Media and Crisis Management
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Media and Crisis Management

Transparency – It Can Avoid a Crisis – Financial or otherwise

Posted on: July 29th, 2012

Crisis Management: Transparency – It Can Avoid a Crisis – Financial or otherwiseCrisis avoidance

During the worst of all weeks in the history of the American stock market, beginning October 6, 2008, one question dominated.  Why were government fixes not calming the panic?  Answers varied. Some said we lacked persuasive leaders.  Others said words don’t carry weight; only hard evidence that the corrections are working does.  Still others said the corrections were on target but the explanations confusing.  (The Wall Street Journal said no wonder Americans are scared: the Treasury Secretary and Fed Chairman “need to explain what they are doing, and why it will lead to a better, more stable financial system.”  Something they are now trying to do.)  Some pointed to banks not trusting each other’s books and halting lending.  (Yet with real fear of debt demons lurking within another bank’s spreadsheets it’s hard to blame a bank for trying to protect its assets against risky loans.)

So, being a crisis consultant rather than financial wiz, what insight might I add to this economic morass?  Well, for one, I keep hearing a familiar echo from my world: transparency.  A common current refrain is that this economic action or that explanation or this institution needs to be more transparent.   An expert on CNBC underscored it by saying a primary difference between firms that tanked on Wall Street and those that didn’t is that the survivors were more transparent in their operations and bookkeeping.

Transparency is almost a mantra to us crisis managers.   We’ve learned that when clients get in trouble, one key to emerging from the pit is to embrace transparency.  The more open and forthcoming you are in addressing problems the more success you have convincing others.  An example.  I had a client under serious threat of public exposure over a product that might be dangerous to children.  An investigative reporter was crawling all over this company based in the Northeast.  The business had been stone-walling the reporter but decided it needed to do something.  But what?  Once they invited my involvement, we threw open our books and provided all requested test and manufacturing data about the product.  We answered every question and tried to exceed expectations.  There was little we wouldn’t give this reporter.  Once this openness became apparent the reporter said, “I have gotten more from you in 10 minutes than I got in the previous month.”

Ultimately, even after weeks of effort, the reporter dropped her story.  She told me it was not just that we provided evidence that disproved her thesis of a problem; it was that we were so transparent with our efforts and our facts.  In short, we earned her trust through our actions and information.  She said THAT was why she killed the story in spite of so much time invested by her.  Believe me she could have found a way to do the story anyway.  She didn’t.

I may not be an economist or a CFO with an MBA but I do know this.  Transparency equals credibility and creates confidence and trust.  Our gasping economy sorely lacks all three.  Whatever mechanisms the experts devise to disentangle this mess, I believe that given the greed, lack of oversight, and consumer overreaching on debt that are causing us to self-immolate, the new capitalism must have inherent and transcendent transparency.  The financial truth must always be on the table. If not, the innate avarice of humankind will compel us to endure this nightmare again and again and again.

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