The Day After
Excerpt of an Article written by Tuck Communications in Tuck Today published Fall 2009
It may be premature to call the greatest economic downturn since the Great Depression “over.” As summer turned to fall, however, there was a collective exhalation as many realized the worst of the recession was now behind us. But as we emerge now from our financial bunkers, it is to a landscape changed. We asked five Tuck faculty members for their insight into what lessons can be drawn from this bruising chapter in our financial history—who were the winners and losers, who was successful in responding to the downturn, and what we can all learn as breaks in the clouds begin to appear.
Paul Argenti: Authenticity Above All
Paul Argenti starts every one of the talks he’s given over the last decade by reminding the audience how little most people trust big business. Nevertheless, the numbers in a recent poll were still shocking—across the world, 62 percent of people trusted business less than they did a year before; in the United States, the number was 77 percent. “There really is an overwhelming negativity in the air,” says Argenti, a professor of corporate communication at Tuck and editor of Corporate Reputation Review. While the banks and financial companies that directly precipitated the financial crisis have been hardest hit, that negativity has rippled out to health care, insurance, and even consumer products and technology.
Given such strong headwinds, finding a way to talk positively to restore consumer confidence is more important than ever. Most companies, however, have been afraid to talk much at all. “Things have gotten eerily quiet,” says Argenti. “That’s very, very dangerous. The reason [the public] doesn’t trust them is that they aren’t out there talking.” Worse, many are living up to the negative impression, cutting back on community efforts and tossing aside employee benefits to cut costs and please shareholders.
Argenti recently completed a survey of companies’ communications strategies in dealing with the downturn, which ran in the Financial Times earlier in the fall. He says the companies willing to address problems, real or perceived, head-on are the ones winning back confidence. As an example, he cites financial-services firm JPMorgan Chase & Co., which has set up a new Web site called The Way Forward that acknowledges consumer fears at the same time as it reassures them with an appeal to its bedrock values of responsible investing. “It’s a pretty powerful back-to-values form of communication,” says Argenti. In addition, the company has kept up efforts in the community and maintained bonuses and benefits for employees. And JPMorgan’s Jamie Dimon has been one of the most visible CEOs in the past few months, actively collaborating with Washington in setting the terms of the bailout plan.
But it’s not enough to just talk with consumers, cautions Argenti. Just as important is to be authentic and transparent in those communications. He cites a recent ad by General Motors that acknowledged its Chapter 11 filing, even as it concludes saying, “the only chapter we’re interested in is Chapter 1.” “That’s a stark contrast to what [oil company] BP did when they were in all kinds of trouble, running ads about the environment,” says Argenti. Despite the recent focus on environmental and social responsibility, Argenti contends that the way a company runs its business—especially the way it treats employees—resonates far more with customers. “It’s not about giving to UNICEF,” he says. “It’s about not trading employees off your own profits.”
The ring of authenticity is even more important now in the new era of social media, when it is so easy for consumers to find their own information to test the veracity of companies’ claims. Argenti faults Volkswagen, for instance, for trying to get out of having to fix a design flaw in their seatbelts by saying customers were using them incorrectly—a stance that blew up in the company’s face online. By contrast, computer-maker Dell has created its own social-networking community where consumers can not only talk to one another but also offer advice to management. “It’s almost like consumers are saying, ‘Look, we don’t trust you guys, so we are going to talk amongst ourselves and tell you what we think you should do.’” It’s the wise company that takes the advice.
Read what the other four professors had to say at Tuck Today: http://www.tuck.dartmouth.edu/today/features/the-day-after/