Anja Feuerabend is the founder and managing partner of relatio PR in Munich. Relatio PR GmbH ranks among the successful owner-managed PR agencies in Germany, and has worked for over 10 years with top companies from such sectors as economics, finance, commerce/sales, healthcare, transport/logistics and IT. She is also the founder and managing partner of PRGS, a specialized consultancy for political consulting and crisis management. Relatio and PRGS operate internationally as part of the ECCO network of owner-managed agencies (ECCO Network), with partners in over 40 countries in Europe, America, Africa, Asia, the Middle East and Australia.mail the author
Financial PR in Times of Crisis8 years, 8 months ago
The investor Warren Buffet observed: “It takes 20 years to build a reputation and five minutes to ruin it.” This holds true most notably in the sector where Warren Buffet made his name: the world of finance. A quick look at international surveys tells the tale: Worldwide erosion of trust in the finance sector; at the start of the year 61 per cent of top earners in Germany stated that they had lost faith in the banks.
How can public relations restore confidence here? The communication behavior of the financial institutions during the current economic crisis has shown that strategic, crisis-oriented communication is simply not taking place in many companies. Companies have to display openness and, above all, willingness to accept responsibility in order to rebuild confidence.
For the sellers of investment funds and certificates, by way of example, it was easy during the stock market boom to set the agenda and enjoy the limelight with their products’ success stories. In the crisis however, many financial institutions have gone off the public radar completely – even though their investors are still holding on to their products. For this reason, especially at this time, these companies must not break off dialogue with their customers.
Through active press relations they can provide assistance and suggest methods of resolution. It goes without saying that sales-related press work will take a back seat for the time being.
In the crisis, the main focus of PR is rebuilding corporate reputations and restoring confidence in the organizations. What should be kept in mind with regards to this?
1. Be prepared: The press office often becomes a ‘buffer’, having to comment on issues when staff from other parts of the company are not available. Comprehensive Q&As and agreement on wordings can provide assuredness, both inwardly and outwardly.
2. Act in harmony: At all times, but particularly in the crisis, the company must make consistent and uniform statements and clearly establish communication channels.
3. Show your colors: Through extensive and prompt communication in times of economic difficulties, the company can demonstrate commercial competence and offer assurances to their customers and consumers that they are being looked after.
4. Be honest: If you would handle a matter differently today than you would have a year ago, say that!
5. Be approachable: Right from the off, the company should establish itself as the reliable first port of call for information. Professional communication to all stakeholders in the ‘good times’ should form the basis for this.
6. Understanding the organization as a whole: An organization that only concentrates on a few image factors – principally concerning sales – is playing down their total value.
7. Show faces: Background stories can have an important leverage effect when building an all-round image. Aspects of this include reports about things like research and development, or stories about managers and employees. And since trust consists of a large emotional component, utilizing visual elements can be another useful instrument. Using pictures can purposefully support the task of rebuilding trust.
8. Communicate strategy: Businesses should always have an eye to the future. How is the business dealing with the crisis situation, and what methods of resolution are there?
The challenge for investor relations
Listed companies in particular are facing challenges in the current financial crisis. A strong sense of uncertainty has spread to many stakeholders.
In order to dispel this uncertainty, investor relations – the essential discipline of communication in the financial sphere – must occupy a central position. For corporations, investor relations is aimed at managing relationships with shareholders, as well as with investors, analysts and the business press/media. In short, the entire financial community.
The most important task concerns the management of expectations. Professional information with economic facts from investors, analysts, and the business press/media form the basis for this. In this way, transparent communication can dispel uncertainty, counter rumors, and rebuild confidence.
In everyday situations, investor relations is aimed at a narrow and specialized target group. In times of crisis, this target group is suddenly enlarged. Every single piece of communication from a company is interpreted by the general public, even the barest of facts.
Moreover, even in the expert financial community, every crisis is associated with somewhat diffuse fears: People and markets react in an extremely emotional way. That’s why investor relations have to follow not only the rules of economics, but also those of psychology – especially in difficult situations.
Effective crisis communication has to consider this emotional level, purposefully establishing so-called trust anchors among the target groups. Those active in press work and investor relations should personally coordinate regularly. Nothing shakes trust more than when a company sends out conflicting signals.
Prepared for the crisis
The best preparation for a crisis is the long-term fostering of relationships with stakeholder groups. By doing this, companies can build up goodwill which they can draw on in times of crisis. Additionally, personal channels to stakeholders can be set up through professional PR and investor relations, which can facilitate direct communication during the crisis – and thereby provide an essential basis for countering rumors at an early stage.
It is also particularly important to have a good (or at least some kind of) connection to opinion formers who have been critical of the company: Critics can develop into opinion leaders in the crisis, and, as such, can become particularly dangerous for the image of the company. Furthermore, companies that practise professional issue management – continuously monitoring and assessing issues and their development – are in a position to recognize crises at an early stage, to prepare themselves, and by doing so greatly reduce the potential damage to the company.
In addition to this, another indispensable component of financial communication is strategic and organizational crisis prevention. Without preparation, timely and correct decisions are almost impossible in times of crisis. Preparatory scenario planning can highlight ways to navigate through the crisis; crisis manuals and crisis exercises provide employees with orientation.
However, it is often the case that even large companies have no concept of crisis prevention. This was pointed out by a recent survey. One in four investor relations departments is scarcely or not at all prepared for crisis situations.
Whilst it’s true that nobody is able to assess or control all risks, only those who are prepared will be able to avoid becoming the punch-bag of the general public. Rather, they will be in a position to influence the development themselves.