlated with the managerial traits RBC was
seeking. Given the complexity of being a people manager at RBC and vast array of strengths
and gaps of each of the managers, McNally felt the 360 was the best way to create individual
manager action plans. This process helped managers see the case for change. After each
manager went through the 360-degree assessment, Bruder and other Canadian Banking
Operations leaders, in collaboration with HR, used three main methods to improve these
managers’ effectiveness based on their individual action plans:

1. Formal Training: RBC rolled out a coaching program across all of its managers, and the 100
targeted managers in Canadian Banking Operations were the first to go through it.
2. Feedback: The manager’s manager meets with him or her to provide feedback. In addition to
the formal performance feedback cycle that occurs twice a year, there are biweekly or
monthly check-in meetings, where feedback can be discussed. Feedback can also be given as
needed and when employee engagement scores are published. Managers also receive
feedback from their direct reports.
3. Formal Coaching: The manager’s manager observes him or her and provides individual
coaching around gaps in their managerial effectiveness. RBC found this to be the most
effective intervention. The coaching was given with a similar frequency as noted above in
method two.
Sample Development Plan
For example, if a manager needed to improve his or her ability to coach and develop a team, a
development plan could look like the following:
Activity 1: Attend a “Coaching & Feedback” formal training program from RBC’s Foundations
of Management curriculum to establish a coaching partnership with team members, coach for
performance results, and give effective and impactful feedback.
Activity 2: Implement key fundamentals learned from the training for the next three to six
months. The manager will regularly ask for feedback from his or her direct reports on the
progress and quality of the coaching.
Activity 3: The manager’s supervisor observes one or two coaching sessions the manager does
with his or her team members and provides feedback on the quality of the conversations.
(See Exhibit 3 for a more detailed sample development plan.)

Cultural Shift
McNally noticed that implementing these action plans was creating a cultural shift:
We have shifted the needle away from saying, “We are going to give you a pass
through because you’ve been here for a long time.” And that was the culture for a
while, but we’ve shifted to where we’re now saying, “No, it’s only fair to you that
we give you the feedback. We have to do this, we have to have everyone
performing on all cylinders in order to be successful and achieve our strategies
and our goals.” Now the expectation is that we will be direct and we will do
what’s right and we will call out low performers.
COMPENSATION
While creating manager effectiveness indexes and implementing action plans, RBC also was
beginning to look at compensation. Being a good manager was a consideration in promotions,

annual bonuses and pay increases, although not in a sufficiently consistent or systematic way.
However, managers were given a leadership effectiveness goal that clearly outlined specific
measures related to activities that lead to higher employee engagement. These measures included
routines and metrics such as managers having regular development planning and career
conversations with their teams and providing regular rewards and recognition. (EOS engagement
scores were not used as a metric, but scores fed into an overall qualitative assessment).
According to McNally, “This was the first time we were holding our people leaders accountable
for their managerial effectiveness. If we don’t measure it, it won’t be a priority. All we were
doing with this goal was shining a spotlight on what we wanted them to focus on, and it
worked.”
Scott and his team were evaluating ways to build rewards systems around those effectiveness
goals. Scott said steps toward rewarding good managers could include 1) leaders having
performance objectives relating to talent management outcomes, 2) managers having
performance standards relating to employee goal setting and conducting employee performance
reviews, and 3) revising promotion criteria to include performance as a manager.
But Scott said the compensation aspect remained a work in progress. “We expect to see year-
over-year improvements in our reach and in its impact, but we also know this has to be a
sustained effort—this is not the place for a one-shot deal. There is more to be done, we have not
yet rewarded strong managers versus weak managers to the degree that we would like.”
A challenge RBC was encountering with determining compensation for managers was finding a
way to measure performance as it related to people outcomes (how direct reports performed and
developed). Scott noted that people outcomes for individual managers, like employee attrition or
promotions, typically were better measured over longer periods of time than the 12-month
review cycle. Also, including data from the EOS engagement section in performance and
compensation decisions ran the risk of managers consciously or unconsciously influencing their
direct reports to score them well. Maintaining the integrity of the survey and its results was
important to RBC, and to address that concern it used employee engagement targets as part of
performance reviews only for senior managers and higher positions.
BRINGING OTHER RBC DIVISIONS ON BOARD
As Bruder was working with HR to create a manager effectiveness index and develop and
implement action plans for the 100 targeted managers in Canadian Banking Operations, a few
other RBC organizational leaders were doing the same thing on a smaller scale for managers in
their divisions. HR had support from high-level executives to grow the program as well as broad
support for it throughout the company. But from their initial conversations with business
leaders, Scott and his team realized they had to overcome a few hurdles to bring some of those
leaders on board. A common question was why this was the time to make changes or take on
another initiative. Some leaders did not believe that the ranking system worked for them because
they saw their business as unique at RBC, and therefore they needed to be able to continue to
have their own way of doing things. For some businesses, managers were also sole contributors.
If they were driving sales, for example, some leaders did not consider it a problem if a manager
did not score well on the 12 EOS questions that correlated with the attributes of good managers.
HR also had to create a clear distinction between general leadership effectiveness and people

manager effectiveness. An executive might be a successful leader of a business with 3,000
people, but get low scores from his or her direct reports on the 12 survey questions. This could
be a difficult conversation to have with that executive, who may not see the value in doing the
assessment or may not believe that the results of the survey matter if he or she is delivering great
business results. Lastly, HR was careful to manage the amount of data it provided to business
leaders so they did not get overwhelmed and then potentially disengage from the process.
CONCLUSION
Bruder recalled that in mid-2012, she was waiting for the results of the next Employee Opinion
Survey. She had observed that the 100 managers in the program were improving, and therefore
knew the program was succeeding−and that McNally would soon be able to provide quantitative
measurements. There were a couple of data points that they could use as their measurements:
The first was the EOS questions looking specifically at Engagement, and the second was looking
at the year- over- year Manager Effectiveness reports.
Once those results were in, the next task for RBC would be scaling and institutionalizing the
Manager Effectiveness Program. There was a fixed number of HR business partners like
McNally, so business unit leaders would need to take more active ownership of the program and
related action plans. The manager effectiveness index also revealed who the highest-performing
managers were, and RBC was putting plans in place to leverage those managers and reward them
accordingly. Lastly, RBC would be developing hiring criteria related to management skills that
would best serve the overall goals of the company.
Exhibit 1
RBC People Management Framework: Traits of Good Managers
Source: Royal Bank of Canada.

Exhibit 2
12 Employee Opinion Survey Questions on Management Effectiveness


Note: The name of the RBC manager has been changed.
Royal Bank of Canada: Transforming Managers (A) HR-42A
Exhibit 3
2012 Sample Development Plan:
Shawn Stevens, Canadian Banking Operations Manager
p. 10


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CASE: HR-42A

ROYAL BANK OF CANADA:

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The People Management Framework had four categories:

 Includes embracing change and maintaining RBC’s competitive edge

2. Acts with Integrity

MANAGER EFFECTIVENESS PROGRAM

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PUTTING THE DATA TO WORK

It helped us understand the ranking of our managers at a point in time where I

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good manager was not always clear.

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Sample Development Plan

(See Exhibit 3 for a more detailed sample development plan.)

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BRINGING OTHER RBC DIVISIONS ON BOARD

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Royal Bank of Canada: Transforming Managers (A) HR-42A p. 8

Source: Royal Bank of Canada.

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Royal Bank of Canada: Transforming Managers (A) HR-42A p. 9

Source: Royal Bank of Canada.

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Source: Royal Bank of Canada.

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