Are banks “un-PR-able?” In the wake of Lehman, subprime, AIG, TARP, TBTF, feasting at the discount window, Libor and the London Whale (the list could go on and on), the answer is probably yes. The complexity of financial products and the scope of the large banks’ operations means that it is not a question of if another scandal will emerge, it’s a question of when. From standpoint of reputation, there is no way to effectively assess and mitigate the multiple risks inherent to global banks.
So what’s a PR guy at [insert name of global investment bank] to do?
Lucas van Praag, former head of corporate communications at Goldman Sachs recently spoke with PR Week about the options. He suggests says that banks need to fight off the instinct to withdraw into the bunker and just focus on corporate social responsibility initiatives. “CSR is important, but [banks] shouldn’t rely on it to repair reputation,” he tells PR Week. Explaining, Goldman’s sometimes confrontational media strategy, van Praag explained that the common link between the firm’s key audiences, including shareholders and regulators, was that “all got most of their information from the media,” meaning that a do-nothing approach was out of the question for Goldman. He goes on to say that “culture is driven from the very top. Banks need to take the initiative to reset the moral compass, and do it often.” The Financial Times echoes this in a recent column, but was more direct, saying it might be “necessary to retire this flawed generation of [bank] leaders.”
Clearly, not all banks have the stomach to spar with media like Goldman once did. In the November 16 issue of Levick Weekly, Candi Wolff, EVP Global Government Affairs at Citi, suggests that the image of banks it tied to the economy and because people believe that banks caused the recession, they will forgive and forget when things improve. “As the economy improves, I think you’ll see an automatic rise in confidence or at least support for banks,” she states. Citi appears to be keeping its head down and focusing on basics. A couple of years ago, it was among the first financial institutions to begin blogging in order to communicate directly with constituents, so it gets the CSR thing, but, for now, is content to play defense. Perhaps the new CEO will change that.
So who is right? I don’t think there is much choice to for banks to play defense and, frankly, pray. Van Praag calls for “structural, operational, and cultural change,” but other than what is mandated by Dodd-Frank and other regulation, change will be slow. Banks simply don’t know when and where the next crisis will hit. How can one realistically take on the skeptics in the media if one doesn’t know what self-inflicted problem is lurking around the corner?
No one tracks it, but I bet in the last two years we’ve set a record for companies apologizing for hugely-publicized errors, omissions and even fraud. From Bank of America to Goldman to every auto American auto company (and not just because their CEOs choose to fly private jets to Washington) to Toyota to cruise ship companies, the mea culpas and the list go on.
The formula for crisis PR is cast in stone: oops, we’re sorry, here’s what we’re doing to make it right, we’ll never do it again, here’s a little more transparency into how we operate, and we’ll set up this foundation to ….yadda, yadda. No wonder crisis PR firms get the big bucks.
These days, even the hint of potential scandal can send a firm in to duck and cover mode. Right BofA? Is today the day Wikileaks unloads all those documents?
So, its nice to see one company draw a line in the sand and say, “no way.” Taco Bell is not running for the border in response to a lawsuit alleging that its meat fails to meet USDA standards. Au contraire, mon amigo. Taco Bell is fighting back hard and using all of the tools in its corporate communications burrito to make sure people get the facts about its products.
Taco Bell is out there swinging, especially on social media platforms. It has a YouTube channel, a Twitter feed, and a Facebook page. It took out full-page ads in major newspapers, it has a TV ad campaign, and has an easy-to-find section of its Web site for addressing the issue head on.
As noted in the BulletProof blog, this strategy only possible because Taco Bell is “absolutely certain of its legal position and that it had command of simple, black-and-white facts that play well with the public.”
This is not easy and too often corporate communications people cannot get to the truth about what is happening in their own companies — not always because there is wrong-doing, but because processes are not standardized and and how things work within the corporation are too complex.
In those situations, communications has no choice but play defense. For example, banks are extremely complex and it should not be surprising that questions persist about mortgage operations. As a result, we should expect to see more stories similar to further allegations about Citi and the disconnect between its businesses and what was reported to shareholders and regulators. Corporate communications has to play defense — prevent defense and the only thing the prevent defense does is prevent you from winning.
On the flip side, when a company has confidence in its controls and operations, PR can go on the offense and in the communications world, the best defense is a good offense. A friend of mine works in communications for a snack food company. Their customer service hotline routinely receives complaints from people claiming to find dead mice or bugs in their snack bags. If the caller is persistent, the customer service department says, “OK, we’ll send over a specialist to examine your dead mouse.” That usually ends the conversation. When the customer [looking for a payout] threatens to call the media, the company basically says, “Do what you gotta do.”
For that company and Taco Bell, both immersed in the battles of man versus food, food wins!