Honest Communication Critical in Times of Crisis
Honest Communication Critical in Times of Crisis
By John Morgan
26 January 2009
Money Management Executive
(c) 2009 Money Management Executive and SourceMedia, Inc. All rights reserved.
Mistakes, bad luck and unexpected events can happen to any firm during good times and bad, but tackling misfortune in a forthright, brutally honest manner rather than trying to sidestep unpleasant truths can mean the difference between a small crisis and a full-blown public relations nightmare.
"People are looking to us. They want to know what we think," said Stephen Barrett, chief marketing officer and managing director of Eaton Vance Distributors, speaking at the National Investment Company Service Association's East Coast regional meeting here. "It's absolutely crucial we communicate with everybody as quickly as we can. Out in two days and very good is much, much better than out in five days and perfect."
Investors of all shapes and sizes are rattled right now, said William Blase, president of the New York public relations firm W.T. Blase & Associates. Careful, clear and frequent communication with the public can reassure investors and demonstrate that a firm has the honesty and leadership they seek.
"The most important thing companies can do to enhance their image is to stay visible," Blase said. "With so many other things to focus on, there's a danger that communication with clients, prospects and shareholders can be moved to the back burner, but typically these people are the most important constituencies in terms of your continued success."
Pulling back on communication is "absolutely the wrong thing to do," he added. "A pullback might send the signal that you're not confident. People will wonder what you're doing."
Firms that are struggling could be tempted to wait out this bad period, but choosing to hide could deal a critical blow to your business and hamper your ability to go forward, said Craig Kilgallen, director of advisor insight at Financial Research Corp.
This is a great time for firms to distinguish themselves from a branding perspective, Barrett said. Good branding tells customers who you are, how you're different and why it matters.
"Building equity in your brand is as important in tough times as in good times," he said. "You want to be visible. If your competition is ducking, it could be your chance to step forward. If you have something to say, you need to reach out."
Many investment executives believe the press is at least partly responsible for the current economic climate, with its constant stream of negative stories eroding consumer confidence.
Like it or not, the media is a critical component of branding, Barrett said. While some news organizations may come across as alarmist, arrogant or even smug, the economic crisis is having a very negative effect on newspapers, trade magazines and other media outlets, he said.
Advertising and marketing budgets are often the first things to get cut, Kilgallen said, and news organizations rely on advertising revenue to stay afloat.
"We're all in this together," said Laura Fay, senior vice president of corporate communications for Evergreen Investments. "Obviously their job is to objectively cover the business."
But the press obviously is not the only source of bad news. Whenever there is breaking news about a company, investors often go directly to the company's website for an explanation.
A carefully crafted, timely message on a firm's official website can do much to reaffirm investor confidence and reduce reputational damage.
When a crisis happens, you need to get the right people into the room, get a plan down on paper and get it out to the public, Barrett said.
"Folks who can anticipate and react quickly are the ones who will do well," he said. Having a skilled public relations professional who can communicate the right message to the public during a crisis is also vital.
"A delay can be the difference between a client who feels frustrated and is thinking about going elsewhere and someone who stays," Fay said.
Other, non-media outlets, particularly blogs and social networks, are rapidly growing in popularity and should not be ignored.
"There is so much more you can do to embrace social networks," Barrett said. "You can use networks to communicate directly with potential customers, and you don't have to use the filter of the media."
In a world where anyone with a computer can become a blogger, and unverified, questionable information is commonplace, people need to know the information they're finding online is legitimate.
"If you've never Googled yourself, you should try it," Blase said. "Plug in your own name and see what other people are saying about you."
It's also a bad idea to try and trash-talk your competitors by leaking information through the press, he said: "Take it from me. There is no such thing as off the record."
"Last year was not a fun time for anyone, and there's nothing wrong with saying that," Barrett said.
"Everybody knows last year was horrific," he said. "Our advisers are going through very difficult times. We need to take that tone as we communicate and speak about real issues to real people in real plain language. You don't want to make it too cute."
The old aspirational images of a retired couple walking along the beach at sunset with their feet in the water and their yacht in the background are no longer realistic, he said.
"There are some very complex, risky vehicles in our industry," Barrett said. "We need to be very, very judicious with our words. We need to be able communicate so that my grandmother can understand."
A good communication strategy keeps people away from the edge of fear, Fay said, stressing that a firm's own employees often have the most questions and concerns.
"There isn't a better time than now to connect with employees," she said. "An informed employee will be much more engaged. Deliver your message to employees and be consistent."
Leadership and follow-through from management is also critical, she said.
"Focus on the folks you're surrounding yourself with," Fay said. "Make sure your people are engaged and understand the direction of the company. It all comes down to people."