In Times of Crisis, Communicate

These days, the survival of a bank or thrift in crisis can depend as much on communication as on the balance sheet.

Still, too many institutions are failing to assuage the concerns of customers and analysts and to reassure employees - and are acting defensive anytime a reporter calls with a simple question.

Many institutions will be shrinking assets, cutting expenses, reporting real estate-related losses, reducing staff, and changing management. When this sort of thing is going on, it is not a good idea to pretend that everything is business as usual.

Here are some thoughts for executives who decide to make communication a priority:

Don't hide the bad news. Letting bad news dribble out works against you - in two big ways.

* First, it makes it seem that you don't have control over the situation (of course, maybe you don't).

* Second, it makes it harder for the world to accept your assessment when you finally announce the worst is over.

There are still financial institutions reporting "surprise" losses in their real estate portfolios each quarter. Perhaps U.S. business is so determined to put a smiling face on quarter-to-quarter performance that it just can't bear to say how bad the situation truly is.

Such a mistake can haunt you.

By the way, not returning reporters' phone calls or deliberately missing their deadlines is considered hiding information. Such a strategy buys you a little time, but at great expense. The story doesn't go away, but reporters get mighty ticked off - and persistent.

You can't expect to indefinitely avoid talking, especially when the media already have an inkling that your institution has problems worthy of publication.

Know what you're going to say. Start by telling the truth. But know precisely what you're going to say - and stick to it.

If these were happy times and you had developed some exciting new product, your public relations counsel would teach you to keep coming back to your key message points during your appearance on the "Today" show.

No matter what question you were asked, you would somehow be able to point out that your new product was "less filling" and "tastes great."

The same strategy is essential during a crisis - yet it's amazing how often executives will tailor and change their messages from audience to audience.

For example, Wall Street hears how the company has sidestepped the investment

land mines, while the employees hear how tough the business is and how further cutbacks are unavoidable.

Of course, the customers hear a third, somewhat different message.

In the end, everybody hears every message - and nobody trusts anything you say.

Mark Twain's advice is worth considering: "If you tell the truth, you don't have to remember anything."

Don't forget any audiences. Just as you shouldn't give different messages to different audiences, you shouldn't miss any key audience.

And be careful about timing. Telling the press first may not be the best strategy.

You want to deliver bad news personally to the audiences it affects. That means you don't want the press telling your employees they are about to be fired when you sell part of the branch network. They deserve to hear it from you.

Your sensitivity will go a long way in determining the credibility of your communications in the future.

Delivering bad news personally also gives you the time to explain your actions to those whose opinions are respected.

The press has key experts it relies upon to evaluate news events and their implications. Securities analysts are the primary group, but there are others. Contacting these key sources and explaining your strategic plan and your interpretation of the news to them can change the quotes you will see in the press and the entire tenor of the reporting that follows.

The regulators are playing a critical role in many announcements coming out of the financial services industry today. It makes good sense to have your public relations counsel talking to the appropriate P.R. departments in Washington. You don't want to be surprised by the regulators' comments in the newspaper the next day.

Obviously, your first priority is to comply with any disclosure responsibilities, but it makes sense to call your important industry contacts a couple of hours before you start returning all the press calls.

Bring the word from the top. If there was ever a role for top management, it's during a crisis.

When a plane hits severe turbulence, you want to hear the pilot say that everything is O.K. - rather than listen to the doomsday scenario from the passenger across the aisle. An executive who has made an effort to establish credibility can be a calming voice in a crisis.

What's required is devoting more time to public relations. Only top management can deliver the message that events are being dealt with and are under control.

Frequent, accurate updates are essential.

Expect the worst. Bad news - the media seem to thrive on it. Which means it's incumbent upon you to prepare for the most intensive questioning every time you face the press.

If you don't practice responding, some question out of the blue will become the entire subject of a news article - and you'll never have a chance to get your message points across.

We recently helped announce a change in management at a financial institution. Everyone connected with the announcement rehearsed diligently.

The good news: We were prepared for every negative question the media asked. The bad news: The media asked every negative question we were prepared for.

And be patient. You're better off letting reporters know you're willing to help them understand your business than letting them guess - in print - about what's going on.

One final point for institutions under fire:

Don't feel obliged to respond to everything. Even during the worst of times, there are some limits on what you need to share.

Certainly those limits exclude proprietary information that would endanger the operation of your company.

Don't give away your game plan just because reporters ask you to. That's their job. But if you're willing to explain why you can't divulge certain information, you may find reporters will understand - especially if you've been honest and responsive on other fronts.

The financial services industry will look considerably different a decade from now. But to survive skeptical publics - customers, employees, analysts, government officials and the media - and winning them over will require more than a strong balance sheet.

It will entail structuring your communications as if a crisis exists.

Because it does.

Mr. Blicksilver is managing director of GCI Corporate and Financial, New York, a public relations subsidiary of Grey Advertising Inc.

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