Post-Hayne Royal Commission: Get rid of the PR gloss
As the door to the Hayne’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry closes, another opens – onto a long road ahead, where financial institutions navigate fixing business practices and repairing reputations. Actions alone won’t rebuild trust, and communication that isn’t authentic or relies on “PR gloss” will also be viewed cynically. Now is the time for purposeful action, coupled with strong communication.
The end is just the beginning
Commissioner Hayne’s final report condemned those whose leadership, practices and focus on profits rather than customers, fell short of community expectations. It would be a mistake to believe that with the formal proceedings wrapped up, criticism and scrutiny will just blow over.
As we head into federal election campaigning, the financial institutions called out in Hayne’s Royal Commission will face continued scrutiny during financial results, AGMs and whenever an industry body, law enforcement agency or regulator takes action against them. Companies can only get on the front foot if they remember the long game: achieving good customer outcomes and making investments to change for the better.
Quick action will help to reassure customers and shareholders that lessons have been learned and changes are being made. And effective communication of such changes will be critical if companies are to restore customer trust. However, reactive communication and one-off responses to an issue will not suffice. Financial institutions must “walk the talk” of reform by using Commissioner Hayne’s report as a catalyst to permanently improve business structures, operations and governance.
Moving forward – customers come first
Before promising to do better, an organisation must openly admit its mistakes – if it hasn’t already. Now is the time to show genuine contrition for corporate failings – and that should start at the top, with commitments from the Board, CEO and senior management that will flow through all levels of the company.
CEOs and Boards should show unwavering commitment to a customer focus. They need to do so even if that means having difficult conversations with shareholders about the business taking a hit initially, focusing on how investments in the short-term can deliver longer-term benefits. Communication, again, is critical here. Any shareholder that isn’t convinced already that a customer-first strategy is non-negotiable can be taken through the rationale around longer-term benefits.
That is, more satisfied customers use more services, which helps drives profitability. Better customer outcomes make a company a better investment proposition over the long run. In fact, Commissioner Hayne noted in his report that the chief executives of all four major banks had said that the best earnings opportunity comes from long-term relationships with their customers.
The “customer first” strategy needs to be demonstrable. This could involve a proper reporting system that monitors goals, customer interactions at all touchpoints, and analysis of complaints and satisfaction levels.
The Australian Banking Association (ABA) has already moved to improve customer focus among its member banks, with its new version of the Banking Code of Practice taking effect from July 1, 2019. However, Commissioner Hayne said there might be some doubt about the extent to which obligations in industry codes can be relied on and enforced by individuals.
Substance over sparkle
To win back the trust of customers, financial institutions must commit to making real changes. This involves being aware of the accelerating expectations and demands of customers, and continually checking in to make sure these are being met.
WE Communications’ Brands in Motion 2018 global study showed that consumers are seeking stability in these uncertain times, and they’re looking for ‘less promise and more proof’ from business and industries. In addition, the study showed that average score of rational drivers of brand perception have increased more significantly than the average emotional score, which reaffirms that as consumers, our need for reason is currently outpacing our need to feel emotionally connected.
In this context, companies shouldn’t bring in their PR teams only when things go wrong, to ‘put out fires’. Nor should they see PR as a way to gloss over issues or distract through some fancy ‘look over here’ activations.
Instead of being brought in at the end of the strategy and planning, PR marketing and communication teams should be engaged properly from the start, to ensure a well-considered communication process that is consistent across all customer-facing channels. After all, a knee-jerk response is nowhere near as effective as ongoing governance and management of issues and customer expectations.
What not to do?
DON’T underestimate the important role your executives play in demonstrating forward-focused leadership. Purposeful action and communication is the best way to move your business forward and away from moments of trouble. Our 2018 Brands in Motion global study showed that 57% of people said that the behaviors of the executive leaders of a company in the Finance & Banking industry influences their decision to support the business or not (up from 43% the year before).
DON’T forget the important role your staff play – often as they face of your brand – and ensure they understand the plan, their role, and are able to access the right people to get further information and/or provide feedback. A good internal communication strategy can mean the difference between an army of advocates or detractors.
DON’T think of issues management as just being about crisis manuals. The best approach to ongoing reputation management involves having an empowered, connected communication team and functions that are in control. It’s about building insight and capacity through analytical tools and processes to ultimately build what we call communication – and business - resilience.