Business leaders will have to make a choice between fighting greater regulatory oversight and rebuilding public trust: it seems clear that any attempt to do the former will diminish the chances of achieving the latter.
Efforts to date have been less than effective.
Says Baerlein: “You’re already seeing the obvious play from the playbook: full page ads in the Wall Street Journal and major newspapers like the Boston Globe extolling that particular financial institution’s safety and security of people’s assets. That was a good strategy for the 80s, but now millions of consumers get their information from a variety of sources, including the internet. ‘Experts’ are out and ‘people you know’ are in so I’d be thinking about targeted and localized campaigns that reach very diverse audiences. While Warren Buffet is good for the national messaging, I’d be thinking about using certified financial planners of some size and reputation as local experts in their media markets to deliver a financial institution’s message. I believe that having some independence from the institution in the near term would make consumers more likely to believe what they are reading or hearing.”
Companies “should probably talk to their clients and listen to them,” says Schuybroek. “Not on a basis of mutual accusations—irresponsible lending versus irresponsible borrowing, for instance—but more on a ‘mutual education’ basis. And not through the media, but directly, by building intensive local meetings programs, or organizing chat rooms on the Internet, which should include customer education. It will probably be uncomfortable at some moments, but a fruitful exercise on the longer term.”
The good news for public relations people is that a crisis of trust such as this one will demand a serious commitment to communication.
“Leaders now need to focus internally and be honest and transparent when communicating to key stakeholders,” says Gainer-Ross. “In such uncertain times, the best path for communicating to stakeholders is to be straightforward, even if it requires saying you do not know. This is no time for ‘no comment.’ Leaders must speak simply, clearly and resonate with stakeholders who are scrutinizing every word and hungry for information. It goes without saying that leadership communications must be credible all the time, not just in times of crisis. Now is not the time to first begin building a reputation for transparent communications. Leaders must remind themselves of their jobs as guardians of their company reputations and stewards of their company values.”
Gaines-Ross believes that any communication must begin with internal stakeholders.
“Most importantly, employees are one of the most critical stakeholders to address during challenging times and are in need of steady reassurance. Leaders should be asking for input from employees on what questions they would like answered and what rumors or gossip need to be addressed immediately. This is no time for an absence of leadership.”
Just as important, it is also a time for leadership by example. “If leaders are asking employees to manage costs better, leaders must do the same,” Gaines-Ross says. “This is not a time for wining and dining customers, senior management golf tournaments, and splashy sponsorships. Instead, boards should be reviewing their risk management procedures, identifying emerging issues and staying up-to-date on the challenges facing companies on whose boards they sit.”
The specific communications approach will vary from company to company, Petruzzello says.
“First, financial companies that have been directly and negatively involved in the events of the past year will have the biggest hole to climb out of and, therefore, the biggest communications job. They had a business that was based largely on trust and they should assume that there is little of that left with their customers, vendors, investors, lenders, and analysts. They will have to rebuild that from the bottom up, including a new executive team that has not been tainted by the recent past and can and does communicate with all stakeholders. Dramatically increased transparency and solid and steadfastly maintained investment and lending guidelines that are exceptionally well communicated will also be important. Until business results demonstrate that the company is on the right track, these will be the only things the company will have to prove its value
“Second, financial services companies that have not been involved in the events of the past year need to consider a communications strategy that allows them to take advantage of their relatively good position. They must not assume, however, that everyone understands that they have not been tainted. All financial services firms have been hurt even if their own financial performance has been good. This includes those like Bank of America, Citigroup, and JP Morgan Chase that may feel like white knights but now have to convince others that the troubled companies they acquired have not negatively affected them. Until business results make the case, these issues will need to be addressed directly.
“Third, nonfinancial companies also have to consider the events of the past year as they communicate with their stakeholders. Cash flow, lines of credit, banking relationships, investments, and insurance will all now be prime questions for their analysts, reporters, investors, and employees. These topics need to be addressed openly and directly in all communications.”
His conclusion: “The financial services industry as a whole needs to strongly consider a coordinated communication effort to improve its image. The truth is that, in spite of everything that has happened, virtually everyone in the world in one way or another uses and relies on financial services every minute of every day. When current events are over, this will not have changed. An industry-wide effort will help dissipate the anger that otherwise will remain much longer if communications are done just on a company-by-company basis.
Adds Torrenzano: “Since trust is built on individual transactions that accumulate in a reservoir of faith and belief in your counterpart, organizations and individuals need to go back to the most basic levels of communications to rebuild that trust: one-on-one interactions. It is hard work, and a lengthy process, but we have been witnessing the results of shortcuts.”
Credit Crunch V: The Outlook for the PR Business
For Part V