« Wall Street Meltdown…Checks and Balances | Main | Dallas Goes Passionately Pink »

The Experience Asset: Corporate Communications during Turmoil
September 22, 2008

The past several months has seen the failure of the U.S. financial markets. Bear Stearns and Lehman Brothers are gone. The government has bailed out Fannie Mae and Freddie Mac. Merrill Lynch has been swallowed by Bank of America. AIG is teetering. And the largest bailout in history is being debated by Congress. The spate of bad news from Wall Street has been fast, disastrous and overwhelming, involving trillions of dollars and impacting millions of people. The pros with deep experience in the financial markets, and with the reporters who cover it, have been working diligently for months to prepare. And even so, this stretch of news has been stunning.

Right now, the value of a smart, experienced financial communications professional has simply never been higher. So, what should public companies do during this time of unprecedented turmoil? Say nothing and wait for things to get better? Just the opposite needs to happen and with lightning speed. At a time when all companies are being painted with the same brush, at a time when the market cares little for a company, balance sheet and product differential, companies need to communicate more openly than ever before. Whether the news is good or bad, companies need to communicate to their key stakeholders to differentiate their strategy, to give faith in management and to clearly articulate their corporate assets. This is not a time for arrogance or to pretend you have all the answers. Clearly, this is a time for the expertise of senior level communications professionals to have a key seat at the table.

When each piece of news reaches different stakeholders – shareholders, employees, customers, competitors, communities – they respond with questions of their own. Are my assets safe? Do I have a job? Why did this happen? Is this crisis over, or continuing? Will the company survive? Communications executives are charged with delivering answers, in real time, to these questions … and they’re also responsible for looking ahead to see what issues and questions will be asked but haven’t.

And, the critical value of internal communications has also risen in turn. The way that important information is shared with employees can have a longer term impact than a short term liquidity issue. It can be tricky to determine when to disclose critical information and in what form. Do you jump-start a crisis by disclosing it with employees in full, the moment you understand its parameters? Do you wait until all potential remedies have been tried? It’s a delicate process that requires experience and punishes those without it.

Lack of experience tends to result in delays. Delays can be disastrous, as PR Week has noted. Your response needs to travel as quickly and as widely as the bad news that called for it. Shaping that response requires the input of experienced financial communications pros who understand the impact of different words on different audiences. The same is true for all communications emanating from Wall Street, as Ad Age notes. This difficult stretch isn’t over – more bad news is coming, which means the expertise of such thoughtful professionals will definitely be on display…communications with key stakeholders must be a top priority. Those who don’t treat it that way put their shareholders, employees and consumers in serious peril.

Posted by Michael Kempner at September 22, 2008 02:23 PM