Categories: Credit Crunch / Crisis management
5 February 2012
Message to bankers: how to win the PR wars
Last week there was “outrage” over the bonus awarded to Stephen Hester, chief executive of Royal Bank of Scotland. This week we are set for another moral outburst when Barclays announces expected profits of more than $9 billion, which will result in its CEO Bob Diamond pocketing around $3 million. In the midst of a global crisis that heralds austerity for many, what strategy should be adopted by PRs tasked with defending banks, bankers and bonuses?
PRs representing bankers need not concede much ground to the moralists. Instead they should recommend their clients come out fighting. The advice from financial PRs should be: stand your ground; defend yourselves; get the rest of the business community behind you.
If banking clients have doubts about the merits of this approach, PRs should remind them that so far they have been very bad at making a serious case for themselves, which has made it hard for PRs to do so on their behalf. Moreover, bankers need not worry about going out on a limb. There are positive signs that the British business establishment is more than prepared to back British bankers and to condemn the anti-business rhetoric being spouted by the media, protesters and politicians.
This week a leading group of business folk, including Sir Michael Rake, chairman of BT and Easyjet, Sir Andrew Witty, chief executive of Glaxo Smith Kline, and Paul Walsh, chief executive of Diageo, will tell Prime Minister David Cameron to stop bullying CEOs. According to The Sunday Times, one of them will state that if Cameron’s government keeps bashing business:
Eventually companies will leave, and those that stay will not be able to recruit top talent.
That’s the bottom line. The British Establishment’s liberal courtiers are in danger of making the country Mickey Mouse about all this: scapegoating Fred Goodwin, whinging about rather ordinary pay and bonuses for HSBC, Barclays and other bankers.
Hence bankers should tell politicians and the media that the British people and City of London need thriving financial institutions more than they need them. That’s an arrogant message, perhaps. But it has the compelling merit of being an honest one.
PRs have to say forcibly that we need Hester to stay at RBS, and we need HSBC and Barclays to look like credible global businesses capable of attracting the very best to work for them: end of. The rest is noise.
It is unlikely that the public and media can be persuaded to agree with such messaging right now. Yet I doubt that the masses will be pleased over the long term if the liberal commentariats make the moral hazards of doing business in Britain too much for the banking sector to bear. So David Cameron (who can be convinced and needs convincing now) needs to be told that he won’t gain anything by banker-bashing. That pious positioning should be left to Ed Miliband, who is blindly stuffing his portfolio with this unelectable puff.
As several people have remarked, the public will be slightly more in favour of bankers etc. when in a few years’ time, Britain is the world centre of world class bankers. But if we lose this fight to the other side because Britain does not embrace banks and business, Switzerland, where I live, is one of many countries that hopes to profit from the UK’s demise.
Swiss bankers have never been popular in Switzerland. Instead, the Swiss grasp the truth about who needs whom more and why. They have long-acknowledged, however reluctantly at times, what drives business success. They value the benefits that accrue to the wider population as a consequence of allowing their financial institutions to function properly in a global market place.
So as I close this piece, here’s my insight gained from observing Swiss bankers. Bankers need to be trusted more than they need to be popular. To win trust they need to speak straight about the realities of their business. That won’t make them popular. BUT: there’s never been an era in history when bankers and money lenders have been popular. So get used to it; get over it.
Canny PRs have long seen this stuff clearly. To those that don’t yet get it, I say be careful which side you support because the stakes are very high indeed.
The problem with some parts of banking is that the troika of risk, bonuses and profit had stopped depending on each other. The tax payer underwrote the risk so bonuses and profit sky-rocketed while times were good and the general population’s welfare was hit when they hit the rocks. What stings more is these same people are still on huge salaries to undo the mess that they made.
Naturally the Labour party wants to shift the blame as they were on watch when this happened and the Coalition has meekly copied them exacerbating the narrative.
PRs are right to show the dangers of doing this, but people do not like having a gun being held at their heads after being stitched up.
Although I agree with you that there is a case to be made, I don’t think that further arrogance is the best PR strategy.
First, there needs to be a recognition that this needs long-term, big picture communications – and so reacting to a news item is the wrong approach. The groundwork needs to be established regarding pay and reward more generally in business – with a robust debate rather than spin or hiding realities hoping the immediate heat will dissipate.
Second, I think the case needs to be proven rather than sulking behind claims that bankers are in such demand that they’ll go elsewhere – that comes across as petulance that is not justified by evidence. It also positions these top earners as only motivated by personal income rather than any sense of professionalism, desire to build stakeholder value, contribute to society or any other additional motivation.
Thirdly, we need to see human faces and personalities behind the “bankers” – who exactly are these people? What are their backgrounds and what do they care about? There must be more to the execs than a faceless, grey banker image. Are they contributing towards developing young bankers of tomorrow in deprived areas of London for example? I’m not suggesting tokenism of responsibility, but reflection of what ought to be genuine engagement with relevant publics and communities of relevance to banks.
The narrative can only change if there is another one that is recognisable, understandable and credible. They need to ditch the greedy self-interested, loads-of-money image and show that bankers are really an integral part of a healthy society.
I think your starting point is at the wrong end of the spectrum: PR and perception instead of the business of banking.
You seem to imply that the cure to the problem of remuneration and reputation is to some important degree a matter of communications strategy. To an extent, I agree with you.
You are of course correct to say that British bankers need to work out what they are for, why they are worth supporting and rewarding. They also must come out as real people saying real things about such matters. In that regard, our role as PRs serves as amplifiers of that messaging and positioning.
However, my point is that the bankers need for all sorts of reasons to find what is defensible in their behaviour and defend it; find out what isn’t defensible and bin it. They need to do so in some sense because they are in communications difficulties, but actually – far more significantly – they are in far deeper existential, moral waters.
We PRs don’t help our clients if we take for granted that they want to swim with the populist tide of liberal opinion (read media and campaigners) whilst being employed by fishes (as it were) condemned to swim against the tide.
The populist tide is more wrong than right though it has elements of rightness. You might think that is a matter of opinion, yet I maintain it is a matter of fundamentals at the heart of what makes financial markets tick in competitive world.
So, PRs need to reframe our (though not mine) predilection to make their banker fishes really, really love all the anti-capitalist, “populist” waters. If you think I exaggerate, take a close look at what the CEO of Kingfisher Ian Cheshire told the savants at Davos. According to the approving nod of Richard Edelman, Cheshire advocated that: “we have to get consumers in developing countries past wanting the “American Dream of more.”’ Perhaps Cheshire wants to export austerity? Perhaps he wants to give austerity a popular twist by substituting B&Qs make-do and mend business (from which he profits) for China’s audacious new-build and let’s transform the world vision? Cheshire’s rhetoric, which is bollocks, is the direction too many PRs want our bankers to swim toward (ok, endorse) or at least pretend to. You can read all about it here Down from the mountain http://www.edelman.com/speak_up/blog/
Looking at the FT, which is impeccably liberal (I prefer the slightly more robust Economist), I would say that the wash-out of all this will go:
Bankers matter and are in a global business: The City and our banks will always look far more capitalist and fatcat than suits the so-called left, the liberals and populism. Tough: get real.
Defending most or much casino capitalism is easier than is supposed by the Guardian readers (who hate the modern world) and hammering it is dangerous to UK Plc. Banking and investment without risk; is not banking or investment. Greed is no bad thing etc. and it is what motives the drive for profit, progress and economic development. The problem today is not too much risk; but too little. The fact is, most corporations are cash-rich and shy of risking it, so they hoard it like squirrels instead. If we take the banking out of the UK – what’s left of consequence?
Bankers have been crap at identifying, living, and explaining a professional dimension (including ethical and moral) to their greed. For the sustainability of their businesses and business models, they will need to address this and do so a matter of facts on the ground because many of them have failed their own businesses, let alone wider capitalism and society. This failure was not a communications failure, it was a business failure. Part of that business failure turned into a massive political problem, and that become a further business problem.
Heather, I am maintaining (in contrast to most PR pros right now) that the communications issue is a real business issue: it has real business consequences. But at its heart is a failure to be good at business (the bankers were not alone in that regard), and that needs addressing long before the communications issue can be addressed properly. So I don’t see us (here I mean banking and business) being able to reach a consensus in society or being able to avoid remaining unpopular, or being able to achieve popularity, this side of sorting things out. So, as our bankers navigate the white water rapids we require leadership, clear headiness and quite a lot of risk-taking on the part of our bosses. We could start by speaking straight and facing up to reality and stop trying to please everybody and then falling visibly and embarrassingly short on every front (In essence: PRs have to stay grounded and realistic and get a grip).
As The Economist has argued, the moral crusade against “Fred the Shred” and bankers and their bonuses has got way out of hand.
The time has come to mount a fight back and to have a more rational and hard-ball discussion about the business of banking and the business of business.
Let’s not underestimate the risks: in today’s digitally networked world bankers and any other business can up sticks and relocate at will and hit the ground running where ever they land. The stakes for the UK economy are very high indeed.
Paul, I don’t think we are disagreeing really as underpinning my recommendations is not simply a focus on communications, but addressing what is at the heart of the misalignment between bankers and publics. I believe the public do get that this is a failure of business – with concerns that the bankers have not recognised their failings but continued business as usual. The media have a particular story they are enjoying telling, but the public are not against people making money (in fact they’d like more of it themselves) – but they don’t like feeling they’ve been mugged.
I also agree with you that the case needs to be made in support of banking, not to have it change into something fluffy. Although I think there are impressions of bankers that do need to be examined: from historically being seen as a reliable member of local community to today’s bogeyman.
There is a need for straight talking – but that includes ending the nonsense that is told in justifying bonuses as well as arguing against them.
Heather, It’s a conflicted mess. That’s what makes it such fun to mess with.
Re: “I think the case needs to be proven rather than sulking behind claims that bankers are in such demand that they’ll go elsewhere – that comes across as petulance that is not justified by evidence. It also positions these top earners as only motivated by personal income rather than any sense of professionalism, desire to build stakeholder value, contribute to society or any other additional motivation.” I think this is spot on and very well put. Paul, I am not sure that bankers fully understand how they are perceived – or really care. It seems to me that they don’t attach a whole lot of importance to it. Otherwise they wouldn’t be coming out with such off the cuff justifications for their rewards. Recognizing that a problem exists and needs to be addressed is the first stage in PR… You are offering strategy ideas but I’m not sure the bankers themselves are really engaged yet…
Of course Heather makes a good point. The challenge is that the banking and finance industry is not sentiment driven. Attempts to make it appear to be what it is not will only end in tears. So while bankers have to change how they communicate (not to mention behave), and start explaining themselves properly in public, they have to do so in ways that speak credibly about the realities of their world. Some of that stuff is not nice and quite tough, but it is defensible and it needs defending. Otherwise this great industry might slip away from the UK and reappear elsewhere to somebody else’s benefit. And that word “benefit” brings us all back to what it is bankers and the rest of the finance industry actually contribute to society and how they do it and within what regulatory and moral framework….
Hester decided to speak with the Radio 4 Today programme this morning. Not sure that would be my recommended channel; I think it reinforces this idea that the ordinary people don’t understand banking and this programme sets the agenda for the business/political audiences.
To make him appear human, we had the ‘poor me’ strategy that he considered quitting. Ridiculous! If you’re supposedly worth the big pay check for taking tough decisions, delivering a world class operation (which needs a highly paid team motivated by bonuses) and so on – then you can’t whinge about a bit of negative media coverage.
I reckon some highly paid PR consultancy (one of the usual suspects) has come in (as with Murdoch last year) and advised this is how you need to present yourself. Nothing appears to be from the heart and it all reeks of a PR positioning. As Gavin says, they are not yet ready to engage with why there is a problem. I don’t believe that requires appearing what banking isn’t, but they aren’t even getting across what banking is.
For example, we now have class war being brought in (Labour sees a way of goading the Eton Tory boys). Would be interesting to know whether the data stacks up here that high flying bankers have had priviledged upbringings. Hester seems to have had a modest start, but no evidence of really working his way up as his first post-Oxford job was assistant to the chairman of Credit Suisse.
If bankers are all from this narrow sector of society, that raises issues in terms of access or is the argument that really that only those with connections are worthy of the big salaries etc etc. Lots of nice messy stuff here to mess with Paul.