BOfA and Bono Team Up for Charity

 BOfA and Bono Team Up for Charity

THE PR VERDICT: “A” (PR Perfect) for BofA’s brand-building philanthropy.

When was the last time an activist rock star gave a standing ovation to a “too-big-to-fail” bank? That’s just what happened last week when U2 front man Bono extolled the generosity of Bank of America and joined CEO Brian Moynihan at the World Economic Forum in Davos.

Moynihan and U2 frontman Bono announced a $10 million BofA commitment to RED, the AIDS charity co-founded by Bono. In a clever promotional twist, the bank will tie its donation to U2’s newest album release during the upcoming Superbowl. BofA agreed to pay for every download of the album’s song “Invisible” for 24 hours, an investment they will back with expensive Superbowl advertising.

Rarely have Moynihan and his bank basked in such a warm reception. Under the bright Davos sunshine, CNBC and The Financial Times (among other news media) took turns interviewing the Boston-based banker and his rock activist partner. The visual contrast was nearly as noteworthy as Bono complimenting the bank for its “game-changing influence.”

THE PR VERDICT: “A” (PR Perfect) for BofA’s brand-building philanthropy.

THE PR TAKEAWAY: Regain trust by carefully picking your allies. Despite continuing efforts to engage in a public dialogue and foster good will, progress has been incremental over the past five years. In Davos last week, BofA wisely avoided interviews about its business. Instead, it joined a unique global health initiative and happily played back up to a true superstar. Well done, BoFA.

For New Fed Chairman, the Message is the Medium

 For New Fed Chairman, the Message is the Medium

THE PR VERDICT: “B” (Good Show) to Janet Yellen (right; with Larry Summers) for her methodical approach and realistic expectations.

As President Obama prepares to name a new Fed Chairman, he may be well advised to look closely at the communications skills of the candidates. Ben Bernanke dragged the Fed into the modern age of communications and institutionalized commonplace PR strategies to the Fed’s tool kit.

A comparison of the two leading candidates, Larry Summers and Janet Yellen, suggests that both have communications know-how. No doubt Summers is a more practiced communicator, but Yellen has fully embraced today’s communications/transparency paradigm. Under Bernanke, she led a subcommittee on communications and presumably developed the playbook for publicly releasing FOMC minutes, issuing monetary policy “guidance,” as well as establishing a schedule of post-FOMC-meeting press conferences.

But despite Yellen’s studious approach to communications, Bernanke has had trouble staying on message. Bernanke suggested accelerating QE “tapering.” Markets reacted badly, and at his next press conference, Bernanke pushed back. The Fed would “continue to support the recovery,”  but his message was lost in the media glare. One live blogger wrote: “Bernanke seems frustrated that markets and pundits don’t understand the point of policy guidance.”

THE PR VERDICT: “B” (Good Show) to Janet Yellen’s methodical approach and realistic expectations.

THE PR TAKEAWAY: The best communicators focus on long-term objectives. While she has had some bad breaks managing her Chairman’s PR with the financial markets, Yellen believes good communications can support monetary policy and reinforce the Fed’s leadership. As she told journalists in April, “I believe further improvements in the FOMC’s communication are possible, and I expect they will continue.” No PR plan can work flawlessly. The institution you speak for is the message, not how aggressively you handle the media or how articulately a spokesperson expresses a viewpoint.

Facebook Finally Saves Face

 Facebook Finally Saves Face

The PR Verdict: “B” (Good Show) for Facebook and their stock.

Facebook’s return to its IPO price is gratifying to investors, as well as to the firms on Wall Street that  set a price of $38 per share. But the comeback was more than just a successful resolution of a key business problem (mobile revenues). It was a case study in PR perseverance.

On May 18, 2012, after a 30-minute delay, the stock opened on NASDAQ and reached a high of 48. That’s where it stalled, and by the close of the first day of trading, finished flat. One month later, FB had fallen to $28, and reached an all time low of $18 at the end of August.

The level of criticism directed at all parties – underwriters, NASDAQ, and the company management – was overwhelming. The Wall Street Journal labeled the deal “a fiasco,” while others invariably referred to the deal as “botched.” Even the New York Stock Exchange publicly called out its rival, suggesting that NASDAQ may have set a “harmful precedent.” Facebook CFO David Ebersman and Morgan Stanley’s tech bankers took the most heat. Assessing the underwriters’ brand reputation, one Wall Street expert wrote: “…Morgan Stanley will take a hit for it, deserved or not. That’s a big break for Goldman Sachs and JPMorgan Chase.”

And yet, months later, all that has changed. Media criticism eventually lost steam, and the serious investors who held on to the company’s stock were vindicated over time. (Moreover, the JPM and Goldman reputations did not enjoy a “big break.”)

THE PR VERDICT: “B” (Good Show) for Facebook and Morgan Stanley.

THE PR TAKEAWAY: Don’t react; just act. Sure, Facebook management might have made more of an effort to embrace Wall Street. Mark Zuckerberg didn’t need to wear a suit and tie during the roadshow, but the hoodie and declarations that the company was “in no rush” to go public may not have sent the right message. But this was all on brand and contributed to Facebook’s business-as-usual unflappability. Given disclosure restrictions, defending Facebook’s pricing and underwriting process after the fact required consistency and patience. Over time, that strategy – which may have been no strategy – paid off.

Bad News, Good PR: Law Firm Airs Its Own Dirty Laundry

 Bad News, Good PR: Law Firm Airs Its Own Dirty Laundry

THE PR VERDICT: “A” (PR Perfect) to Weil Gotshal & Manges.

When it comes to managing bad news, the smartest folks are usually the attorneys. A lesson in managing bad news came last week from Barry Wolf, executive partner and chairman at legal firm Weil Gotschal & Manges. The firm released an internal memo announcing 60 junior-level and 110 staff layoffs, as well as ”meaningful compensation adjustments for certain partners ” – PR code for pay cuts.

Weil freely shared the memo with reporters, and the news received extensive coverage, including page one of the Wall Street Journal and the lead BusinessDay story in the New York Times. No one was surprised that Weil was  committed to sustaining its $2.2 million annual profit-per-partner metric and while some lawyers lamented that the elite firms, known as “Big Law,” have succumbed to the realities of big business, the firm positioned itself as being ahead of the business curve, actively managing a business undergoing macro changes.

That’s a message its corporate clients understand all too well. Weil effectively neutralized most of the potential bottom-line impact that might have initiated a loss of confidence. Internally, the firm may have more work to do. Morale will continue to suffer as departures leave behind empty desks and lawyers reassess their careers, but for the outside world, the firm looks ahead of its peers.

THE PR VERDICT: “A” (PR Perfect) to Weil Gotshal & Manges for candor, transparency and proactive management of bad news.

THE PR TAKEAWAY: Address a difficult issue head on – before others do it for you. While this wasn’t a case of crisis management, it could have been a serious reputational blow if facts emerged slowly, forcing the firm to go on the defensive. Instead, Weil comes out a leader for addressing a difficult issue, laying out the rationale and taking careful action. Ironically, given that other firms are likely to follow suit, a management decision to shrink the firm enhances Weil’s leadership for both the long and the short term.

 

Royal Bank of Scotland’s Hester No Fool

 Royal Bank of Scotlands Hester No Fool

THE PR VERDICT: “D” (PR Problematic) for the UK government. (Pictured: Royal Bank of Scotland’s Stephen Hester)

Government, it seems, is no match for bankers and executives who run the world’s most powerful financial institutions. The world got another reminder of this on Wednesday when Stephen Hester, Chief Executive of Royal Bank of Scotland, abruptly tendered his resignation. The news might have slammed Hester as another wealthy banker too arrogant to work under government supervision. Instead, Hester left his post like a hero, with lavish praise from the folks who fired him and the admiration of shareholders.

News of his departure sent the stock down, triggered headlines about bereft employee morale, and prompted a Treasury minister to address the UK’s House of Commons with a statement full of hyperbole about Hester’s success at getting the job done.

The reason for the departure? Apparently the government wants to “turn the page” on RBS and divest itself of the business it bailed out. Investors in a privatization deal will not view Hester’s leadership favorably, reckoned the bureaucrats. Instead, so their thinking goes, the market wants to see a leader who represents the future, not the past. Fair enough but for the unanswered questions: Who is Hester’s replacement? And if he’s as good as you say, why show your most capable leader the door? Why not let him help you through the “transition?”

THE PR VERDICT: “D” (PR Problematic) for the UK government for badly mishandling an announcement with a communications strategy that begs many questions.

THE PR TAKEAWAY: Before firing, have a replacement lined up, or suffer the consequences. The RBS privatization has a chance to succeed, but the government just raised its cost of capital unnecessarily by showing the current CEO the door, with no apparent plan for replacement. Once the press statements were finalized and the polite, politic resignation letter released, Hester told the truth that he’d wanted to stay after all. While he got to appear as though he’d orchestrated an effective career transition, Chancellor of the Exchequer George Osborne et al were left holding a bag of empty words. Next time, think before you pink slip.

 Royal Bank of Scotlands Hester No FoolPRV Contributor Pen Pendleton is a communications professional with 20 years experience in business and financial public relations. He began his career as a newspaper reporter and now works as a consultant in New York.