Tags: All posts, Crisis Communication
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BP keeps working its way through its worst nightmare, no doubt about that. I wonder whether they – or any of their competitors for all that matters – have ever been serious about preparing for the impossible, for the unconceivable. It may sound silly, but isn’t that what crisis preparedness is all about? Never mess around with Murphy’s Law… And yet, it seems that the ultimate crisis scenario (a leaking well, completely out of control) was not in the crisis preparedness books at BP. Definitely not at the engineering level, let alone in the communications department.
What we’ve seen over the past 50 days is a crippled organization, as winged as the poor pelicans and seabirds they are accountable for. While struggling to close the leaking well in a tragic trial and error engineering process, properly communicating about it seems an even bigger challenge for BP.
The company’s inability to communicate transparently about the three key questions – What happened? What are you doing about it? How will you contain the impact? – has become the story in the digital media. Twitter took over and BP has completely lost grips on its reputation and credibility by starting crisis communications off the wrong foot. It will take their so carefully built market value and brand value to an unprecedented low for a long time.
The fake BP announcement in Dutch newspapers saying “SORRY” (with an asterisk referring to a footnote reading : “but you wanted to get cheaper oil”), shows that the brand has now been completely hacked. The world is at war against BP – as a company, as a brand, as a member of the community.
To me, these are the top 3 management behaviors that should never be overruled in a crisis:
1) Be reassuring but only promise what you are sure you can deliver
2) Say what you do and do what you say
3) Be perceived as part of the solution, not the problem
To date, my score for BP on each of these behaviors is below average, to say the least. It’s high time BP reviews the basic rules of crisis communications and lives up to them.
Tags: All posts, Opinion
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As some careful signs of recovery from the economic crisis start to surface, the corporate world is diligently shaping up for revival and getting back to “business as usual”. Having said that, the question is whether business will ever get back to what it used to be before the Lehman collapse. Most probably not. As bankers are being accused and pursued for taking risks they didn’t even fully understand themselves while pocketing extravagant bonuses, the virus that spread through the financial sector has highlighted the interdependencies that ultimately undermined the whole global economic system. Commentators call it systemic risk: a new buzz word, these days often used and sometimes abused.
What did we learn, if anything? Do we understand what really caused the economic tsunami? How can we prevent this from happening again? Lots of theories have been developed, lots of measures proposed, discussed, adopted or rejected. Almost everybody seems to agree on three main conclusions. First and foremost: careless risk taking in banking should be made impossible. Second, good corporate governance and ethics should be the only drivers in business. And last but not least: it looks like the word “bonus” needs to be erased from corporate vocabulary. But how will we achieve that and turn around almost overnight? The remedy looks as obvious and straightforward as the analysis of the cause: we need more and better regulation, stronger control mechanisms, less loopholes – in other words: close the gap on systemic risk. Shareholders and clients need to have more transparency on what they get in return for their money. And we need to ban disproportionate remuneration packages for senior leadership.
Whilst all these ideas and objectives are very legitimate, I think we should not underestimate the risk in overregulation of the business and undervaluation of leadership capabilities. Rules and regulations are the foundation of every democratic and well functioning community, whether it’s social or business. But too many rules and too stringent regulations, as an overreaction to the financial industry meltdown and as an attempt to close each and every loophole, may well turn out to become an adverse effect. At the end of the day, what’s important now is to learn from experience, turn around and prepare for the post-crisis momentum. Business is bound to pick up sooner or later and smart companies are the ones that look ahead and take their own sustainability at hand.
In the post-crisis game, financial institutions – and by extension corporate companies in general – will need to work hard to regain and earn respect and credibility. That’s not an easy task. Especially in finance but in other sectors too, a lot of reputational damage has occurred and it will require years of hard work to get some brands back to where they stood 15 months ago. It’s a challenge, one that cannot be achieved by merely complying with the newly enforced regulation, not even if compliance were 200%.
The roadmap to earning confidence in the post-crisis world is walking the talk. By actually evidencing the “R” of responsibly taking in CSR, by demonstrating ethical behavior in business dealings, by being transparent on corporate governance and decision making processes, by maintaining an intelligent dialogue with shareholders, customers and employees. Believe me, those companies that comply with the new rules and regulations will be good in class. Those who act upon them and live and breathe the substance of these rules will become best in class. Corporate behavior, as a new dimension to corporate compliance. Nice word play, I agree – but to me it’s the benchmark against which corporate brands and their leadership will be perceived, valued and rewarded in the post-crisis economic environment. Compliance is a non negotiable, corporate behavior is what creates trust and differentiates companies that move ahead of the pack, in any given industry.
Easier said than done? Maybe, maybe not. It all depends on how effectively companies and their leadership communicate with their audiences – directly and indirectly, in speech and in behavior. In the current social media explosion, stakeholders – friends and foes – increasingly serve as multipliers of their own perception – good or bad – about the company. And perception is reality. The recent “hype” around Fortisgate is a good example of the damage that horizontal influencing can do to a company.
As we move out of the crisis, we need to make sure that the current regulatory groundwork serves as the solid foundation for reconstruction, but also as the fertile soil in which responsible behavior can grow and be cultivated. If you look at the financial services industry, the focus is very much on going “back to basics”. Retail banking – and savings banks – are bound to revive, whilst for decades they were considered second tier as compared to the “real”, more sophisticated banking practices. I just hope that back to basics doesn’t mean “back to the past”. In itself there is nothing wrong with sophisticated bank products and financial services – what matters is how bankers deal with them: there lies a world of corporate responsibility between “over the counter hard selling” and “empathic face-to-face advisory”.
Coming back to remuneration packages – and bonuses – they have become such a sensitive topic lately, but shouldn’t we at least have the courage to reconsider going back to basics too? I just wonder. At the end of the day, what’s the harm in rewarding a handful of truly visionary leaders who think long term, act long term and inspire thrust and confidence through their responsible behavior? The share price (or perceived brand equity) of a company is the present price tag for its future (financial) value creation potential. Everybody will agree to that. I leave it as food for thought, but wouldn’t it be great if the post-crisis “management bonus” would be the price tag for transparency, ethics, sustainability, talent management and forward thinking?
Shareholders are getting a stronger voice 07/07/2009Posted by Corneel Maes in Uncategorized.
Tags: All posts, Corporate Responsibility
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As the traditional high season of shareholders’ meetings has concluded, it looks like the season was a lot more animated that in previous years. A new trend has kicked off and communications professionals at listed companies better learn and pick up. Nowadays, shareholders want to be heard, they take the floor, as a matter of speech but also quite literally. The obviously respectful consent that until recently marked so many shareholders’ meetings has now turned into critical questioning, deliberate no-voting and in some cases it even escalated into physical violence. Admittedly, what happened at Fortis in Brussels remains the exception to the rule, but it typically evidences how easily shareholder frustration and disappointment can ecalate into violence. Whether this is entirely attributable to the sophisticated schemes of business lawyers such as Mr. Modrikamen is very much questionable. Fact is that, in the wake of the crisis, there is a lot of underlying negative energy. It all boils down to the broken confidence in companies that until recently were considered as the most secure investments. But confidence has gone.
KBC Bank and Shell are just two examples of companies that recently experienced the impact of lacking confidence from their investor base. Shell Directors were denied their bonus as the company had not reached its 2008 target. Who would have ever thought that just 2 years ago, shareholders would vote against a bonus? They wouldn’t even dare… KBC learned a hard lesson when they missed warning their shareholders’ meeting about upcoming bad news. Two weeks after the shareholders’ meeting the news came out and Euronext saw the most spectacular share price drop in its history.
The big challenge for corporate communications and investor relations professionals is to restore confidence and that is easier said than done. The world has changed and investors have grown to be more explicit, more outspoken, more conscious and concerned about the risks of their investment. Even if the audience is very fragmented, they all have one common concern: learn how to trust again. It will take time, lots of time and efforts as serious damage has been done.
I tell you, the communications profession has to learn from experience and face up to the new reality. I see three major objectives for any senior PR and IR professional:
1) earn confidence again
2) be capable of meeting with the audiences, including institutional investors, where they meet and communicate amongst eachother: at blogs, in media article comments, on Facebook and Twitter
3) succeed in driving senior leadership into the world of social media with its new, different communication techniques
In many perspectives, the third challenge will by far prove to be the most diffricult one. Coaching of senior management will become a major “asset” for today’s PR and IR people. Investors and other stakeholders have found their way into the new channels and the corporate world will have to follow. If we, communciations professionals, fail to lead our Senior Leadership into the new world of social media, we may eventually face a disconnect with our audiences. Using the new media or at the very least being aware of them, is what we owe our shareholders, our customers, our employees.
Have you tweeted your company’s financial results? Do you have a web place that aggregates all relevant news about your company in one single screen? Do you have an on-line facility that allows investors to ask questions in real time? Can you easily track what is being said and written about your company, about your brands, about your performance out there on the internet? Do you really want to know? Well, I can show you how.
Controllers in the Board Room 25/06/2009Posted by Corneel Maes in Uncategorized.
Tags: All posts, Corporate Responsibility
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The worldwide crisis in the financial services industry is leading to quite creative proposals being tabled. The Belgian Banking Commission and National Bank claim they need to get a seat at certain Board Room meetings of the major banks, insurance companies and clearing house in Belgium. And they need to be able to say their say in the strategy of these institutions.
Admittedly, the financial crisis has in a very confrontational manner shown that banks all over the world had been playing with fire for too long. They got burned all right, but beyond themselves they also injured way too many people who trusted them, from their clients and employees all the way to their shareholders. Admittedly, this has to be prevented from happening again. We all need to learn from our mistakes, and so do bankers. But will more piles of regulation, crafted and redrafted by laywers and financial wizards, prove to do the trick? And how will genuine competition between financial institutions be guaranteed if the Banking Commission involves itself in all of their respective strategies? This one seems a bridge too far.
Banks urgently need to restore and even more so earn the confidence of their clients, their shareholders, their employees. Corporate Governance in the financial services industry will eventually move into a new dimension. With control systems and flashing lights that are sharp and sensitive, with early warning signals that pre-empt major risks much earlier.
But above all, Board Rooms and Executive Committees must ensure that they have the right profiles and skills on board. Independent directors and external controllers are great; what the financial services industry now needs most is experienced bankers in the driver’s seat, people who in their professional career have proven to be knowledgeable and ethical. No compromise there. That will eventually bring more credibility to the system than additional layers of control from the outside.
Maybe here’s a lesson to think about: Haven’t we all been good students in our younger lives, bahaving properly and disciplined when the teacher was around? But oh boy, as soon as the teacher turned his back – what a difference, what an excitement to cross the line. It’s part of human nature, full stop. Would you really think that adults, even bankers aren’t humans?
Tags: All posts, Opinion
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The Lamfalussy report and recommendations for the Belgian banking sector supervision are published. I guess that nobody will contradict that banking supervision needs to be strengthened, in order to provide more clearcut regulation and above all the necessary mechanics to increase transparency. More transparency is the only way for financial institutions to earn back credibility and trust from their clients. But transparency will also become the driver behind better informed Executive Committee and Board Room decisions. Let’s make sure that the banking industry learns from recent experience and acts upon the consequences. So, I find the report encouraging. When reading the recommendations I felt one disappointment though. The corrective measures proposed are said to have been formulated to be “politically credible”. I think it’s high time that regulators are allowed and have the courage to think out of the box and do what they think is the right thing. Politics are part of the game, for sure, but now is the time to make some really fundamental changes for the future. And isn’t it so that sometimes politically unpopular measures are the most effective ones? Challenging discussion. To be continued …
CSR – what’s in a name? 16/06/2009Posted by Corneel Maes in Uncategorized.
Tags: All posts, Corporate Responsibility
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Any company – big or small – has a responsibility to its stakeholders, by virtue of participating in the socio-economic society in which it is doing business. Corporate Social Responsibility emerged in the late nineties from Boardroom vision and conviction that companies must give back to the community. CSR has since become a ‘must-have’ for the average company and organization. Unfortunately, the notion of CSR has been used and abused in such a multitude of instances that the essence of what it actually stands for has considerably diluted.
Historically, the main emphasis of CSR has been on social and environmental engagement. In today’s economic crisis shareholders, employees, customers, suppliers have more, different needs. Amid economic uncertainty they look for reliability, for responsible companies that are viable and sustainable. But even more so, they expect company leadership to showcase that sense of responsibility, to evidence ethical behavior in running their business. Against the background of too many major disappointments (finance, automotive and others) stakeholders want to “put their money” with companies that do understand their concerns and are seen to pre-empt them.
That to me is the essence of what Corporate Responsibility today should stand for. Not a nicely phrased CSR statement, not a promise of good intentions but a genuine sense of trustworthiness. That is also what local and EU policy makers are increasingly scrutinizing for – and rightfully so!
Corporate Responsibility, in my view, spans the ground between three solid pillars: financial viability, ethics and sustainability – firmly held together with the glue of mission, vision and values and actually embedded in the DNA of a company and its leadership.