Pfizer and CCI (Corporate Communications institute) hosted a panel of experts from various sectors of the financial industry to consider if we’re back from the brink after the housing bubble (sub-prime mortgage crisis.) What are the crisis management lessons we should learn from this event which is still affecting lives and the economy in America? Part 2 of the post deals with the role of the corporate communicator post crisis.
COMMUNICATIONS & THE HOUSING BUBBLE CRISIS FACTORS LIST
Raymond Pellechia Jr. of Zito Partners presented his perspective on the practice of corporate communications. He attributed the following factors to the housing bubble crisis, comprising environment, regulatory and communications issues.There is a record gap in trust between government and business according to the Edelman Trust Barometer (2014) which makes corporate communications and PR even more important than ever.
9 FACTORS WHICH PLAYED A PART IN THE HOUSING BUBBLE CRISIS
- Economic factors
- Poor risk controls
- Unintended consequences
- Group siloed thinking – AIG dependence on one department.
- Opacity and complexity – trading in dark unregulated markets.
- Misaligned incentives – short term incentives were the norm and higher risk was encouraged before long term.
- Cultural factors – arrogance to regulation and compliance eg JP Morgan and London whale.
- Crisis mismanagement – Bear Stearns took very long to tell their story
Here is more detailed information on the economic factors which caused the housing bubble crisis by Slate. Some people even blamed the media for making the situation worse and causing unnecessary panic.
CRISIS COMMUNICATIONS LEARNINGS FROM THE HOUSING BUBBLE CRISIS
SOME HELPFUL OPERATING LEARNINGS FROM THE HOUSING BUBBLE CRISIS
Mr. Pellechia offered some good advice learned from the housing bubble as to how PR and communications professionals should operate:
- PR must have a trusted seat at the table – practitioners must show PR acumen and knowledge about the state of business. PR News shared this article about earning that seat at the executive table..
- Unintended consequences – People shrink back in a crisis instead of standing up and defending their position. This post compares some instances when people/organizations chose to hide or to take a stand when a crisis arose.
- Look around corners – which translates into looking ahead or anticipating what’s coming.
- Emphasize our broad role – Don’t be button-holed into one area. Create, plan and execute projects, put someone else in charge and move on.
- Opacity/Complexity – write with clarity. Many people did not understand what was going on. Commit to truth and disclosures.
- Talk to people who are experts and don’t work for you. They may notice warning signs and offer perspectives which will help .
6 WAYS TO EFFECTIVE COMMUNICATIONS FROM THE HOUSING BUBBLE CRISIS
Here are a range of suggestions from Mr. Pellechia as to how we can achieve successful communications:
1. Diversity and inclusion – This article offers advice on how PR benefits from diversity and inclusion.
2. Outreach – Don’t make excuses of time and ignore outreach. The Head of corporate communications need to be outside and present. Get senior executives and the CEO out to meet and greet as well.
3. Misaligned Incentives – Have a long term focus – relationships are built with individuals, so teach that skill throughout the organizations.
4. Active philanthropy – there are matching gifts program at stock exchange. Philanthropy gives people a sense they belonged to community and what mattered to them mattered to employer.
5. Crisis mismanagement prevention – What’s your process and what is leadership’s role? How did the ignition switch problem remain at such low levels at GM but now it threatens the company. The preferred option is to get the bad news out quickly. React and manage it and put it behind you.
6. Engage in higher purpose – Mr Pellechia recounted how it gave his team a sense of satisfaction to be involved in the success of the company and its story. e,g, Donna Karan going public and global was a dream come true for her and her emotional reaction resonated with the people involved. One way of doing this is making people aware of the larger purpose of the organization.
Kudos to Pfizer and CCI on an informative event. Looking forward to more Reputation Management seminars.