Working in communications in finance is tough because the industry is complex, faces public distrust and is a balancing act of profitability and regulation.
It’s really a love/hate relationship: people don’t trust financial institutions or regulators, but need banks for personal and business transactions and rely on the government to protect them from harm. So the institutions are faced with increasing regulation, lawsuits and fines from regulators like the SEC and CFTC (and for good reason). Have you seen Credit Suisse and BNP Paribas in the headlines recently? Do Abacus, the London Whale, or LIBOR ring a bell?
As PR professionals, we have two responsibilities when a situation arises: to advise on practices in the best interest of the company’s reputation and relationships with stakeholders; and to manage the communications.
For four months, I researched the reputational effects regulatory action has on big banks. I got the inside scoop from two banks, read countless articles and studies and spent hours with journalists.
1. Build up reputational goodwill. The better your institution’s reputation, the more slack your stakeholders will give you during a crisis. In my research, one case was a “slap on the wrist” and the other was a “black eye” and a lot had to do with reputation. Personally, I’d prefer a slap on the wrist, and that comes from nurturing a reputation.
2. Develop good relations with the media. One of the best things a bank can do is build a solid relationship with reporters. One that’s based on trust and respect, not likeability. A mutually-beneficial relationship influences the media more than you think and is one of your strongest assets. On a similar note…
3. Help journalists write more interesting stories. Stories about small business loans and charitable work have already been written. Journalists are now looking for more hard-hitting stories about finance. You help them, they’ll help you.
4. Ensure your communication plan is 360˚. When you don’t communicate with every stakeholder, you become vulnerable to rumors and scrutiny. In one of the case studies, two stakeholder groups that were omitted from communication efforts were the ones that criticized the firm the most. Develop an all-inclusive communication plan and stick to it.
5. Understand that even quantitative-minded stakeholders care about reputation. Analysts and credit rating agencies care as much about reputation as they do about financial performance. Your reputation management and media relations efforts have a lot of influence.
6. Be forthright in your communication. The cover up is always worse than the crime, as my advisor and mentor, Fred Garcia, says when referring to crises. If you are faced with a challenging situation, the best strategy is to be upfront with the announcement. There is no doubt you will feel pressure and be criticized, but it is a proven and efficient long-term strategy. Why? Because stakeholder groups are more forgiving of banks who do this and see it as a sign of responsibility, not weakness.
7. Take regulators and regulation seriously. Even though you may not be the direct contact to the SEC or CFTC, make sure you, and your department, are updated with regulations. Take a proactive approach, be ahead of the game, and you’ll be ready for anything that comes from the Hill.
8. Never give the impression that you were caught off guard. Always be prepared. Mitigate the reputational risk and handle every aspect of communication strategically.
9. Lastly, don’t do anything unethical. The public is more critical, journalists are smarter, investors are more skeptical, regulators have more oversight, politicians will demand more regulation, employees will jump ship, and clients won’t trust you. One of these groups will find out and expose you either tomorrow or a year from now. Stay ethical and fair and be a true advisor.
These are only some of my findings. If you’re interested in hearing more, get in touch!
Julia Sahin is a recent graduate from the Master’s program in Public Relations and Corporate Communications at NYU. She is a communications freelancer and a monthly contributor to Muck Rack. She plans on doing big things.
Photo: Business finance chart via Shutterstock