Basil Jarrett | The importance of crisis communications planning

IN THE past few weeks, we have had several interesting developments involving several publicly traded companies and some of their key personnel. Resignations, apologies and public explanations have been flying left, right and centre as the light is once again shone on the securities industry. These incidents have now caused curious eyes to refocus the spotlight on the banking and financial sector, just when things seem to have normalised somewhat since the start of the year.

The importance of the banking and investment sector to Jamaica’s overall economic well-being cannot be overstated. It is not simply about shareholder confidence in the companies that they’ve bought into, but rather, it involves public confidence in the stock market in general.

OPENNESS AND TRANSPARENCY

The challenges in the sector underscore the need for open, transparent and forthright communication when a crisis occurs. Whenever these companies are faced with an emergency, people get antsy. When that happens, the answer is rarely to pull back, clam up and withdraw from the public discourse, as tempting as this may be.

A crisis communications plan should not be a document that sits on a shelf or a hard drive and collects dust; it should be a living, breathing framework that outlines the steps to take, the messages to convey, and the stakeholders to engage when a crisis strikes. Without such a plan, chaos can reign, and hard-earned trust can crumble overnight.

History is replete with examples of how a well-crafted crisis communications plan can prove to be the blueprint that guides an organisation through the stormy waters of adversity. Take 2014’s cyberattack at JPMorgan Chase, for example. JPMorgan, one of the largest banks in the United States, faced a massive cyberattack that compromised the data of millions of its customers. In accordance with its pre-prepared crisis communications plan, the bank immediately disclosed the breach to the public and its victims, and provided regular public updates as the investigation progressed. The bank’s CEO, Jamie Dimon, was also swift in publicly acknowledging the breach and assured customers that their money and sensitive information were safe.

ACCEPTING RESPONSIBILITY

Communication and cooperation with regulators, law-enforcement agencies, affected customers and the media was also extensive, as was consistent messaging, clear updates, and crucially, a willingness to take responsibility for their role in the breach. The bank demonstrated its commitment to resolving the issue and to retain and rebuild customer trust in the company. This openness about the situation and the commitment to taking immediate steps to address it, helped JPMorgan Chase successfully navigate the crisis while minimising the impact on their reputation. That Dimon is still CEO of the bank nearly 10 years later, is possibly the biggest testament to the effectiveness of its crisis response.

While having a plan in the first instance is clearly the optimal way to manage these incidents, it’s never too late to implement one during a crisis. In 2016, for example, Wells Fargo faced a cross-selling crisis when it was discovered that employees had been opening unauthorised accounts for customers. Cross-selling involves the core principle of promoting the sale of multiple products to consumers in an attempt to open as many accounts as possible. Numerous deceitful savings and chequing accounts were opened on behalf of clients without their consent.

A SLOW RESPONE

The fraud was discovered in late 2016, prompting the Consumer Financial Protection Bureau, the US’s version of our Financial Services Commission, to impose a collective fine of US$185 million on the organisation. While the bank initially struggled with its response, it eventually took steps to address the issue and to rebuild public trust.

Wells Fargo’s initial crisis communications response was insufficient and defensive. Although the bank initially placed ads in newspapers accepting responsibility for the controversy, it rejected the notion that its sales culture led to the actions of employees, and referred to the problem as an issue with sales practices, rather than the company’s broader culture. This did not go down well with customers or staff.

Eventually, the bank acknowledged its wrongdoing, held senior executives accountable, and implemented several changes to prevent similar incidents in the future. The bank’s leadership openly admitted to the mistakes and painstakingly communicated their commitment to regaining the trust of customers. By eventually taking proper and decisive action, and communicating these changes to internal practices, Wells Fargo managed to turn the situation around and demonstrate accountability. But some amount of damage was still done and continues to have legal, financial, and reputational ramifications for Wells Fargo and former bank executives as recently as March this year.

THE PITFALLS OF NOT HAVING A PLAN

These two examples clearly demonstrate the importance of having and using a prepared crisis communications plan. But what happens when one is absent? Take the Royal Bank of Scotland (RBS) IT failure incident in 2012 as an example. RBS’s IT outage left millions of customers unable to access their accounts, leading to widespread disruption and public backlash. The bank’s crisis communications response was widely criticised as being slow, inadequate, and not empathetic enough. The bank failed to provide timely updates to affected customers and did not adequately explain the source of the problem. RBS’s CEO was widely criticised for not taking a more visible role in addressing the crisis, and the entire process showed a lack of proactive planning around its communication. Customer trust and the bank’s reputation were significantly eroded as the negative sentiments and financial losses intensified.

It must be made clear here that a crisis communications plan isn’t going to bulletproof your organisation from accidents, emergencies and crises. Nothing can do that. What the plan will do, however, is to mitigate the fallout, reduce the damage, and help set the conditions for a quick turnaround. These real-world examples highlight the importance of having that well-prepared crisis communications plan in place, and what can happen when you don’t.

Major Basil Jarrett is a communications strategist and CEO of Artemis Consulting, a communications consulting firm specialising in crisis communications and reputation management. Follow him on Twitter, Instagram, Threads @IamBasilJarrett and linkedin.com/in/basiljarrett. Send feedback to columns@gleanerjm.com.